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Remuneration report
Section 02
Remuneration policy

Remuneration philosophy

The purpose of Massmart’s remuneration philosophy is to establish fair and equitable reward levels that will attract, motivate and retain high calibre employees. This is in line with the Group’s culture and values, whilst aligning remuneration with stakeholder interests and best practice in the retail environment.

We strive to ensure that our remuneration policy supports the development and retention of top talent and critical skills. Its purpose is to ensure a workforce that is motivated to successfully develop, implement and support the Group’s business strategy. The focus is on ensuring the long-term growth and success of the Group and the enhancement of stakeholder value.

The desired outcome of our remuneration programmes is to:

  • Provide competitive, equitable and responsible remuneration based on an employee’s skills, performance and contributions to the Group, among other factors
  • Attract and retain the talent necessary to achieve the Group’s business objectives
  • Develop a sense of Group ownership and align the interests of employees with those of its stakeholders
  • Recognise Massmart Division-specific goals and reward employee’s appropriately for their contribution towards achieving those goals
  • Provide opportunities for the potential of greater financial rewards to those who perform well within their job responsibilities



Guaranteed Remuneration

Massmart remains committed to ensuring competitive remuneration packages whilst managing costs.

The guaranteed remuneration of Executive Directors is set according to annual benchmarking using data from the PwC Remchannel, Mercer and the Korn Ferry Hay Group salary surveys, as well as specific benchmarking to other similar sized JSE listed companies. The TGP is benchmarked to the third quartile. Annual TGP increases for Executive Directors are determined by the Remuneration Committee and are aligned to individual performance and the annual salary increase percentage range as set for the Group.

+ Total guaranteed package

The TGP provides a fixed remuneration package, as determined to be appropriate and market-aligned, for each particular level and/or role. TGPs are reviewed annually against market data and increases are awarded on TGP in July each year. The actual percentage increases awarded are determined by taking CPI, business performance, market trends and individual merit into account, whilst also considering salary positioning against the Massmart salary structure and market data.

Basic salary
The basic salary is calculated from the TGP and is used as a basis for the pensionable salary and AIP. Expatriate employees working for Massmart in South Africa receive a basic salary denominated in US Dollars or Euros, as well as additional non-cash benefits e.g. housing, schooling and home leave.

Retirement benefits
All permanent employees are required to belong to a Group-approved retirement fund. The current Group-approved funds are all defined contribution schemes. The funds provide the employee with an opportunity to save for retirement. Life, disability and funeral cover are also provided to all permanent employees. Alexander Forbes has administered the Massmart funds for a number of years. A formal service level agreement is in place that regulates this relationship. The trustees of the funds monitor fund performance on a quarterly basis. The Company contributes 10.5% of pensionable salary to the retirement fund and related insurances. Employees contribute at least 7%. Expatriate employees are paid a cash allowance in lieu of retirement benefits.

Medical aid benefits
It is compulsory for all new permanent Massmart Group employees to join a Company-approved medical plan. The Group has the responsibility of ensuring that appropriate plans are offered by the Massmart Health Plan and that contribution levels are sustainable and affordable for all levels of employees. Expatriate employees are covered by a separate international medical insurance. The Company contributes a portion of the medical aid fund contribution; the difference is contributed by the employee.

Car/travel benefits
Travel allowances, or Company cars, are provided to nominated employees to enable them to perform their duties, as required. The quantum of the allowance or Company car value is determined based on the requirements of each specific level and/or role.


Massmart believes in rewarding employees for performance that is aligned to shareholders’ interests, in particular the sustained creation of shareholder value.

In prior years, various share schemes were established to recognise and reward different levels of employees. In May 2013, the Massmart Share Incentive Plan, that is more closely aligned to the Walmart approach, was approved and replaced all other previous share schemes. No further share options are issued from either the Massmart Holdings Limited Employee Share Trust or the Massmart Black Scarce Skills Trust. Those options which have not yet vested through the above-mentioned Trusts will still vest according to the relevant rules and plans. Massmart offers both short- and long-term incentives as detailed below. The performance measures are set and approved by the Remuneration Committee on an annual basis.

+ Annual Incentive Plan

Short-term incentives:

The AIP aims to incentivise and reward the achievement of the approved financial and non-financial goals and targets.


Executives and employees of a certain staff level are eligible to participate in the AIP, subject to Remuneration Committee approval.

Participating employees can earn an increasing multiple of their monthly basic salary dependent upon achievement against the agreed targets.

Financial performance: As noted in the Chairman’s letter, from 2018 the financial performance metric has been reduced to 80% and continues to measure PBT. The 80% financial metric is calculated as follows:

Group Executives are 100% incentivised on Group Performance, Divisional CEOs are incentivised on 50% of Group performance and 50% on Divisional performance, while Divisional executives are incentivised on 25% of Group performance and 75% of Divisional performance.

Non-financial performance: Executives will, from 2018 onwards, have 20% of their AIP based on non-financial metrics.

At the lower levels of the AIP an individual metric, based on employee performance, is included.

Bonus pay-outs
The bonus pay-out is determined separately for financial and non-financial performance to target:

Financial performance: For business performance below 90% of planned PBT, no incentives are earned. Incentives are capped at performance levels of 107% of planned PBT, unless the Remuneration Committee has approved a super-maximum target for a specific year.

Non-financial performance: For performance below target, no incentives are earned. There is no additional payment for performance above target.

The two incentive portions earned together equal the total bonus payable.

Discretion of the Remuneration Committee
Outside of the AIP, the Remuneration Committee also has the option to provide discretionary awards to reward individual performance. The discretionary awards are capped at not more than 25% of target AIP. If awarded, these incentives are paid annually.

+ Share Incentive Plan

Long-term incentives:

The SIP is a long-term equity-based incentive plan. A combination of Performance Shares and Restricted shares are awarded and granted to qualifying employees.


Full-value share rights are awarded bi-annually to qualifying permanent employees taking into account SARB exchange control regulations.

Initial qualification is based on motivation by the Executive Committees of each of the Divisions. Final approval for participation is provided by the Remuneration Committee.

Operation and instruments
Performance Shares: The performance share plan has specific performance metrics that have been designed to align with Walmart’s metrics and are measured individually against approved Group-level annual nominal sales and ROI targets, over three separate years, with an equal weighting (50% nominal sales and 50% ROI). Each target has a range and the final awards are calculated based on a sliding scale in the range of 50% to a maximum of 150%.

If achieved, the awards are equity-settled at the end of the third year. If performance against either of the targets falls below the minimum of the range, no performance share awards will be earned against that target.

Restricted Shares: Restricted share grants are specifically utilised for retention purposes and vest on a time basis, being one third each at the end of years 3, 4 and 5. There are no performance conditions applicable to the restricted shares. Restricted shares are aimed at the retention of employees with the long-term reward linked to share price growth.

Mix of awards
The plan provides for a mix of performance shares which are awarded annually in April, and restricted shares which are granted annually in September, based on the level of the employee. At Executive levels, the mix is 75% performance shares/25% restricted shares and at other levels, 50%/50%.

Value of awards
Currently, at Executive Director level, the value of the award is 100% of guaranteed package.

In aggregate, all participants, under all Plans, may not exceed 39.5 million shares. Individually, one participant may not exceed four million shares.

The settlement of grants and awards are done primarily through on-market share purchases.

Discretion of the Remuneration Committee
The Remuneration Committee may approve special restricted share grants to employees whom the Company wishes to recognise for extraordinary achievements.

Massmart’s approach to fair and responsible pay

Massmart remains aware of the high levels of inequality in South African remuneration and as such endeavours to remunerate employees fairly, responsibly and transparently. Similarly attraction and retention of key talent and scarce skills remain challenging in a difficult economic environment. The Remuneration Committee has committed to reviewing remuneration at all levels, as well as comparing remuneration between levels, to ensure that progress is made in addressing any inequality identified in the Group, whilst at the same time ensuring that key employees and Executives are remunerated competitively.

Executive pay mix

Anticipated contribution to total annual packages

The Committee believes that over an extended period and subject to business performance, Executives’ total annual remuneration should comprise approximately equal amounts from TGP, AIP and SIP. The amounts received annually under AIP will vary depending on the achievement of the set targets, and those received under the SIP will also vary depending on the business achievement targets and the growth of the Massmart share price.

It is anticipated that about two thirds of Executives’ remuneration should be variable and conditional upon sustainably improving business performance.

+ Non-Executive Director fees

These fees remunerate the non-Executive Directors for their time, responsibilities and commitment to Massmart.

All Committee members complete detailed self-assessments covering the composition, duties, responsibilities, process and effectiveness of the relevant committees. The results of these assessments are collated by the Company Secretary and sent in summarised form to the Chairman for a formal written response. The summarised results, together with the Chairman’s written response, are included in the Board papers at the November Board meeting.

Based on their Board membership and membership of the Board sub-Committees, each independent non-Executive Director receives a fixed fee for their services.

The Board has elected to pay a fixed fee only, without the payment of additional attendance fees. This decision was taken on the basis that many Directors provide expertise that extends beyond the boardroom.

The remuneration of independent non-Executive Directors is reviewed annually by the Remuneration Committee and the Board after a benchmarking exercise against market. Fees are required to be competitive but not necessarily in the top quartile of the market. Recommendations for increases are made to shareholders at the AGM for consideration and approval.

The Walmart-appointed non-Executive Directors do not receive fees from Massmart.

Non-Executive Directors do not qualify for participation in any share plan or incentive scheme.

Proposed fees 2018
Following a recent benchmarking exercise of the upper-quartile of the South African market, the below-mentioned increases are proposed for the non-Executive Directors and the various committee roles. The increases take into account the aggregate fees that each Director will earn given their committee roles. For this reason, the proposed independent non-Executive Directors’ fees of R420,000 are typically lower than the market (upper quartile).

Proposed fees

    2018 Fee   2017 Fee   %
Role   (R’000)   (R’000)   Change
Chairman of the Board   1,575.0   1,500.0   5.0%
Deputy Chairman of the Board   840.0   800.0   5.0%
Independent non-Executive Directors   420.0   400.0   5.0%
Audit Committee Chairman   368.0   350.0   5.1%
Risk Committee Chairman   289.0   275.0   5.1%
Remuneration Committee Chairman   289.0   275.0   5.1%
Nominations and Social and Ethics Committee Chairmen   289.0   275.0   5.1%
Audit Committee member   184.0   175.0   5.1%
Other Board Committee members   147.0   140.0   5.0%
The Remuneration Committee and its role


The Remuneration Committee consists of four non-Executive Directors, of whom the majority are independent. Meetings are held four times per year and more often if deemed necessary. The CEO is a permanent invitee to all Committee meetings. Other nominated Executives attend meetings by invitation. Neither the CEO nor nominated invitees are present when matters relating to their own remuneration are discussed. The Group General Counsel acts as secretary for the Committee.



With a view to making remuneration recommendations for approval by the Board, the Committee shall assist the Board with the following:

  • The development and maintenance of a remuneration policy which, inter alia, sets out:
    • Arrangements for ensuring that the remuneration of Executive Management is fair and responsible in the context of overall employee remuneration in the Group
    • The use of performance measures that support positive outcomes across the economic, social and environmental context in which the Group operates
    • The voting by shareholders on the remuneration policy and implementation report, and the implementation of related measures to address various outcomes of such votes, which policy shall be put to the shareholders at the AGM for endorsement by way of a non-binding advisory vote
    • Reviewing and guiding the drafting and approval of the form for submission to the Board of the remuneration report to be included in the Integrated Annual Report
    • Ensuring that the implementation and execution of the Group’s remuneration policy achieves the policy’s objectives
    • The review of all the benefits, remuneration, incentive and share scheme policies for all employees and non-Executive Directors in the Group
    • Annual evaluation of senior Executives’ salary packages against remuneration paid to Executives of other companies of a similar size, both in South Africa and internationally (where relevant), utilising published surveys or independent consultants performing the specific analysis; and the extent to which Executives have met their performance targets, goals and objectives
    • Recommendation for approval by the Board of performance incentives that are consistent with the Group’s overall objectives and compensation policy
      and reflective of market trends
    • The review of the Group’s retirement plans and medical schemes
      Recommendation of non-Executive Directors’ and Board Committee members’ fees
    • Determination of the Company’s policies regarding the various components and mix of compensation, incentivisation and wealth creation
    • Determination of the cost of Executive compensation to the Company relative to short-, medium- and long-term performance


A full account of the role and responsibilities of the Remuneration Committee is described in the Remuneration Committee Charter and is available on request.









A copy of Massmart’s full Remuneration Policy is available here