Page 94 - Capricorn IAR 2020

RISK REPORT REMUNERATION REPORT
BOARD SUSTAINABILITY AND ETHICS REPORT
Elements of pay
The table below sets out an overview of the elements of pay applicable to Capricorn Group employees:
Fixed remuneration and benefits
Variable remuneration
Element
Basic salary
Benefits
STI plan
LTIs
Detail
The fixed element of remuneration is referred to as basic salary or Total Guaranteed Pay (“TGP”).
Benefits include membership of a pension fund and medical aid, to which contributions are made by both the employee and the company. Benefits may also include mortgage bond interest subsidies and housing, car, entertainment or other allowances, depending on the job level of the employee. Company contributions are calculated as part of the employee’s cost to company.
The Group operates a bonus pool STI plan, in which all employees are eligible to participate. The bonus pool is funded from the consolidated Group operating profit and is varied according to the Group’s performance during the year, as is expanded upon in the STI section below. A further enhancement to the policy included the allocation model to ensure that both Group as well as business unit performance is taken into consideration in the determination of the payout. A further alignment was done to ensure that the quantum of payouts per job level is benchmarked.
LTI awards take the form of share appreciation rights, conditional shares, or a combination of both. Most awards are subject to vesting conditions relating to Group performance, measured over a three-year performance period. In instances where retention is required, conditional shares are awarded, which are subject to a vesting condition of continued tenure within the Group. In addition, employees from a specified grade level may participate in the Group’s share purchase scheme to purchase Capricorn Group shares at the volume-weighted average price over the previous 12 months with the option of an interest- free loan repayable over nine years. Full ownership of these shares vests after three to five years.
Annual remuneration adjustments are effective on 1 September every year and increases are not guaranteed. During this process, remuneration structures and pay ranges are evaluated and adjusted where necessary, based on each individual’s salary compared to the salary scales. The following aspects are considered:
• Employee’s performance review
• Formal salary survey conducted to determine local and regional pay practices
• Adjustment of salary scales to reflect any market movement
Short-term incentives (“STIs”)
The Group has an STI plan which aligns with market best practice and operates in the same manner for all employees in the Group. A bonus pool from which all STIs are paid is calculated based on consolidated Group profit.
The percentage of profit which forms the pool is modified according to Group performance during the year, relative to profit before tax and return on equity targets, which are set yearly in advance. Where company performance is below the threshold level, no bonus pool will accrue for senior management and executives.
Each individual’s STI is calculated based on individual performance and job grade, informed by the total pool. Where an employee’s performance is assessed to be below expectation, that employee will not qualify for any STI payment during the year.
The Remco approves the individual performance scores for the executive management teams of the different entities.
The maximum performance incentive remuneration of an employee is limited to twice the on-target incentive.
Entities acquired during a financial year are gradually phased in to ensure alignment, but no disruption, to their operational success.
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