LENMED AIR 2019.pdf

REMUNERATION GOVERNANCE Principle 14 The governing body should ensure that the organisation remunerates fairly, responsibly and transparently so as to promote the achievement of strategic objectives and positive outcomes in the short, medium and long term. The Board takes responsibility for remuneration governance. It is assisted by the Remuneration Committee, which oversees that the organisation remunerates fairly, responsibly and transparently so as to promote the delivery of strategic objectives and the creation of value in a sustainable manner. It makes recommendations to the Board in this regard. The South African healthcare sector is characterised by a shortage of staff in general, which compels Lenmed to retain talented and higher-level staff. Remco has the task to recommend strategies to attract and retain staff of the highest calibre, while still being mindful of managing costs. Remco conducts external benchmarks across executive and senior Group management roles while hospital managers and nurses are done on a more informal basis. The scarce skills and competitive market dictate the remuneration levels and if Lenmed does not remunerate competitively, it will not be able to retain these skills. ASSURANCE Principle 15 The governing body should ensure that assurance services and functions enable an effective control environment, and that these support the integrity of information for internal decision making and of the organisation's external reports. Lenmed follows a combined assurance model, with assurance being provided by management, the internal audit function (PWC) and the external auditors. Oversight on assurance is provided by the Audit and Risk Committee and, in addition, the Board tasks the CFO to implement an effective control environment and report back on this. Internal Audit is used to review the control environment and also assist with the establishment of a control environment. They are independent and objective and their plans and reports are reviewed by the Audit and Risk Committee. The Group has not utilised independent assurance to assess the competence and independence of Internal Audit and IT as both of these areas are serviced by outsourced service providers and, therefore, no assurance is required. In addition, the Annual Integrated Report is not subject to external and internal audit. The current level of assurance is deemed appropriate for Lenmed but is monitored. STAKEHOLDERS Principle 16 In the execution of its governance role and responsibilities, the governing body should adopt a stakeholder- inclusive approach that balances the needs, interests and expectations of material stakeholders in the best interests of the organisation over time. Lenmed has identified its key stakeholders and material issues and risks that could impact the stakeholders of Lenmed, as set out in the Annual Integrated Report. The value of Lenmed’s stakeholders — Our social licence to operate depends largely on the quality of our stakeholder relationships and our positive or negative impacts on them. Lenmed’s economic growth is underpinned by the value of our relationships with investors, employees, medical practitioners, patients, suppliers and the broader communities in which we operate. Our approach to community development recognises that our long-term sustainability is linked with that of our communities. We are, therefore, aware of and responsive to the socio-economic challenges faced by the communities surrounding our hospitals. Communication with our stakeholders — Reputation and trust are vital intangible assets. Managing our brand and reputation is of prime concern in today’s global business environment, in which stakeholders are increasingly well-informed and assertive. Lenmed makes every effort to establish close and informative relationships with our stakeholders. This communication is two-way and includes employees, patients, doctors, funders, regulators, suppliers and shareholders. As regards employees, a newsletter from the CEO is sent to all staff members every quarter. As regards shareholders, there is ongoing engagement with shareholders via various mechanisms, including interim/year-end reports, the Annual Integrated Report, presentations, the AGM, Lenmed’s website and social media. The Remuneration Report and Implementation Report is set out on page 76 of this report. Lenmed’s corporate governance continued King IV™ overview continued 68 ENSURING AND PROTECTING VALUE