Remuneration report
During 2021, the focus was on refining the short-term incentive scheme structures in terms of the mechanics and the delivery model.
Background statement
Remuneration Committee Chairperson’s report
On behalf of the Remuneration Committee (the committee), I am pleased to present AfroCentric’s remuneration report for the year-ended June 2021. This report supplements the information provided in the corporate governance report, highlights the committee’s focus areas for the year, outlines our policies and practices, and addresses the Group’s performance and corresponding remuneration outcomes.
During 2021, the focus was on refining the short-term incentive scheme structures in terms of the mechanics and the delivery model. To that end, the committee approved changes to the performance contracting and the formula for the bonus calculation. These changes will foster clear alignment of executives and general managers’ performance to the business unit objectives and ensure that profitable business units are not subsidising business units that do not achieve the financial targets. It is critical that top performers are rewarded for their individual strategic contributions to the organisation's success.
An additional driver to the strategic incentive scheme amendments was to ensure that the interests of employees (key and critical staff) are aligned with that of shareholders and drive individual, business and Group performance. Furthermore, the amendments seek to enable the retention of key staff who are entrenched in the business and contribute to the success of AfroCentric’s short-term business objectives and longer-term sustainable value creation for members and shareholders.
The committee also approved a single payment point of the various short-term incentive structures within the Group to ensure that employees are incentivised to maintain enhanced performance throughout the entire performance period. This further creates alignment and consistency of incentive structures throughout the organisation and strengthens the direct link between performance bonuses and performance outcomes.
The incentive policies for the Group’s entities in other jurisdictions (Mauritius and Namibia) were strengthened and approved by the committee.
Operating context and performance highlights
The Group set itself an aggressive target of achieving an EBIT deliverable of R806 million for the 2021 financial year after recording a R740 million EBIT in 2020. It is encouraging to report that the Group achieved an EBIT of R794 million despite an uncertain operating context, where the impact of COVID-19 continues to unsettle the environment. The Group also fared well with the other balanced scorecard (BSC) components, where the transformation, governance, culture and strategic impact key performance areas were met, and even partially exceeded in certain instances. To that end, the Group was able to declare bonuses and settle the bonus payments under the strategic and management incentive schemes. The total management performance bonus pool approved for distribution by the committee was R88 million (2020: R88.5 million).
Further detail on the Group’s overall performance is provided in our CEO’s and CFO’s reviews.
Changes to the remuneration and related policies
In keeping with our philosophy of ensuring fair and responsible remuneration, the committee continuously reviews the Group’s remuneration policies and practices to ensure that they remain relevant and responsive to organisational imperatives. No material changes were made to the Group’s remuneration policy for the year under review.
Focus areas
The Remuneration Committee envisages the following focus areas in advancing the organisation’s value proposition:

Shareholder engagement and voting
Shareholder voting results
Resolution | November 2020 |
November 2019 |
Ordinary resolution on non-binding advisory vote on remuneration policy | 93.90% | 96.89% |
Ordinary resolution on non-binding advisory vote on implementation report | 99.33% | 96.89% |
Special resolution on Non-executive Directors’ fees | 99.34% | 99.47% |
Special resolution on general authority to repurchase shares | 99.75% | 99.96% |
The remuneration policy and implementation report were presented for shareholder voting at the AGM held on 10 November 2020. The policy was endorsed by 98% of our shareholders, and the implementation report received an in favour vote of 97%.
As required by the Companies Act and King IV, the following resolutions will be tabled for shareholder voting at the AGM, details of which can be found in the Notice of AGM.
In the event that either the remuneration policy or the implementation report, or both, are voted against by 25% or more, the Board will engage with shareholders to understand concerns raised. This engagement may be done by virtual meeting or in writing and will be implemented at a time after the release of the voting results. Where possible and prudent, objections are taken into consideration when formulating any amendments to the Company’s remuneration policy and implementation report in the following financial year.
Appreciation
I would like to thank my fellow Remuneration Committee members for their contribution and support. It is the view of the Remuneration Committee that the remuneration policy achieved its stated objective of attracting and retaining high-calibre talent within the organisation. I am satisfied that the committee responsibly and professionally discharged its obligations.
Thank you to our shareholders for your support and engagement in 2021.
Dr Shirley Zinn
Remuneration Committee Chairperson
13 September 2021
Remuneration oversight and policies
Remuneration governance
AfroCentric’s remuneration policy, structures and processes are set within a governance framework with designated levels of authority.
SHAREHOLDERS
Approve Non-executive Directors’ fees and nonbinding approval of the remuneration policy and implementation report
BOARD OF DIRECTORS
Approval of the remuneration policy
Provide Group Remuneration Committee with specific mandates
GROUP REMUNERATION
COMMITTEE
Recommends the policy and monitors implementation of the remuneration policy
GROUP CEO
AND EXECUTIVES
Implementation, oversight, communication and formulation of recommended policies and remuneration supported by the Group CFO and Human Capital Executive
While we apply a common remuneration structure across the Group, we differentiate its implementation according to the size and operating models of various entities within the Group.
Remuneration policy design principles
Our remuneration policy provides a framework for managing total remuneration within the Group and supports the Group’s employee value proposition.
Remuneration objectives | ||
Talent motivation and engagement | Ensures strategic alignment with organisational and individual objectives, thus keeping employees engaged. | |
Talent attraction and retention | Manages high-calibre talent for the achievement of strategic objectives. | |
Leveraging the total reward offering and enhancing our employee value proposition | Balances financial and non-financial rewards for a holistic reward mix that is sustainable. |
Remuneration principles
Our people are at the core of our business success as we require highly skilled, competent and experienced employees to drive our business growth. AfroCentric’s remuneration policy is designed to reward employees for their performance and contribution towards value for our shareholders. The following principles govern Group-wide remuneration at all levels:
PAY FOR PERFORMANCE
Pay-for-performance methodology, linking executive reward to business performance. This allows for differentiated increases based on the individual’s contribution and performance.
PARITY AND EQUITY
Ensure external parity is maintained, market relevance, balanced internal equity, and pay adjustments are affordable for the organisation.
TALENT ATTRACTION AND RETENTION
Ensure a remuneration mix that will attract the best talent in the market and retain top talent within the organisation.
PERFORMANCE INCENTIVES
Align executives to shareholder interests by linking STIs and LTIs to performance indicators not limited to financial indicators.
FAIR AND RESPONSIBLE PAY
Internal equity: Ensuring all our employees are appropriately and fairly rewarded for their contributions, irrespective of gender, race, age, ethnicity, religion or sexual orientation.
Pay for performance
Executives’ remuneration is based on their level of accountability, complexity and nature of the role, which is sized relative to the organisation’s turnover, number of employees (including Wage Bill), market cap, assets and net after-tax profitability benchmarked to the external market. The table below shows the relationship between the Group’s strategy, its pay-for-performance philosophy and requirements set out in King IV:
Strategic impact
- Enhancing our operating model
- Stabilising IT systems and enhancing the infrastructure
- Launching and implementing primary care products to create a unique value proposition for the Group
- Delivering a successful medicine capitation model with full value chain optimisation
FINANCIAL (40% WEIGHTING)
GOVERNANCE (10% WEIGHTING)
TRANSFORMATION (10% WEIGHTING)
ORGANISATIONAL CULTURE (5% WEIGHTING)
STRATEGIC IMPACT (35% WEIGHTING)
Our deliverables, contained in our BSCs, are derived from and directly support the Group strategy. The Group BSC cascades to the various business units and is aligned with the business unit and individual performance objectives.
Remuneration arrangements for other employees
Recognising the need to remunerate executive management fairly and responsibly in the context of the overall remuneration, we award higher increases to bargaining unit employees than to executive levels (see Implementation report). Increases for the bargaining unit are negotiated annually with National Education, Health and Allied Workers’ Union (NEHAWU), the recognised labour union, considering various internal and external factors such as affordability, market conditions, and benchmark information. PwC’s Remchannel Salary Survey formed the basis for market benchmark information to facilitate the remuneration review.
Differences in remuneration policy for executives compared to other employees
There are differences in the remuneration policy’s structure for Executive Directors, prescribed officers and other salaried employees, which are necessary to reflect the different levels of responsibility and market practices. The key difference is the increased emphasis on incentives or variable performancerelated pay in senior roles. Lower maximum variable pay limits, as a percentage of guaranteed pay, apply for positions below the executive level, driven by market benchmarks and the relative impact of the role.
Senior executives, general management and key strategic resources at senior management, middle management or specialist levels may participate in both STI and LTI schemes, where these plans are targeted at individuals who have the greatest responsibility for Group performance.
General staff are eligible to participate in a performance-based bonus scheme.
Remuneration model
AfroCentric’s remuneration model balances short-term and long-term financial and non-financial rewards to drive a high-performance culture. The critical components of this model, including policy elements, are illustrated below:
GUARANTEED PAY
This comprises the benchmarked, market-related fixed component of AfroCentric’s remuneration offering set to attract and retain qualified and experienced employees
Base pay | Benefits and allowances |
Market-related salary reflecting individual contribution, roles and responsibilities | Market-related benefits, including medical aid, retirement fund1 and insured benefits such as Group death and disability benefits, Nedbank workplace banking benefits |
Purpose To attract and retain qualified and experienced employees |
Purpose To retain employees and contribute to their overall wellbeing |
Mechanics
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Mechanics
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Maximum opportunity
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Maximum opportunity
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1 | Employees elect participation in either a pension fund or the NEHAWU Provident Fund, the latter being available to NEHAWU members only. |
VARIABLE PAY
Additional financial compensation in the form of STIs and LTIs aligned with the Group’s performance, strategy and value creation
STI scheme | LTI scheme |
Performance-based Group annual incentive schemes
|
Share scheme designed to incentivise the delivery of long-term strategic goals aligned with shareholder expectations |
Purpose
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Purpose To retain, motivate and reward executives and senior management or individuals who influence the long-term sustainability, value creation and strategic objectives of the Group on a basis that aligns their interests with those of the Group’s shareholders |
Mechanics
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Mechanics
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Maximum opportunity
|
Maximum opportunity
|
Number of participants 489 FOR MANAGEMENT 3 193 FOR GENERAL STAFF |
Number of participants 59 |
1 | General management is defined as positions at grade levels E1 to E3 on the Paterson grading scale. |
2 | Senior Management is defined as positions at grade levels D3 to D5 on the Paterson grading scale. |
3 | Management is defined as positions at grade level D2 on the Paterson grading scale. |
STI schemes
The Group relies on various bonus schemes designed to achieve its strategic objectives.
Individual performance below the threshold results in a zero score, and the employee will not be eligible for consideration for the STI award.
Management strategic incentive scheme
The annual strategic management incentive scheme is focused on the executive team and tier two managers, being those who report directly to the executives and employees selected for value contribution as well as scarce and critical skills. This applies to employees whose roles have a direct impact on the Group’s strategic imperatives.
Strategic incentives are calculated as shown below; however, any payment is subject to the achievement of the Group performance scorecard on a sliding scale basis.

Group performance
The Group achieved an EBIT of R794 million compared to a budget of R806 million which falls within an acceptable range (5%) of the target being met.
Management performance bonus scheme
The management performance bonus scheme was introduced during the 2017 financial year at the Remuneration Committee’s request. This scheme targets exceptional performance by rewarding 100% of the guaranteed monthly package and additional bonus payments as given in the rules.
Performance-based bonus
The performance-based bonus scheme was introduced in 2019, with the Remuneration Committee’s support. This scheme is aimed at non-management level employees and ensures an allinclusive performance-based total reward strategy for the Group across all levels.
STIs on termination of employment
There is no automatic entitlement to annual STIs on termination, but it may be considered at the committee’s discretion, considering performance measures during the period. Any such payment will be pro-rated to service. The governing rules require active employment on the date of payment. No bonus will be payable in the case of misconduct or resignation, unless done under extenuating circumstances.
LTI scheme
AfroCentric’s LTI scheme (the vesting share scheme) commenced in November 2017, following approval by the Board and shareholders at the AGM held on 8 November 2017.
The Remuneration Committee approves the allocations for all participants
Malus and clawback
Where defined trigger events take place, provision is made for redress against remuneration through either malus (pre-vesting forfeiture) or clawback (post-vesting forfeiture). Malus and clawback provisions and the application thereof to trigger events are governed by the Group Malus and Clawback policy.
Vesting share scheme
Award mechanism | Linked to job grade and allocated by the committee. The Remuneration Committee has discretion within a range per job grade with a maximum number of shares set per grade. |
Bonus shares | Discretionary allocation by the committee considering scarce skills, personal performance ratings, leadership and potential. |
Vesting | Five-year vesting based on the anniversary of allocation: Year three – one-third, year four – one-third and year five – one-third. |
Participation | Individual participation is reviewed annually by the committee to ensure alignment with the
strategic objectives of the Group, and consideration is given to:
|
Conditions | Share award is conditional to the retention period provided the employee is eligible. |
Performance conditions | Long-term individual performance. |
Remuneration mix

To maintain a high-performance culture and alignment with shareholders through value creation, the total reward mix for the Group CEO, Executive Directors, executives and senior management is geared towards a higher percentage of variable pay ‘at risk’ for achieving stretch goals.
The chart below represents the potential mix of guaranteed pay, STI and LTI for the Group CEO at below, on-target and stretch levels. The below target assumes no variable incentive payments.
Remuneration processes
Service contracts and notice periods
AfroCentric can summarily terminate executive employment for any reason recognised by law in the respective jurisdiction. It is policy that the Executive Directors and executives have employment agreements with the Group that may be terminated with a three-month notice period. Executive Directors may be required to work during the notice period, but, if not, the full notice period may be provided with pay in lieu of notice (subject to mitigation, where relevant).
Non-executive Directors’ remuneration
The table below sets out the remuneration principles applied by the Group for the 2021 financial year for Non-executive Directors. These policies also apply for the 2021 financial year and form the underlying basis for the fees tabled for approval at the AGM to be held on 11 November 2021.
Chairperson | Deputy Chairperson | Directors and Lead Directors | Committee |
Objective | A market-related fee to attract and retain experienced and diverse Non-executive Directors | Fees to reflect the additional responsibilities undertaken
through membership of committees Committee Chairpersons receive an additional amount |
Fee principles |
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Payable | Main Board: quarterly Subsidiary board: monthly |
Per meeting fee payable monthly |