The Board has delegated responsibility for remuneration policy to the Remuneration Committee. The role of the Remuneration Committee is to establish the overall principles that determine the remuneration of the Group's executive directors. In compiling this report, the committee has taken into account the provisions and recommendations outlined in the King II report and the Combined Code on Corporate Governance. 

The Remuneration Committee operates in terms of defined terms in the Remuneration Committee charter, which has been approved by the Board. 

The composition of the Remuneration Committee during the 2008 financial year
was:

• S J Davidson (Chairman from 6 August 2007)
• C S Seabrooke (Chairman up to 6 August 2007)
• L Boyd
• N J Temple
• J F McCartney (from appointment to the Board on 16 July 2007). 

The Chief Executive Officer and the Group Finance Director may be invited to attend meetings of the Remuneration Committee but neither may take part in any discussions regarding their own remuneration. External advisers are used to provide information and advice as required.

REMUNERATION PHILOSOPHY
The Remuneration Committee operates a framework of policies, within which it has set the remuneration package for each executive director. 

The overall strategy of the Remuneration Committee is to ensure that executive directors and senior managers are rewarded for their contribution to the Group's operating and financial performance at levels which take account of the international IT industry, market and country benchmarks. In order to promote a common interest with shareholders, performance linked share-based incentives are considered to be an important element of executive incentive policy. 

The basic objective of the policies is that the executive directors should receive remuneration which is appropriate to their scale of responsibility and performance and which will attract, motivate and retain individuals of the necessary calibre. The underlying philosophy of the Remuneration Committee is to provide base pay above median levels by comparison with relevant comparator companies and to provide the potential for upper quartile earnings when corporate and individual performance justify it. In the application of its policy, the Remuneration Committee has regard to the necessity of being competitive in the different parts of the world in which the Group operates, particularly the US and the UK. 

SUMMARY OF REMUNERATION
The remuneration of the executive directors currently consists of three main ingredients designed to balance long- and shortterm objectives: a base salary; annual bonus plan with performance targets; and long-term incentives in the form of share-based incentive schemes (also with performance targets). The last two elements are designed to encourage and reward superior performance and to align the interests of the executive directors as closely as possible with the interests of the shareholders. In addition to these main ingredients, the executive directors also receive retirement and other benefits as outlined below. 

BASE SALARY
The base salary of the executive directors is subject to annual review and is set with reference to external market data relating to comparable international companies based in the US and the UK. Individual performance is also taken into consideration. 

ANNUAL BONUS PLAN
All executive directors participate in an annual bonus plan based on the achievement of short-term performance targets set for each executive director. These targets include measures of corporate performance (HEPS, PBT and operating cash flow), share price performance, divisional objectives (where applicable) and the achievement of individual objectives. These targets are reviewed annually by the Remuneration Committee with the Chief Executive Officer. The bonus is capped at 150% of base salary for the Chief Executive Officer and at 100% of base salary for the Group Finance Director.

OTHER BENEFITS
Executive directors are entitled to pensions, the provision of car allowances or a fully maintained car, medical insurance and death and disability insurance. The total value of benefits received by each director is shown under the heading of Director's Emoluments further below. 

During the financial year under review the Group contributed an amount of 15% of the executive directors' base salary for J P Montanana and D B Pfaff to private pension schemes, with the individuals contributing 5% of their salary. 

SHARE-BASED REMUNERATION
Datatec operates the following equity-settled share-based incentive schemes for Group employees:

• Share Appreciation Rights Scheme
• Long-Term Incentive Plan
• Datatec Limited Deferred Bonus Plan. 

Before the introduction of these schemes in August 2005 share options were granted to Group and subsidiary employees under the Datatec Share Option Scheme. These schemes are all equity settled and their earnings dilution effect is included in the diluted earnings per share figure. Details of these schemes are given below. 

Datatec's subsidiaries operate a number of cash-settled share-based incentive schemes for their senior employees. Summaries of these schemes are also provided below. 

THE DATATEC LIMITED SHARE APPRECIATION RIGHTS SCHEME 2005 ("SARS")
Eligible employees may receive annual grants of Share Appreciation Rights (SARs), which are rights to receive shares equal to the value of the difference between the exercise price and the grant price less income tax payable on such difference. 

Vesting of the SAR is subject to performance conditions. The duration and specific nature of the performance conditions and performance period are stated in the letter of grant. The condition that has been imposed for all grants of SARs to date is that HEPS must increase by two per cent per annum above US consumer price index (CPI) inflation over a three-year performance period. Retesting of the performance conditions is permitted on the first and second anniversary of the end of the performance period (i.e. years 4 and 5). For the initial, 2005, SARs awards, a pro-forma HEPS base of 15 US cents was implemented, as opposed to the actual HEPS base of 4 US cents. Therefore HEPS growth of US Dollar CPI plus 6% over a three-year period will be applied to a base HEPS of 15 US cents, before the SARs will vest. For the 2006 and 2007 SARs awards the actual HEPS base of 26,9 US cents and 40,8 US cents, respectively, were used. 

After vesting, the SARs will become exercisable. Upon exercise by a participant, the Company will settle the value of the difference between the exercise price and the grant price, less income tax, by delivering shares. SARs not exercised within the period specified in the letter of grant, will lapse. 

Details of the three issues under the Datatec Limited SARs Scheme made to date are given below:

The SARs in issue during the year ended 29 February 2008 constitute a 0,47% dilution of the Company's weighted average shares for the year. 

In addition to the above, in May 2007 a special grant of Datatec SARs was made to five key employees of Crane Telecommunications at the time of its acquisition by Westcon. 272 925 SARs were granted at a price of £2,3633 (based on the London AIM price of Datatec shares at the time of issue). These SARs vest one-third on issue, one-third on the first anniversary of issue and one-third on the second anniversary of issue and expire three years after vesting. Vesting of the second and third tranches is conditional upon Westcon's Convergence division meeting certain performance criteria. 

Refer to the limits for the SARS below. 

THE DATATEC LIMITED LONG-TERM INCENTIVE PLAN 2005 ("LTIP")
Eligible employees receive annual grants of conditional awards. 

The conditional awards will vest after the performance period if, and to the extent that the performance conditions have been satisfied. The duration and specifics of the performance condition and performance period are stated in the letter of grant. The intended performance period is three years. The performance condition that is imposed for the first year will be related to the Company Total Shareholder Return ("TSR") over a three-year period, relative to the TSR of an international peer group. No retesting of the performance condition will be allowed. 

The performance condition will determine if, and to what extent, the conditional award will vest. Upon vesting of the conditional award the Company will procure the delivery of shares to settle the after-tax value of the vested portion of the award. The conditional awards which do not vest at the end of the three-year performance period will lapse. 

The commitment to issue shares under the LTIP for the conditional awards in issue during the year ended 29 February 2008 constitutes a 0,28% dilution of the Company's weighted average shares for the year. 

The TSR for the purposes of the LTIP is defined to be the compound annual growth rate ("CAGR") on a portfolio of Company ordinary shares purchased on 28 February preceding the issue date, holding the shares, and reinvesting the dividends received from the portfolio in Company shares, until 28 February three years later, and then selling the portfolio on that day. The TSR calculation will be performed using the Company daily ZAR TSR Indexas provided by Datastream (a UK based information provider), on the nearest trading day following the start and the nearest trading day following the end of the three-year period, and computing the CAGR between these values. This TSR will be smoothed by computing the TSR in the same manner for the three-year period following each trading day for the six months preceding 28 February in each year of issue. 

Subject to the participant remaining in the employment of the Group for the LTIP
minimum employment period, if the TSR over the LTIP performance period:

• ranks within the upper quartile of the peer group, then the whole LTIP award, which is subject to the TSR condition will become unconditional and will vest; 
• ranks at the median TSR of the peer group, then 30% of the LTIP award, will become unconditional and will vest. The remainder of the LTIP award subject to the TSR condition will lapse and will be of no further force or effect; 
• ranks less than the upper quartile of the peer group and ranks greater than the median of the peer group, then the percentage of the LTIP award, subject to the TSR condition, which becomes unconditional and will vest, will be linearly apportioned as the ranking of the TSR increases. The remainder of the LTIP award, subject to the TSR condition will lapse and will be of no further force or effect;
• ranks less than the median TSR of the peer group then the whole of the LTIP award, subject to the TSR condition will lapse and will be of no force or
  effect whatsoever.

Refer to the limits for the LTIP below. 

THE DATATEC LIMITED DEFERRED BONUS PLAN 2005 ("DBP")
Eligible employees will be permitted to use a portion of the after-tax component of their annual bonus to acquire shares (pledged shares). A matching award will be made to the participant after a three-year pledge period on the condition that the participant remains in the employ of the Company and retains the pledged shares over the period. 

The participant remains the full owner of the pledged shares for the duration of the pledge period and will enjoy all shareholder rights in respect of the pledged shares. Pledged shares can be withdrawn from the pledge at any stage, but the matching award is forfeited in this case. 

Pledged shares were acquired under the terms of the DBP by two eligible employees as follows: 72 350 on 17/18 May 2007; 70 600 on 18 May 2006; and 135 300 on 18 August 2005. 

The commitment to issue matching shares for the pledged shares held during the year ended 29 February 2008 constitutes a 0,15% dilution of the Company's weighted average shares for the year. 

Refer to the limits for the DBP below. 

LIMITS TO THE SARS, LTIP AND DBP
The aggregate number of shares which may be allocated under the SARS, the LTIP and the DBP will be limited to 5% of Datatec's ordinary shares in issue from time to time. This limit of 5% applies to the SARS, the LTIP and the DBP only and not to options previously issued under the Datatec Share Option Scheme. 

The face value of the grants made to an employee in any financial year under the SARS should not exceed 80% of his/her base salary at the date of the offer. 

The face value of the grants made to an employee in any financial year under the LTIP should not exceed 80% of his/her base salary at the date of the offer. 

The face value of the matching shares in any financial year made under an award to an employee under the DBP may not exceed 30% of his/her base salary at the date of the offer.

THE DATATEC SHARE OPTION SCHEME
Since the implementation of the SARS, LTIP and DBP on 16 August 2005, no new options have been granted under the Datatec Share Option Scheme. Under the terms of the Datatec Share Option Scheme options could be granted up to a maximum of 15% of the issued share capital with a maximum number of options available to any one participant being limited to 1,5% of the issued share capital. Options previously granted under the DatatecShare Option Scheme will run their course in terms of the rules of the scheme. Options were granted to employees and directors of Group companies at a price equal to the 30 day average closing market price prior to the date of such grant (always subject to a minimum price of 2,00 ZAR). 

Options vest over a period of four years from the date on which the option was granted at the rate of 25% per annum at each anniversary of the date of grant. Options are eligible to be exercised within 10 years of being granted, unless such option lapses through the death or termination of employment of the option holder. 

As at 29 February 2008 10 546 654 (2007: 8 321 878) share options had been exercised since the original grants and 3 874 157 (2007: 6 187 158) share options had been granted but not yet exercised as follows:

WESTCON GROUP, INC. SHARE INCENTIVE PLAN ("THE WESTCON PLAN")
The Westcon Plan has been in operation since January 2001 and provides for grants of incentive share options, non-qualified share options and share appreciation rights for the purchase of up to 23 300 Westcon common shares to employees, directors (other than directors who serve on the compensation committee), consultants and other advisers to Westcon. Grants of share appreciation rights allow the holder to receive a payment based on the appreciation of Westcon's common stock. 

Westcon's board of directors has authorised the Westcon compensation committee to administer the Westcon Plan. The compensation committee determines the estimated market price, exercise price, the vesting period and the period in which to exercise the share options or share appreciation rights. The expiration date of grants cannot exceed 10 years from the date of grant. The exercise price of a share option is equal to at least the fair market value of a Westcon ordinary share on the date of grant. Share options granted under the Westcon Plan are generally exercisable for 12 months after termination of employment due to death or total disability, and for three months after other terminations of employment other than just cause. For share appreciation rights granted under the plan, termination due to death, disability or retirement results in immediate redemption of any vested but unredeemed share appreciation rights. Under any other separation of service all vested and unvested share appreciation rights will immediately terminate.

The Westcon Plan provides that in the event of a merger, consolidation, or sale of, all or substantially all of the assets of Westcon, or upon a dividend or other distribution, recapitalisation, share split or other similar corporate transaction, as more fully described in the Westcon Plan, the compensation committee may adjust: the number and type of shares (or other securities) that may be issued upon the exercise of share options and share appreciation rights yet to be granted; the exercise price per share to be paid for each outstanding grant; and the number and type of shares (or other securities) covered by each outstanding grant. The Westcon board of directors may suspend, amend or terminate the Westcon Plan at any time. However, unless approved by a majority of Westcon shareholders, no amendment will increase the total number of shares. In addition, no termination of the Westcon Plan or action by the Westcon board of directors in amending or suspending the Westcon Plan will affect or impair the rights of an option holder under any share option or share appreciation right previously granted.

All share options expire 10 years from the date of grant. Share appreciation rights issued in the years ended29 February 2008 and 28 February 2007 vest in equal instalments over three years from the date of grant, are voluntarily redeemable in cash in equal instalments over three years beginning with the date of each vesting period, and expire on the last redemption date, which is five years from the date of grant. 

In January 2008, Datatec acquired 2 271 of the Westcon Group options included below from a former employee of Westcon Group. 

As of 29 February 2008 4 917 shares were available for future grants. Of the share options outstanding as of 29 February 2008, 4 342 are exercisable only upon the completion of an initial public offering of Westcon's common shares. Additionally, if there is a change in control prior to an initial public offering of Westcon's common shares, the vested share options and share appreciation rights, as well as one-half of the unvested share appreciation rights, will be redeemed and paid based on the appreciation, if any, of Westcon's common shares.

THE LOGICALIS GROUP CASH-SETTLED SHARE APPRECIATION RIGHT SCHEME 2005 ("THE LOGICALIS SAR SCHEME")
Under the terms of the Logicalis SAR Scheme, SARs are granted annually to senior managers. The scheme is cash-settled which requires an annual valuation of Logicalis to mark the liability to the valuation share price and to establish both a grant price for new awards and the exercise price for vested SARs. Fifty percent of the SARs vest after 24 months and the remainder after 36 months. All rights lapse if not exercised by the end of the fifth year after issue. There are certain headline earnings performance conditions which govern the vesting of each award.

Details of the three annual grants of SARs under the Logicalis SAR Scheme made to date are given in the table below:

ANALYSYS MASON SHARE BASED REMUNERATION
During the year ended 29 February 2008, Analysys Mason introduced a performance share plan to replace a performance warrant scheme and a shadow option scheme under the terms of which share-based remuneration had been granted in previous years. Details of the grants under these schemes are given in the table below.

THE WESTCON SA CASH-SETTLED SHARE APPRECIATION RIGHT SCHEME 2006 ("THE WESTCON SA SAR SCHEME")
Under the terms of the Westcon SA SAR Scheme, SARs are granted annually to senior managers. The scheme is cash-settled which requires valuation of Westcon SA (and agreed other entities under management control) to mark the liability to the valuation share price and to establish both a grant price for new awards and the exercise price for vested SARs. The SARs vest three years after the grant date. All rights lapse if not exercised by the end of the fifth year after issue. There are certain headline earnings performance conditions which govern the vesting of each award.

THE ONLINE DISTRIBUTION CASH-SETTLED SHARE APPRECIATION RIGHT SCHEME 2006 ("THE ONLINE SAR SCHEME")
Under the terms of the OnLine SAR Scheme, SARs are granted annually to senior managers. The scheme is cash-settled which requires valuation of OnLine to mark the liability to the valuation share price and to establish both a grant price for new awards and the exercise price for vested SARs. The SARs vest three years after the grant date. All rights lapse if not exercised by the end of the fifth year after issue. There are certain headline earnings performance conditions which govern the vesting of each award.

NON-EXECUTIVE DIRECTORS' REMUNERATION
During the year ended 29 February 2008, non executive directors received fees as approved by the 2007 annual general meeting as follows:

• Chairman of the Board US$120 000
• Deputy Chairman US$75 000 
• Senior non-executive director's fee US$65 000 
• Non-executive director's fee US$55 000 
• Chairman of the Audit, Risk and Compliance Committee US$30 000
• Chairman of the Remuneration Committee US$10 000 
• Chairman of the Nomination Committee US$5 000 
• Member of the Audit, Risk and Compliance Committee US$15 000 
• Member of the Remuneration Committee US$7 500 
• Member of the Nomination Committee US$5 000 
• Trustee of Datatec trusts US$5 000 

The approved non-executive directors' annual remuneration above will also apply for the year ending 28 February 2009. 

The terms and conditions of appointment of non executive directors are available on request from the company secretary. 

EXTERNAL APPOINTMENTS
Subject to the approval of the Board, executive directors are permitted to hold a directorship in one non-Group listed company and to retain the fees payable from this appointment. 

Mr Montanana is a non-executive director and member of the Audit Committee of Versatile Systems, Inc. a Toronto (TSX:VV) and London (AIM:VVS) listed Canadian company which provides hardware and software technology to enable transaction-based business solutions based on its series of proprietary software products "Mobiquity^TM Suite" in various industry verticals. Mr Montanana has held this directorship since 1998 and does not receive any remuneration for his services. He holds 2 578 571 shares and 125 000 share options in Versatile Systems, Inc. 

DIRECTORS' SERVICE CONTRACTS
In order to properly reflect their spread of responsibilities, executive directors have employment contracts as follows: J P Montanana has contracts with Datatec International Holdings Limited and Datatec Limited; D B Pfaff had contracts with Datatec International Holdings Limited and Logicalis Group Services Limited; and Ivan Dittrich has contracts with Datatec Limited and Datatec International Holdings Limited. The employment contracts of all executive directors are terminable at six months' notice by either party. 

All the non-executive directors have letters of appointment with Datatec Limited and/or Datatec International Holdings Limited. Under these contracts, non-executive directors retire in accordance with the articles of association of the Company, which is every three years. Retiring directors may offer themselves for re-election.

DIRECTORS' EMOLUMENTS
The following tables set out an analysis of the pre-tax remuneration, including bonuses, for individual directors who held office during the financial years ended 29 February 2008 and 28 February 2007. The Remuneration Committee has approved the executive directors' emoluments. The external auditors have independently confirmed the emoluments disclosed below. Please refer to page 80 for details of directors' share based incentive awards.

 

DIRECTORS' SHARE INTERESTS
The interests of directors who held office at 29 February 2008 in ordinary shares of the Company:

In addition to his holding of Datatec shares shown above, Mr Montanana holds the following American call options over Datatec shares with a strike price of R35,00 per option which he purchased on 7 February 2008: 500 000 expiring on 6 February 2009 at a premium of R3,23 per option; and 500 000 expiring on 5 February 2010 at a premium of R5,86 per option. 

During the financial year, Mr Montanana sold 300 000 three-year American call options over Datatec shares with a strike price of R9,48 per option which he had purchased on 28 February 2005 at a premium of R4,32 per option.

When he was appointed a director on 1 March 2008, Mr Dittrich held no Datatec shares.

At the date of this annual report, there have been no changes to the total shareholding of the current directors of the Company since 29 February 2008.

DIRECTORS' SHARE-BASED INCENTIVES
Directors holding office at 29 February 2008 held the following Datatec share options (under the Datatec Scheme):

The total gain made by directors on exercise during the financial year of the options shown above was US$5 833 000 (2007: no options were exercised by directors). The options above are not subject to any performance conditions and expire 10 years after the grant date in accordance with the rules of the Datatec Share Option Scheme. 

Mr Dittrich held the following share options when he was appointed a director on 1 March 2008: 12 670 at a grant price of R10,96; 8 750 at a grant price of R8,88; and 17 500 at a grant price of R9,69. 

Directors holding office at 29 February 2008 held the following share appreciation rights (under the SARS):

Mr Dittrich held the following share appreciation rights when he was appointed a director on 1 March 2008: 41 047 at a grant price of R13,76; 23 093 at a grant price of 27,22; and 23 810 at a grant price of R38,64. 

Directors holding office at 29 February 2008 held the following conditional awards (under the LTIP):

Mr Dittrich held 68 253 conditional awards (under the LTIP) when he was appointed a director on 1 March 2008.

Mr McCartney holds the following share-based incentives in Westcon Group, Inc. which he was awarded as Chairman of Westcon Group prior to joining the Datatec Board: 1 000 share options with an exercise price of US$1 280 per share; 49 SARs with an exercise price of US$1 990 per share; and 42 SARs with an exercise price of US$2 590 per share.