104 / 146
AFROCENTRIC GROUP
100
GOVERNANCE
REMUNERATION COMMITTEE REPORT CONTINUED
In respect of the 2016 financial year, the Remuneration
Committee approved a total STI pool of R60.568 million for
distribution (2015: R71.86 million). Executive STIs represented
16.70% of the total STIs paid to participants during the reporting
period. Participants had to be in the employ of the Company at
the time of the STI payment.
83.30
STI paid to Executives
STI paid to Participants
16.70
2016 STI distribution (%)
KEY REMUNERATION DECISIONS TAKEN DURING
THE PERIOD OF REVIEW
In line with the Group’s strategic direction and its responsibility
to employ fair and sustainable remuneration practices, the
Remuneration Committee took a number of key decisions
during the reporting period:
• Review of the remuneration policy to ensure alignment to
the Group’s strategic imperatives
• Review of the short-term incentive scheme
• Approval for the development and implementation of an
LTI scheme
• Review and approval of executive remuneration increases
• Evaluated executive performance as input into the
determination of executive short-term incentives
• Review and recommendation of Board Fees for the
reporting period
• Executive performance scorecard was reviewed to ensure
that the interests of Directors were aligned to the interests
of shareholders and creating value, with focus on drivers
such as financial growth, risk management and
strategic impact
• Review of the remuneration and reward structures to
include LTIs, with the view to attract, engage, motivate and
retain key employees
• Review of remuneration in respect of Non-executive
Director’s fees
• Appointments of Executive Directors – remuneration as well
as terms and conditions of employment
REMUNERATION ELEMENTS
GUARANTEED REMUNERATION INCREASES
At 30 June 2017, a total of approximately 1 514 of our
employees were covered under collective bargaining
agreements with NEHAWU: In June 2016, 6.8% of the
guaranteed remuneration for employees in the bargaining unit
was made available for annual increases, compared with 6.5%
and 6.45% for the non-bargaining unit and executives
respectively. This resulted in an overall increase in the Group’s
salary bill of 7.08% (excluding executives).
Accordingly, we continue remunerating our employees in
the bargaining unit appropriately relative to the industry and
continue to seek measures to reduce any pay differentials.
VARIABLE REMUNERATION
Short-term incentive (STI)
STIs are delivered through our discretionary STI arrangements.
The aim of STIs is to drive sustainable results within an agreed
risk appetite framework and to encourage behaviours that are
consistent with our values and aligned with the best interests of
our stakeholders.
As a general rule, all STI plans are funded from our overall STI
pool, subject to sustainability and affordability. With these
principles in mind, the STI scheme introduced in 2015 was
reviewed at the behest of the Remuneration Committee and the
Board. The revised schemes saw a review of participation and
award linked to the amount of risk taken by the role and a
bonus was introduced in respect of employees where risk
taking is limited. STI payments, typically made in cash, are
subject to achievement of individual performance and minimum
Group performance standards in respect of EBIT (“Earnings
Before Interest and Tax”) as well as non-financial indicators set
by the Remuneration Committee.
STI participation is discretionary and therefore there is no right
to a performance incentive award in any given year. At an
individual level, STIs are determined primarily on the basis of
performance, employees performing below a minimum
acceptable level are not eligible for consideration for an STI
award. This principle is central to all variants of STI schemes.
STI metrics and performance ranges will be set each year by
the Remuneration Committee of the Board for application in the
coming financial year.
A combination of financial and non-financial metrics is used to
determine incentive amounts to reduce the risk of unintended