Massmart, through the Remuneration Committee, implements remuneration policies that enable it to recruit, retain and motivate the executive talent needed to achieve superior performance. The Committee, with periodic advice from external executive remuneration consultants, ensures the provision of executive remuneration packages that are competitive with reference to other major South African retail companies, as well as other companies similar to Massmart in their size, spread and complexity.

 

Our executive remuneration policy has three components, being:

  • guaranteed package, specifically the basic salary and benefits including motor vehicles, retirement funding and medical aid;
  • short-term incentives, represented as multiples of basic monthly salary linked to the achievement of targets and/or personal performance. If achieved, these incentives are paid annually; and
  • long-term equity incentives, represented as a percent of guaranteed package in a mix of Performance and Restricted shares.

The Massmart remuneration policy strives for the guaranteed package to align with the median of the market; and the upper quartile of the market for all three components of remuneration combined.

With regard to short-term incentives, Massmart places particular emphasis on generous annual incentives for high performance for both executive directors and executive management. This policy, communicated to and understood by the Group’s executives, codifies a range of performance incentives linked to the approved annual Operating Income targets for both Group and Divisions. Executives can earn an increasing multiple of their monthly basic salary depending upon achievement against these agreed targets. The Committee also has the discretion to reward superior individual performance.

The long-term equity incentive plan ensures alignment of executive reward with shareholders’ interests, in particular the sustained creation of shareholder value. Shareholders approved a new plan in May 2013 which provides for a mix of Performance share awards and grants of Restricted shares. The Performance share awards are linked to approved annual revenue and ROI targets over three separate years. The targets have ranges so that the final amount awarded is based on a sliding scale. If achieved, the awards are share-settled at the end of the third year. Restricted share grants are made for retention purposes and vest on a time basis, one third each at the end of years 3, 4 and 5. The awards and grants are made annually in amounts calculated together on a 70/30 split, based on 25% – 100% of guaranteed packages for eligible employees, at each approved grade level. No consideration is imputed for the issue of awards or grants and for the calculation of subsequent gains.

At least every two years the Committee receives a report prepared by independent remuneration consultants on the recent trends in, and the current levels of, short and long-term executive remuneration in South Africa. Annually the Committee also reviews the Group’s employee benefit funds, being the in-house medical scheme and the provident and pension funds, considering their governance, performance, financial stability and the general principles central to the benefit levels being applied.

Top three executives’ salaries

King III recommends that the salaries of the top three executives, excluding executive directors, should be disclosed. Due to their specialised retail skills, the highly competitive South African retail environment and the employees’ value to Massmart, the Board does not wish to disclose this information for each of the individuals but has instead disclosed the total salaries of the three employees concerned.
During the year ended December 2013, the top three executives’ combined salaries (comprising basic salary, motor vehicle, medical aid and retirement benefits) were R23.6 million (26 weeks ended Dec 2012: R14.7 million).

Non-executive directors’ fees

The Board’s policy is to pay non-executive directors’ fees that are competitive but not in the top quartile. As noted in the ‘Our Business’ section on the web, attendance fees are not paid. The Walmart-appointed non-executive directors do not receive fees from Massmart. The following fees for the 2014 financial year will be proposed at the May 2014 Annual General Meeting:

 

 

2014
2013
R
R
Chairman of the Board
871,000
822,000
Deputy Chairman
625,000
590,000
Directors
259,000
244,000
Committee Chairmen
252,000
238,000
Committee Members
120,000
113,000

 

 

_0000_Chris Seabrooke.jpg

Chris Seabrooke
Chairman of the Remuneration Committee

10 April 2014

Massmart, through the Remuneration Committee, implements remuneration policies that enable it to recruit, retain and motivate the executive talent needed to achieve superior performance. The Committee, with periodic advice from external executive remuneration consultants, ensures the provision of executive remuneration packages that are competitive with reference to other major South African retail companies, as well as other companies similar to Massmart in their size, spread and complexity.

 

Our executive remuneration policy has three components, being:

  • guaranteed package, specifically the basic salary and benefits including motor vehicles, retirement funding and medical aid;
  • short-term incentives, represented as multiples of basic monthly salary linked to the achievement of targets and/or personal performance. If achieved, these incentives are paid annually; and
  • long-term equity incentives, represented as a percent of guaranteed package in a mix of Performance and Restricted shares.

The Massmart remuneration policy strives for the guaranteed package to align with the median of the market; and the upper quartile of the market for all three components of remuneration combined.

With regard to short-term incentives, Massmart places particular emphasis on generous annual incentives for high performance for both executive directors and executive management. This policy, communicated to and understood by the Group’s executives, codifies a range of performance incentives linked to the approved annual Operating Income targets for both Group and Divisions. Executives can earn an increasing multiple of their monthly basic salary depending upon achievement against these agreed targets. The Committee also has the discretion to reward superior individual performance.

The long-term equity incentive plan ensures alignment of executive reward with shareholders’ interests, in particular the sustained creation of shareholder value. Shareholders approved a new plan in May 2013 which provides for a mix of Performance share awards and grants of Restricted shares. The Performance share awards are linked to approved annual revenue and ROI targets over three separate years. The targets have ranges so that the final amount awarded is based on a sliding scale. If achieved, the awards are share-settled at the end of the third year. Restricted share grants are made for retention purposes and vest on a time basis, one third each at the end of years 3, 4 and 5. The awards and grants are made annually in amounts calculated together on a 70/30 split, based on 25% – 100% of guaranteed packages for eligible employees, at each approved grade level. No consideration is imputed for the issue of awards or grants and for the calculation of subsequent gains.

At least every two years the Committee receives a report prepared by independent remuneration consultants on the recent trends in, and the current levels of, short and long-term executive remuneration in South Africa. Annually the Committee also reviews the Group’s employee benefit funds, being the in-house medical scheme and the provident and pension funds, considering their governance, performance, financial stability and the general principles central to the benefit levels being applied.

Top three executives’ salaries

King III recommends that the salaries of the top three executives, excluding executive directors, should be disclosed. Due to their specialised retail skills, the highly competitive South African retail environment and the employees’ value to Massmart, the Board does not wish to disclose this information for each of the individuals but has instead disclosed the total salaries of the three employees concerned.
During the year ended December 2013, the top three executives’ combined salaries (comprising basic salary, motor vehicle, medical aid and retirement benefits) were R23.6 million (26 weeks ended Dec 2012: R14.7 million).

Non-executive directors’ fees

The Board’s policy is to pay non-executive directors’ fees that are competitive but not in the top quartile. As noted in the ‘Our Business’ section on the web, attendance fees are not paid. The Walmart-appointed non-executive directors do not receive fees from Massmart. The following fees for the 2014 financial year will be proposed at the May 2014 Annual General Meeting:

 

 

2014
2013
R
R
Chairman of the Board
871,000
822,000
Deputy Chairman
625,000
590,000
Directors
259,000
244,000
Committee Chairmen
252,000
238,000
Committee Members
120,000
113,000

 

 

_0000_Chris Seabrooke.jpg

Chris Seabrooke
Chairman of the Remuneration Committee

10 April 2014