Statement from the Chairman of the Board Remuneration Committee

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This Remuneration Report was prepared by the Remuneration Committee and approved by the board. The board believes that a properly constituted and effective Remuneration Committee is key to improving the link between pay and performance. The committee consists entirely of non-executive directors, and executive directors are not involved in determining their own remuneration packages. This report describes our remuneration policy and directors' remuneration for the 2010 financial year.

Overview

This has been an unprecedented year in that remuneration has been widely discussed by regulators, politicians and the public across the jurisdictions in which we operate. It is incumbent on a public company to reflect upon these changes.

The committee, in addition to its regular business, has reviewed a comprehensive survey of the new remuneration regulations and changing attitudes in all our core geographies. An extensive gap analysis was done to capture the extent of the changes required of us and we have received independent confirmation that this analysis was comprehensive and robust. There are some subtle nuances and differences in the requirements across the geographies in which we operate.

We have concluded that Investec's long-standing fundamental remuneration philosophies are consistent with these requirements. Our overall remuneration philosophy and practices have thus remained largely unchanged from the prior year. At the level of operational implementation we have, however, made some changes to the detail of our approach in order to be more closely aligned with these new requirements. We have worked hard at closing any gaps and believe we comply with the substance of these various regulations.

The committee continues to consider remuneration policies and packages of the executive directors, persons discharging managerial responsibilities, a number of other senior and highly paid employees across the group, as well as paying specific attention to the rewards allocated to employees within the Internal Audit, Compliance and Risk divisions.

Talent management and the retention of senior management and executives remained key items on our agenda during the year. We are conscious of the need to constantly refresh the means of incentivising our staff in order to meet the pressures of competition in our labour markets within the context of a much changed global landscape.

This has been an unprecedented year in that remuneration has been widely discussed by regulators, politicians and the public across the jurisdictions in which we operate

Remuneration in context

The details of our remuneration philosophy, practices and programmes are detailed later in this report.

In summary, we recognise that banks have to divide the return from their enterprises between the suppliers of capital and labour and the societies in which they do business, the latter through taxation and corporate social responsibility activities. Our global remuneration philosophy seeks to maintain an appropriate balance between the interests of these stakeholders, and is closely aligned to our core values and philosophies which include risk consciousness; meritocracy; material employee ownership; and an unselfish contribution to colleagues, clients and society.

Over the last five years our consolidated compensation ratio has been between 35% and 40%, with a 10 year average of 42%, reflecting a key emphasis on balancing risks, rewards and incentives. We note that several investment banks which used to operate at higher ratios have more recently reduced to this level. We encourage our employees to be shareholders and thus also derive benefits from the organisation through the returns on their shareholdings. The proportion of shares owned directly and indirectly by employees is approximately 15%.

Remuneration and effective risk management

Risk management is embedded in the organisational culture from the initiation of transactional activity through to the monitoring of adherence to mandates and limits. The Board Risk and Capital Committee determines the categories of risk, the specific types of risks and the extent of such risks which the group should undertake, as well as the mitigation of risks and overall capital management and allocation process. This is executed via a number of forums and internal processes on a day to day basis, with risk functions that are both embedded in business units as well as subject to oversight by independent central risk functions.

We have, for in excess of 10 years, applied a variable performance reward model which is closely linked to business profit performance using a realised Economic Value Added (EVA) model against pre-determined targets above risk and capital weighted returns. Independent risk committees approve all limits and risk exposures. In terms of the EVA structure, capital is allocated based on risk and therefore the higher the risk, the higher the capital allocation and the higher the hurdle return rate required. This model, which has remained largely unchanged for several years, ensures that risk and capital management form the basis for key processes at both a group and transaction level thus balancing the rewards between all stakeholders.

The persons responsible for alignment of all stakeholder interests are the various risk managers of the group as well as the group executive whose awards are not linked to specific performance based on a formula but on the overall performance of the group taking into consideration financial performance, compliance with culture and values and numerous other qualitative factors set out later in this report.

Year in review

In addition to the information provided above, key points to note for the period under review include:

•	Investec's recurring revenue base and operational diversity have continued to support profitability across its core geographies. Core capital and liquidity ratios remain sound and the group has reported attributable earnings of £309.7 million (2009: £269.2 million). Further information on our risk management indicators, policies and procedures and the group's performance can be found in Financial review and Risk management
•	The total staff compensation to operating income ratio is 36.1% (2009: 34.9%)
•	£30.1 million of the current year's variable remuneration has been paid in the form of share awards and deferred (representing 16.6% of our variable remuneration expense for the year)
•	Non-executive directors will receive a modest increase in their fees in the forthcoming year, roughly in line with inflation
•	Our total shareholder return was 90.6% for Investec plc in Pounds Sterling and 65.1% for Investec Limited in Rands. This compares to a return of 49.8% for the FTSE 350 General Finance Index and a return of 50.4% for the FTSE 100 Index. Towards the end of our financial year, Investec plc was included as a new entrant to the FTSE 100 index. Since listing on the London Stock Exchange in 2002, Investec plc has outperformed the FTSE 350 General Finance Index and the FTSE 100 Index (see graph in Governance section)
•	Executive directors hold 1.6% and 2.9% of the issued share capital of Investec plc and Investec Limited, respectively. Non-executive directors hold 1.1% and 1.6% of the issued share capital of Investec plc and Investec Limited, respectively (see table in Audited information)
•	Investec plc issued 2.2 million ordinary shares and Investec Limited issued 0.7 million ordinary shares to the staff share schemes during the year.

Looking forward

The Remuneration Committee will continue to ensure that reward packages remain appropriately competitive, provide an incentive for performance, and take due regard of our culture, values, philosophies, business strategy, risk management and capital framework. The committee will keep the existing remuneration arrangements, as discussed in this report, under review during the 2011 financial year, particularly taking cognisance of any additional regulatory and market driven remuneration reform proposals. Where appropriate, we will continue to consult shareholders and shareholder bodies on any significant proposed changes in remuneration policy The committee unanimously recommends that you vote to approve this report at the 2010 annual general meeting

On a personal note

Work volume necessitated the committee meeting regularly during the year. Following the period under consideration, we will lose Sir Chips Keswick to whom we express thanks for his perceptions and experience over the last eight years. In addition, we welcomed Sir David Prosser to the committee during the year.

We have been ably supported in our work by the internal support teams led by the Company Secretariat with Human Resources, the Staff Share Scheme division and line management input. Recommendations from the executive which are considered by the committee have already been through a rigorous process in separate business unit and group panels. Our external support is led by Hewitt New Bridge Street as our formal independent advisors, whom we reappointed during the year and, where appropriate, we obtain legal advice from Linklaters, one of the group's legal advisors.

While the committee continues to meet without executive directors present we did hold a specific meeting with the CEO, MD and FD to discuss the consequences of the changing remuneration landscape. The group Chairman also attended this and some other meetings. We remain determined to continue to strike the appropriate balance between the need for operational flexibility for executive management and for overall control for the committee.

We thank the executives and internal teams for their support and assistance in allowing the committee to operate efficiently and meet its mandate and objectives.

Signed on behalf of the board

George Alford
Chairman, Remuneration Committee

15 June 2010