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:
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.
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.
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.
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:
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