Our governance

celebrating 20 years Remuneration and nomination committee report

Part one: Background statement by the Chairman of the R&N Co

Introduction

I have pleasure in presenting the Aspen R&N Co report for 2018. This report provides details in respect of the composition and activities of the R&N Co for the year, our remuneration policy as it relates to employees, executive directors and non-executive directors and how this policy has been implemented during the year. The information in this report has been approved by the Board on recommendation of the R&N Co.

Activities, composition and attendance of the R&N Co

The table below reflects the activities undertaken by R&N Co during the year and the resulting outcomes from these activities:

Activities     Outcome

Board appointments and succession planning

   
  • considered the composition of our Board and its committees, succession planning in respect of these governance structures, the succession planning in respect of the Chairman of the Board and the formal processes relating to the appointment of members to these structures, including the formal induction of directors; and
  • while no director appointments were required during the financial year ending 30 June 2018, Linda de Beer was appointed on 31 July 2018. John Buchanan retired with effect from 31 July 2018.

Performance evaluations

   
  • performed an internally facilitated evaluation of the performance of the Board, its committees, the Chairman, the Group Chief Executive, the Group Deputy Chief Executive (Finance Director), the Company Secretary & Group Governance Officer and each of the individual directors, which evaluation confirmed that directors were materially satisfied with the performance of the respective structures and individuals; and
  • issues raised as part of the evaluation process have been addressed by the Chairman.

Succession planning in respect of executive directors and senior executive management

   
  • reviewed and approved the succession plans in respect of the Group Chief Executive, Deputy Group Chief Executive (Financial Director) and senior executive management.

Setting and reviewing the Group’s remuneration policy

   
  • reviewed the Group's remuneration policy and the setting of fair remuneration levels across the Group, with specific reference to the review of:
    • the proposed annual salary increments for employees of Aspen businesses; and
    • the award and vesting criteria for short, medium and long-term incentives in respect of the executive directors and senior executive management.

Executive director performance reviews

   
  • reviewed the achievement of the set financial performance and KPI targets of the Group Chief Executive and Deputy Group Chief Executive in respect of the year under review, taking into account internal and external factors influencing the achievement of these performance targets; and
  • considered and recommended the financial performance measures and the KPIs of the executive directors for the forthcoming financial year.

Recommendation of non-executive directors' fees

   
  • reviewed the fees to be recommended to shareholders to be paid to our non-executive directors following an internal benchmarking study, excluding the fee to be paid to the members of the R&N Co as these fees are independently considered and recommended to shareholders by the Board.

Application of King IV

   
  • considered the recommendations contained in King IV as they relate to nomination and remuneration aspects and proposed initiatives to ensure the application of these recommendations as and where appropriate.

Remuneration disclosure

   
  • considered our remuneration disclosure in the Integrated Report and whether this disclosure is accurate, complete and transparent.

The R&N Co has formal Terms of Reference which are incorporated in the Board Charter and which have been approved by the Board of Directors. The Terms of Reference are reviewed and amended by the Board as and when required. The Committee has conducted its affairs in compliance with these Terms of Reference and has discharged its responsibilities contained therein. The R&N Co is satisfied that it has fulfilled its responsibilities in accordance with its Terms of Reference for the reporting period.

The R&N Co consists of independent non-executive directors, one of whom chairs the Committee's meetings. Members and the Chairman of this Committee are elected by the Board.

The Chairman of the Board is a member of this Committee and, while the Group Chief Executive, Deputy Group Chief Executive and Company Secretary & Group Governance Officer attend meetings by invitation, they recuse themselves from any deliberations in respect of their own remuneration or benefits. From time to time other executives of the Group attend meetings of the Committee, as requested. In accordance with the Terms of Reference, the Committee meets at least three times annually, but more often if necessary. During the current financial year, the Committee met three times. The minutes of these meetings are made available to the other directors on a secure electronic database. The Chairman of the Committee provides the Board with a verbal report of the Committee's activities at each Board meeting.

The following table of attendance at R&N Co meetings reflects the Committee's meetings held during the year and the attendance of these meetings by its members during the year:

R&N Co 13 July
2017
13 September
2017
7 March
2018
Roy Andersen (Chairman)
John Buchanan
Kuseni Dlamini

Overall attendance at the R&N Co meetings held during the year was 100%. The Chairman of the Committee represents the R&N Co at the annual general meeting ("AGM") each year. The Company Secretary & Group Governance Officer is also the Secretary of the Committee.

Shareholder voting

Our remuneration policy and the implementation thereof are subject to a non-binding advisory vote at our upcoming AGM. At the 2017 AGM, a total of 332 591 670 votes (2016: 324 806 291) were cast in respect of the resolutions relating to remuneration policy and the implementation thereof, with the vast majority of shareholders supporting these resolutions. The result of the voting was as follows:

Remuneration policy For Against Abstain Total
2017 95,89% 4,11% 0,10% 100%
2016 95,82% 4,18% 0,35% 100%
Remuneration implementation report For Against Abstain Total
2017 98,75% 1,08% 0,10% 100%
2016 N/A N/A N/A N/A

While no material concerns have been raised by stakeholders in respect of our governance processes, including our remuneration policy, in the past year, any concerns raised going forward will be considered and addressed by means of constructive engagement. Both our remuneration policy and implementation report will be tabled for separate non-binding advisory votes at the Company's 2018 AGM, scheduled for 6 December 2018. Policy provisions have been adopted to ensure that, in instances where either the remuneration policy or the implementation report are voted against by 25% or more of voting rights exercised, appropriate measures will be taken to constructively engage dissenting shareholders in order to address legitimate and reasonable objections and concerns raised or to clarify and adjust remuneration governance or processes. The nature and outcomes of these engagements will be reported on in our Integrated Report of the following financial year.

Areas of focus in respect of this report and going forward

Several initiatives have been implemented to improve the disclosure in respect of our approach to remuneration and the application of King IV and enhancements to this report reflect the progress made in this regard. While the Committee is satisfied that the objectives of the Group's remuneration philosophy and policy have been met in the year under review and that the King IV principles in relation to this aspect have been applied, further research is being undertaken into the financial well-being of employees, including aspects relating to the payment of a fair living wage, gender pay gap concerns which may need to be addressed and improving the socio-economic conditions of our lowest level employees throughout the Group. Succession planning in respect of the Group's executive directors and other senior executives has received increased attention during the year and will be an area of focus for the Committee in the year ahead. Part Two and Three of this report, respectively the overview of our remuneration philosophy and policy and the remuneration implementation report, are presented herewith for the consideration of stakeholders.

Roy Andersen
R&N Co Chairman

Part two: Overview of remuneration philosophy and policy

We strive to retain our competitive advantage in the local and global pharmaceutical industry through the attraction and retention of high calibre individuals, who not only have the required technical qualifications and experience, but who also demonstrate the desired behavioural traits which fit our entrepreneurial and dynamic culture. We recognise that the appropriate remuneration of our executive directors, non-executive directors and our employees is inextricably linked to the attraction, development and retention of the Group's human and intellectual capital.

Our remuneration philosophy

Pay for performance - driving our high-performance culture

We remain cognisant of the importance of finding the proper balance between the fair remuneration and reward of our employees and balancing the financial considerations of the Group's shareholders in the medium term. The R&N Co will be assessing aspects related to ensuring the payment of a fair living wage and improving the socio-economic conditions of our lowest level employees throughout the Group in the short- to medium-term. Employee wage rates across the Group comply with legislated wage rates in the relevant jurisdictions and, where applicable, employees are paid in accordance with rates agreed upon with trade unions and/or collective bargaining councils. In endeavouring to set remuneration packages at levels of remuneration which are fair to all our employees, as well as being competitive and market-related, reference is made to independent surveys, publicly available economic data and marketplace intelligence both locally and internationally. In awarding annual salary increases and incentive payments to employees, consideration is given to:

  • the employee's performance and achievement of predetermined KPIs;
  • the financial performance of the Aspen business in which he or she is employed;
  • the economic conditions impacting the industry; and
  • the geographical market in which the employee is based. The remuneration philosophy is consistently applied across companies forming part of the Group.
Our remuneration philosophy, as it relates to the executive and management of the Group, is aimed at:
  • driving the Group's high-performance culture - remuneration packages are directly linked to individual and Company performance and the achievement of predetermined targets in respect of each of these performance measures;
  • aligning the rewards of these employees with changes in the value delivered to the Group's stakeholders;
  • providing competitive remuneration packages which enable Aspen to attract and retain employees of the highest quality;
  • recognising and rewarding exceptional individual contributions in achieving the Group's stated strategic objectives; and
  • the transparent disclosure of our remuneration philosophy, policy and practices to stakeholders to provide them with an informed view of these aspects.

Package structure and design

The remuneration packages designed and applied in respect of our executive and managerial employees generally consist of three components:

Remuneration andincentivisation linked to:individual performancecompany performance
Congruence of interestsReward aligned to valuedelivered to Group'sstakeholders
Remuneration packages ofexecutives and managementmade up of:fixed elementsvariable elements
  • the base salary or fixed portion of remuneration payable;
  • a short-term cash-based incentive; and
  • medium-term and long-term share-linked incentive schemes.
Component     Purpose     Performance Measures     Delivery

Base salary

    Attraction and retention of skilled and capable talent.     Reviewed and adjusted annually based on benchmarking surveys, inflationary indicators and the achievement of individual performance targets.     Delivered as a cash salary and a mix of compulsory and discretionary benefits.

Short-term cash-based incentive

    Creates a high performance culture through a cash bonus by rewarding employees for achieving predetermined performance targets.     Granted annually upon the achievement of predetermined individual and business performance targets.     Delivered as an annual once-off cash payment and subject to capping against base salary.

Medium-term and long-term share-linked incentive schemes

    Alignment with shareholder interests and retention of critical skills.     Annual grants, predominantly linked to the performance of the Aspen share price, vesting over either three or 10 years, based on the achievement of predetermined individual and business performance targets.     Delivered in Aspen shares (acquired on-market) or cash depending on the scheme.

These three components are discussed in more detail below:

Base salary

This is the fixed or guaranteed portion of the remuneration package, payable to employees in cash. It reflects the market value of the role and forms the basis of our ability to attract and retain skilled and capable talent. This remuneration component is reviewed annually, with reference to:

  • the achievement of predetermined individual performance targets set in terms of the Group's performance management processes;
  • inflationary considerations; and
  • industry and regional benchmarking studies.

Additional adjustments are considered in circumstances where the executive or manager has changed responsibilities or has relocated.

Role of the R&N Co: Upon conclusion of the annual benchmarking and inflationary research, the Committee considers and approves the average percentage increase allowed in respect of each Aspen business. The Committee also reviews and approves the specific increase adjustments made to the base pay of selected senior executive employees, including the business leaders of Aspen’s material businesses and functions.

Annual cash incentive

Calculations of annual cash incentives and the caps in respect of these incentives are determined as a percentage of total guaranteed remuneration, modified according to the achievement of predetermined individual and business performance targets during the year.

On-target annual incentive levels increase at higher levels of seniority, but are capped at differing levels. In the case of the executive directors, the award is capped at 100% of the base salary. For other members of executive management, the cap is 30% of the base salary (in some countries of employment, a lower cap is applicable). South African executives and managers are subject to the provision of the South African Management Incentive Bonus Scheme which applies a cap of 30%.

Role of the R&N Co: In determining the award of the annual cash incentives, the R&N Co has the discretion to exclude factors and extraordinary events which are beyond the control of the Group, but which may nevertheless favourably or adversely impact the Group’s performance. Accordingly, extraneous factors may be excluded in the calculation of incentives for the executive directors and other members of executive management, at the discretion of the Committee.

The approval of annual cash incentives of certain selected senior executives (predominantly business and functional leaders) falls within the discretion of the R&N Co. A further discretionary bonus may be paid in cash to employees who are considered by the R&N Co to have rendered exceptional service in any given year.

Medium-term and long-term incentive and retention schemes

The Aspen South African Management Deferred Incentive Bonus Scheme

      Nature and purpose
of the scheme
    Determination of value of awards     Vesting

Medium-term component of the scheme

   

The scheme is designed to acknowledge performance and reward individuals for achievement of both the relevant Aspen business which employs the individual and the individual’s performance for the trading period immediately preceding the date that the award is made. While it has the same performance measures as the annual cash incentive, it introduces a retention element through the three-year deferral to ensure that critical executive and professional skills are retained and that there is congruence between the interests of executive and managerial employees and shareholders.

Alignment between shareholder and employee interests has been successful as most eligible employees have historically elected to receive the value of the award in Aspen shares (2018: 93%, 2017: 96% and 2016: 97%).

   

The award value varies according to the level of seniority of the executive or manager and is determined according to the achievement of the same performance targets which apply to the annual cash incentive.

The maximum award does not exceed 33% of the total remuneration cost in any instance, except for executive directors’ awards which are capped at a maximum of 41,25% of their total remuneration cost.

To encourage the holding of shares within the Company, an enhancement of 10% is given to employees who elect to receive the award in shares.

   

Awards are deferred for three years, and eligible employees are given the choice at the date of the award to receive the deferred bonus in cash or Aspen shares.

To the extent that an employee elects to receive shares pursuant to the award, share awards are acquired and held by the Aspen Share Incentive Trust (in respect of awards made up until 2015) and an unrelated intermediary (in respect of awards made from 2016 onwards) to enable Aspen to settle its future obligation to participating employees upon vesting. No shares are issued in terms of this scheme and it has no dilutive effect.

Should the employee retire within the three-year period, the vesting of the awards will be accelerated to the date of retirement.

Employees who resign or who are dismissed for any reason other than retirement, retrenchment or medical incapacity forfeit unvested awards.

Long-term component of the scheme

   

The Aspen South African Management Deferred Incentive Bonus Scheme is aimed at the retention of a limited number of key senior executives.

   

The value of the awards granted to employees in terms of this component of the scheme is on an ad hoc basis and at the discretion of the R&N Co.

   

These awards vest after a period of 10 years and may only be settled in shares. Awards made in terms of this component of the scheme will not be accelerated in the event that a recipient retires within the 10-year period and before the age of 65, unless the express approval of the R&N Co has been obtained for such acceleration.

The Aspen International Phantom Share Scheme

      Nature and purpose
of the scheme
    Determination of value of awards     Vesting

Medium-term component of the scheme

   

In order to incentivise the management of Aspen’s non-South African businesses in the medium term, a phantom share scheme exists for selected employees.

The scheme has been designed to incentivise managers for the medium term, align their goals with those of the Aspen Group and to match their reward to movements in the Aspen share price. Due to regulatory restrictions in respect of transfer and ownership of Aspen shares to offshore employees, the scheme is operated on a phantom basis, which is designed to give an employee the same economic benefit

   

Awards are linked to performance of the employee, the business and growth in the Aspen share price.

The value of awards that can be awarded annually in terms of this component of the scheme is capped, with this cap varying according to the level of seniority of the executive or manager and territory of employment.

   

The phantom shares entitle eligible employees to receive a cash amount which is linked to the Aspen share price.

Awards vest after a period of three years and are paid out in cash to the employee by the Aspen business employing him or her.

Should the employee retire within the three-year period, the medium-term incentive will be accelerated to the date of retirement.

Employees who resign or who are dismissed for any reason other than retirement, retrenchment or medical incapacity forfeit unvested awards.

Long-term component of the scheme

   

The Aspen International Phantom Share Scheme is aimed at ensuring the retention of a limited number of key offshore senior executives.

   

The value of the awards granted to employees in terms of this component of the scheme is on an ad hoc basis and are determined at the discretion of the R&N Co.

   

These awards vest after a period of 10 years and may only be settled in shares. Awards made in terms of this component of the scheme will not be accelerated in the event that a recipient retires within the 10-year period and before the age of 65, unless the express approval of the R&N Co has been obtained for such acceleration.

Role of the R&N Co: In determining the medium-term and long-term incentive awards, the R&N Co has the discretion to exclude factors and extraordinary events which are beyond the control of the Group, but which may nevertheless favourably or adversely impact the Group’s performance. Accordingly, extraneous factors may be excluded in the calculation of incentives for the executive directors and other members of executive management at the discretion of the Committee. The approval of the medium-term and long-term incentive awards of certain selected senior executives (predominantly business and functional leaders) falls within the discretion of the R&N Co.

The rules in respect of our management incentive schemes, and any change thereto, are approved by the R&N Co.

Benefits

Benefits vary from country to country depending on customs and regulations. Benefits include retirement funding, medical insurance and life and disability insurance. A limited number of employees in South Africa are entitled to post-retirement health benefits (as a consequence of contractual obligations assumed from predecessor companies). Aspen has never offered post-retirement health benefits, but has assumed obligations for post-retirement health benefits through various acquisitions. In respect of retirement benefits, the Group generally contributes to employee retirement funding. The extent of its contributions varies from country to country, depending on the state social security contributions and benefits in the country concerned.

Executive directors

The principles in terms of which the remuneration packages of the Group's executive directors are determined are similar to those applicable to other executives and management. Executive directors accordingly receive a base salary, an annual incentive and a medium-term incentive, which are determined in accordance with the principles applicable to executives and management and are calculated as set out in this report. Our executive directors are contracted as full-time, permanent employees and receive no additional remuneration on account of their being directors of the Company. Restraint of trade provisions are included in service agreements with these directors, while notice periods are six months' written notice. Shorter notice periods may apply in the event of termination due to disciplinary procedures being taken. Bonus payments and the vesting of long-term incentives that are in place at the time of an individual's termination of service are subject to the rules of the relevant scheme. These contracts do not commit the Company to:

  • pay additional remuneration on termination arising from the director's failure to perform agreed duties;
  • make any form of balloon payments; and/or
  • making payments to executive directors in the event of a change of control of the Company.

Executive directors' annual incentive bonuses are considered and approved by the R&N Co based on predetermined targets. The targets for 2018 are dealt with on page 120. The targets confirmed by the R&N Co in respect of the year to 30 June 2019 are as follows:

1. growth in the normalised CER NHEPS, measured against the achievement of the budget approved by the Board. The weighting of this portion of the incentive is 40% of the total incentive; and

2. the reduction in the leverage measurement to levels below 4,0 based on a scale approved by the Board. The weighting of this portion of the incentive is 30% of the total incentive.

3. KPI targets for the executive directors in respect of the 2018 financial year, which have a combined weighting of 30% of the incentive, have been updated to include:

  • continuing to develop a sustainable growth strategy and implementing an effective organisational structure which is appropriate for the implementation of the Group's strategy;
  • developing and implementing synergy realisation and growth plans;
  • setting an exemplary ethical tone for the Group and ensuring the effective management of and compliance with applicable regulatory requirements;
  • ensuring Group infrastructure is appropriate to meet Aspen's short to medium-term objectives;
  • ensuring that SHE standards are maintained across the Group;
  • maintaining an appropriate funding structure in line with the Group's growth objectives;
  • implementing working capital improvement strategies to achieve better than budgeted outcomes in working capital management;
  • meeting certain talent development objectives determined by the S&E Co;
  • ensuring that an effective risk management and reporting process is maintained across the Group; and
  • implementing and maintaining appropriate business and reporting systems.

The executive directors have, to date, always elected to receive their deferred incentive awards in shares as opposed to cash.

Executive director package design - performance scenarios

The graphs below provide an indication of short-term and medium-term incentives payable to executive directors in respect of the 2019 financial year where performance against the above performance metrics may either be achieving performance targets, achieving 50% of performance targets or not achieving performance targets at all.

Stephen Saad – short and medium-term incentives
(Rm)
  Gus Attridge – short and medium-term incentives
(Rm)
Stephen Saad – short and medium-term incentives   Gus Attridge – short and medium-term incentives

No additional incentive payments are applicable in instances of performance above expectations.

Non-executive directors

Non-executive directors do not receive any bonuses, share options, incentives or other payments in addition to their directors' fees. Following research and a benchmarking exercise conducted into trends in non-executive director remuneration among companies of a similar size and complexity to the Group and the duties performed, non-executive directors' fees are proposed by management to the R&N Co. After review of such proposals, the R&N Co makes appropriate recommendations, other than for fees for services paid to the R&N Co, to the Board. The proposal endorsed by the Board is tabled for approval by shareholders at the AGM. The Board has proposed a general fee increase of 6% for the 2019 financial year in respect of the attendance and retainer fees paid to non-executive directors. The fees payable to these directors through to the AGM in 2019 will be submitted for approval at our annual general meeting to be held on 6 December 2018. The Chairman of the Board receives a fixed annual fee for his role as Chairman. Non-executive directors' fees are fixed for the year. A quarterly base fee is payable to each non-executive director, in addition to a fee per meeting attended. Further fees will be paid for attendance at unscheduled meetings dependent on the number of hours spent at the meeting, up to a maximum of the set fee per meeting. In the instance of non-attendance, non-executive directors are obliged to continue to participate in meetings by providing the Chairman or the Committee Chairman with detailed inputs for all agenda items. The R&N Co has discretion to approve payment of such fees to a non-executive director notwithstanding his/her absence from a meeting under special circumstances.

Non-binding advisory vote

The remuneration policy will be subject to a non-binding advisory vote at the annual general meeting to be held on 6 December 2018. The policy is reviewed annually and the opinions of shareholders are an important consideration during these reviews. The R&N Co's Terms of Reference have been updated to allow for prescribed processes to be followed in instances where this policy is voted against by 25% or more of the voting rights exercised, including measures to engage with dissenting shareholders to ascertain the reasons for the dissenting votes and to address legitimate and reasonable objections and concerns raised. These engagements and steps taken as a result of these engagements would be reported upon in the next report of the Committee. Shareholders not in favour of this part of the report are requested to raise their concerns with the Company Secretary prior to voting in order for the concerns to be considered. These may be submitted by email to rverster@aspenpharma.com.

Part three: Remuneration Implementation report

This section of the report provides an overview of the implementation of the remuneration policy as it applies to executive directors and non-executive directors.

Remuneration decisions taken during the year

Please refer to the table above of this report for a summary of the remuneration activities undertaken by the R&N Co during the year.

Base pay adjustments during the year

The following base pay adjustments were made during the year:

  Base pay
2018
Approved
adjustment
Base pay
2017
Stephen Saad 7 226 575 6% 6 828 214
Gus Attridge 5 946 851 6% 5 627 345
Total 13 173 426   12 455 559
Stephen Saad
(Cumulative percentage increase)
  Gus Attridge
(Cumulative percentage increase)
Stephen Saad   Gus Attridge

Short-term and medium-term incentive outcomes during the year

The targets in respect of the year to 30 June 2018 were as follows:

  1. A 70% weighting in respect of the Group’s performance against the following measures:
    • the three-year CAGR of the Group’s fully diluted NHEPS from continuing operations as measured against pre-determined South African Consumer Price Index-linked targets. The weighting of this portion of the incentive is 40% of the total incentive;
  2. The three-year CAGR of the Group’s earnings before interest, tax, depreciation and amortisation as measured against pre-determined South African Consumer Price Index-linked targets. The weighting of this portion of the incentive is 30% of the total incentive; and
  3. A combined weighting of 30% on their KPIs, including but not limited to:
    • continuing to develop and implement a sustainable growth strategy;
    • setting an exemplary ethics tone for the Group;
    • developing and implementing strategies to achieve a better than budgeted earnings outcome;
    • developing and implementing synergy realisation and growth plans;
    • maintaining productive stakeholder relations;
    • ensuring our infrastructure is appropriate to meet Aspen’s short to medium-term objectives;
    • ensuring that SHE standards are maintained to the satisfaction of the Board;
    • maintaining an appropriate funding structure in line with our growth objectives and achieving better than budgeted outcomes in working capital management;
    • establishing a talent development programme to the satisfaction of the S&E Co and the Board; and
    • ensuring that an effective risk management and reporting process is maintained.

While both executives achieved the full 30% weighting in respect of their achievement of their respective KPIs (measure 3 above), the performance measures in respect of 1 and 2 above were not fully met, resulting in both executive directors achieving 32% out of a possible 40% in respect of measure 1 and 6% out of a possible 30% in respect of measure 2. As a result, both executive directors achieved an overall rating of 68% and have had their short and medium-term incentives adjusted accordingly.

As a result of the achievement of these targets, the short-term cash incentive payable to the executive directors, in terms of the South African Management Incentive Bonus Scheme is as follows:

    Achievement in respect of
measures 1 and 2
    Achievement in respect
of KPI performance
    Total short-term
cash incentive paid
  % Rand value   %   Rand value   Rand value
Stephen Saad 2017 42% out of 70% 3 308 132   30% out of 30%     2 362 951     5 671 083
  2018 38% out of 70% 3 172 656   30% out of 30%     2 504 729     5 677 385
Gus Attridge 2017 42% out of 70% 2 734 769   30% out of 30%     1 953 407     4 688 176
  2018 38% out of 70% 2 622 775     30% out of 30%     2 070 612     4 693 387

As a result of the achievement of the targets as set out above, the medium-term incentive payable to the executive directors, in terms of the South African Management Deferred Incentive Bonus Scheme, was as follows:

  Award Including additional 10% for opting for shares Three-day VWAP of Aspen share price at award   Number of shares awarded
Stephen Saad 2017 2 126 655 2 339 321 R305,18     7 665
  2018 2 129 019 2 341 921 R164,96     14 197
Gus Attridge 2017 1 758 066 1 933 873 R305,18     6 337
  2018 1 760 020 1 936 022 R164,96     11 736

Vesting of long-term incentives during 2018

Awards made to the executive directors, in terms of the South African Management Deferred Incentive Bonus Scheme, vested as follows during the year:

  Date of award Number of
shares
awarded
Value at date
of award
Distributions/
dividends
received
  Total value
of award
at vesting
Stephen Saad 2017 October 2014 7 825 2 648 250 47 138     2 698 663
  2018 October 2015 9 576 2 878 809 81 396     2 960 205
Gus Attridge 2017 October 2014 6 468 2 189 000 38 963     2 227 963
  2018 October 2015 7 798 2 344 303 66 283     2 410 586

Total remuneration outcomes for 2018

Remuneration composition of executive directors

Stephen Saad
(%)
  Gus Attridge
(%)
Stephen Saad   Gus Attridge
  Remuneration
R'000
Retirement
and medical
aid benefits
R’000
Performance
bonus
R’000
Share-based
payment
expense
R’000
Total
R’000
2018          
Stephen Saad 7 227 1 186 5 677 3 064 17 154
Gus Attridge 5 947 1 005 4 693 2 463 14 108
  13 174 2 191 10 370 5 527 31 262
2017          
Stephen Saad 6 828 1 117 5 671 2 890 16 506
  5 627 944 4 688 2 324 13 583
Gus Attridge 12 455 2 061 10 359 5 214 30 089

Directors' interests in Aspen shares

Shares allocated in terms of the South African Management Deferred Incentive Bonus Scheme as at the beginning of the year and those offered to and accepted by executive directors during the year were as follows:

  Grant
price
(R)
Expiry
date
Shares
outstanding
on 30 June
2017
Awarded
during
the year
Released
during
the year
Shares
outstanding
on 30 June
2018
Stephen Saad 338,44 Oct 2017 7 825 7 825
  300,62 Oct 2018
9 576 9 576
  305,86 Oct 2019 10 021 10 021
  305,18 Oct 2020 7 665 7 665
      27 422 7 665 7 825 27 262
Gus Attridge 338,44 Oct 2017 6 468 6 468
  300,62 Oct 2018 7 798 7 798
  305,86 Oct 2019 7 870 7 870
  305,18 Oct 2020 6 337 6 337
      22 136 6 337 6 468 22 005
      49 558 14 002 14 293 49 267

The deferred incentive bonus shares have a maturity date of three years on acceptance of the bonus.

Increases in non-executive directors' remuneration

In line with the requirements of the Companies Act, the fees payable to the non-executive directors for the financial year were approved by a special resolution of Aspen's shareholders at the Company's AGM held on 7 December 2017.

Non-executive director 2018*
R’000
2017*
R’000
Roy Andersen 664 629
John Buchanan 759 825
Kuseni Dlamini 1 098 1 036
Maureen Manyama # 267 575
Chris Mortimer 309 320
Babalwa Ngonyama ** 622 520
David Redfem 284 313
Sindi Zilwa 701 701
  4 704 4 919

* Fees exclude VAT.
** Babalwa Ngonyama receives an attendance fee for attendance at meetings of Aspen Finance (Pty) Limited, in her capacity as Chairman of the A&R Co of Aspen Pharmacare Holdings Limited.
# Maureen Manyama resigned from the Board with effect from 7 December 2017.

Non-binding advisory vote

The remuneration policy will be subject to a non-binding advisory vote at the annual general meeting to be held on 6 December 2018. The policy is reviewed annually and the opinions of shareholders are an important consideration during these reviews. Shareholders not in favour of this part of the report are requested to raise their concerns with the Company Secretary prior to voting in order for the concerns to be considered. These may be submitted via email to rverster@aspenpharma.com.

Directors' interests in Aspen shares

The direct and indirect beneficial interests of the directors and their associates in the shares of the Company were:

  Direct Indirect
  2018 2017 2018 2017
Roy Andersen 41 150 41 150
Gus Attridge 3 720 571 3 714 103 15 169 319 15 169 319
John Buchanan 30 350 30 350
Kuseni Dlamini
Maureen Manyama
Chris Mortimer 100 068 100 068
Babalwa Ngonyama
David Redfem 4 750 4 750
Stephen Saad 4 063 818 4 055 993 51 302 718 51 302 718
Sindi Zilwa
  7 925 607 7 911 314 66 507 137 66 507 137

None of the directors held any non-beneficial shares in the Company at 30 June 2018.