Remuneration overview

Our approach to remuneration is consistent with, and supports, our strategic value drivers and purpose and is underpinned by the establishment of equitable market-related pay practices.

Remuneration policy summary

Remuneration strategy

Imperial is committed to attracting, retaining and motivating a skilled and professional workforce that is effectively managed within a performance-driven environment, ensuring the long-term sustainability and transformation of the group in alignment with its strategy.

Remuneration philosophy

Imperial's reward philosophy provides the foundation for our guiding principles, which in turn determine how reward processes operate.

The group's reward philosophy aims to:

• Implement fair and equitable pay structures aligned to best practice.
• Recruit high-performing talent with relevant skills in a highly competitive labour market.
• Retain employees who enhance the group's performance and support the achievement of its strategy and vision.
• Motivate and reward individual and team performance enabling ongoing growth and sustainability.
• Recognise business-specific goals and reward employees appropriately for achieving them.
• Manage the total cost of employment in a cost-effective and appropriate manner, aligned with the group's core values and strategic objectives.
• Enable transformation across the group with remuneration practices that are fair, equitable and supportive of diverse needs and free of unfair discrimination.
• Comply with applicable legislation, organisational policies and conditions of service.

Remuneration principles

The remuneration principles that underpin our remuneration policy are:

Rewarding our people has a direct impact on operational expenditure, performance, strategic delivery and execution, organisational culture, transformation, employee behaviour and ultimately the sustainability of the group. The group's remuneration policy seeks to attract and retain quality employees at all levels. Remuneration is structured to be competitive and relevant in the sectors in which the group operates, and businesses and functions review their remuneration policies regularly.

Elements of remuneration

Fixed remuneration Fixed remuneration is the total guaranteed package before short-term incentives.		Annual short-term incentives All executives are eligible for a performance-based short-term incentive.
Share-based long-term incentives The group has two long-term incentive plans in place and participation is based on a range of criteria.		Other benefits These include participation in contributory retirement schemes.

Annual short-term incentive criteria

The short-term incentive criteria differ depending on the position of each executive and the business or function in which they operate.

F2021 criteria			F2022 criteria
Revenue growth for the group and divisions The measurement starts to pay out above a base target for year-on-year organic revenue growth. Operating performance for group and divisions The measurement starts to pay out above a base target for year-on-year organic earnings before interest and tax (EBIT) growth. Group HEPS growth The measurement starts to pay out above a base target for HEPS growth. Group ROIC The base target for ROIC is the weighted average cost of capital (WACC). Divisional free cash conversion The measurement starts to pay out above a base target of free cash conversion. Strategic execution The measurement tracks the achievement of specific KPIs related to the group's six strategic business pillars. These strategic goals and targets are cascaded through the organisation. South African transformation targets – measurement of executive committee members with group responsibility. This measurement is based on sub-measurements for the organisation as a whole, and at divisional level: Management control. Employment equity. Skills development. Growth in black top, senior and middle management. Implementation of a strategic talent management plan and the development of a three to five-year succession plan for key staff members.			Revenue growth for the group and divisions The measurement starts to pay out above a base target for year-on-year organic revenue growth. Operating performance for group and divisions The measurement starts to pay out above a base target for year-on-year organic EBIT growth. Headline earnings growth for the group and divisions The measurement starts to pay out above a base target for headline earnings growth. ROIC for the group and divisions The base target for ROIC is the WACC. Strategic execution The measurement tracks the achievement of specific KPIs related to the group's strategic business pillars. These strategic goals and targets are cascaded through the organisation.

CEO and CFO short-term incentive performance measures for F2021	Weighting
Group year-on-year organic revenue growth*	10%
Group year-on-year EBIT growth*	10%
Achievement of budgeted cost savings	10%
Achievement of group ROIC target (>0% up to 2% over WACC)	15%
Group year-on-year HEPS growth*	15%
Strategic execution, including achieving transformation targets	40%

*	The threshold is determined as 80% of the group target for each measure. Payment will be zero if the actual is below 80% and will be pro-rated if it is between 80% and 100%.

 

CEO and CFO short-term incentive performance measures for F2022	Weighting
Group year-on-year organic revenue growth*	20%
Group year-on-year EBIT growth*	20%
Achievement of group ROIC target (>0% up to 2% over WACC)	15%
Group year-on-year headline earnings growth*	15%
Strategic execution, including achieving transformation and gender targets	30%
– Digital and IT priorities
– People priorities
– ESG priorities

*	The threshold is determined as 90% of the group target for each measure. Payment will be zero if the actual is below 90% and will be pro-rated if it is between 90% and 100%.

Remuneration implementation summary

Executive remuneration

The group remunerated its executive directors during the year as explained below.