Introduction
Imperial is acutely aware of the importance of fair and transparent remuneration policies and practices at all levels of the organisation.
We strive to ensure that our governance and disclosure relating to executive remuneration is transparent and that we do not compromise unduly on performance criteria when external factors outside our control stifle or enhance performance.
Throughout the group, we attempt to compensate individuals fairly for a specific role, with due regard to their skills and performance. The compensation of most of our unionised employees is determined collectively or based on sector norms. We strive to maintain positive day-to-day working relationships with our unionised employees, and to balance their right to industrial action with the rights of the group to conduct its activities.
Remuneration policy and implementation
At the 2017 AGM, 93,7% of shareholders voted in favour of the group's remuneration policy and the implementation of the remuneration policy, slightly down on the 98% in the previous year. Although a non-binding advisory vote, the board continues to take into account the views expressed by shareholders in its deliberations and remains deeply committed to responsible conduct, sound governance and transparency regarding executive compensation.
In keeping with the recommended practices contained in King IV, the committee tables both the remuneration policy and the remuneration policy implementation of the group for approval by shareholders by separate non-binding advisory votes.
Key focus areas
The group undertakes regular benchmarking of the remuneration packages of the CEO as well as executive directors and senior staff members with the assistance of PricewaterhouseCoopers.
The committee also reviews and recommends board fees payable to non-executive directors.
The committee further considered and approved:
- The general composition of executive remuneration packages.
- The criteria for bonus and incentive awards.
- Executive bonuses and incentive awards in accordance with set criteria.
- Executive and general long-term incentive awards.
- The CEO's remuneration.
Committee chairman
The committee is chaired by RJA Sparks, who is the lead independent non-executive director.
Role of the committee
The committee advises and guides the board on:
- Accurate and transparent disclosure of directors' remuneration.
- The establishment and implementation of remuneration policies for non-executive directors, executive directors and other executives, to ensure that the company remunerates directors and executives fairly and responsibly.
- Approval of the general composition of remuneration packages and the criteria for executive bonus and incentive awards.
- Increases to non-executive directors' fees.
- Material changes to the group pension and provident funds and medical aid schemes when appropriate.
- The administration of share-based incentive schemes.
Committee membership
At year-end, the members of the remuneration committee were RJA Sparks (chairman), SP Kana, P Langeni and A Tugendhaft. All are independent non-executive directors, with the exception of Mr Tugendhaft who is a non-executive director.
The group CEO and CFO attend committee meetings by invitation and assist the committee in its deliberations, except when issues relating to their own remuneration and performance are discussed. No director is able to decide his or her own remuneration.
Meeting attendance
| Member | Regular meetings | ||
| RJA Sparks* (chairman) | 3/3 | ||
| SP Kana* | 3/3 | ||
| P Langeni* | 2/3 | ||
| A Tugendhaft | 3/3 |
* Independent non-executive director.
Remuneration policy
The group's remuneration policy and the remuneration policy implementation was approved by shareholders at the AGM on 31 October 2017. In keeping with the recommended practices contained in King IV, both the remuneration policy and the remuneration policy implementation of the group will be tabled for approval by shareholders by separate non-binding advisory votes at the AGM on 30 October 2018.
Should 25% or more of the voting rights exercised at the AGM be voted against the remuneration policy and/or the implementation the board will in good faith start:
- An engagement with dissenting shareholders to ascertain the reasons for the dissenting votes.
- Taking steps to address valid objections and concerns raised, which steps may include amending the remuneration policy or clarifying or adjusting remuneration governance and/or processes.
The board will also disclose:
- Which shareholders were engaged and the manner and form of engagement to ascertain the reasons for dissenting votes.
- The steps taken to address valid objections and concerns.
Determination of performance incentives
Imperial has various formal and informal frameworks for performance management that are directly linked to either increases in total cost to company or annual short-term incentive bonuses. Performance management and assessment sessions take place regularly throughout the group, where company performance, personal achievement of key performance indicators (KPIs), and delivery on key strategic imperatives are discussed.
| 2018 | 2017 | |||
|---|---|---|---|---|
| Total number of employees | 48 339 | 49 346 | ||
| Total compensation paid to employees (Rm) | 17 744 | 16 623 | ||
| Total compensation as a % of revenue | 14 | 14 |
Remuneration breakdown
The group's employees are key determinants of its success. Employee remuneration, particularly guaranteed pay, is a significant component of the group's total operating costs. 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 divisions review their remuneration policies regularly.
Salaried employees
| Cost to company | Short-term incentives | Long-term incentives | Other benefits | |||||||
|
Divisions pay short-term bonuses aligned to industry best practice and in some cases include a guaranteed bonus equal to one month’s salary. However, in the majority of cases bonuses depend on the performance of the individual and business in which they are employed. |
Only salaried employees at senior management level qualify for long-term incentives. |
Pension and provident fund, medical aid (includes both regular and budget options). |
Employees paid by the hour
| Cost to company | Short-term incentives | Long-term incentives | Other benefits | |||||||
Annual increases in remuneration and bonuses generally determined at industry level through collective bargaining and negotiations between the industry and trade unions. The group aims to remunerate employees fairly and in line with sound business and remuneration principles, beyond minimum wage. Increases for deserving employees are determined based on merit. Where appropriate, employees receive ongoing training and promotions, with concomitant rate increases. These promotions are discussed and authorised by both supervisors and line management. |
Bonuses are determined annually in line with agreements signed with various unions. Where appropriate, certain individuals are awarded additional bonuses in line with their individual performance. These bonuses are reviewed and approved by divisional management. |
No long-term incentives. |
Pension and provident fund (compulsory), and medical aid (includes both regular and budget options. Some hourly paid employees belong to bargaining council medical schemes and pension funds). |
Executive directors and prescribed officers
Policy
Executives are responsible for leading others and taking significant decisions about the short- and long-term operation of the business, its assets, funders and employees. They require specific skills and experience and are held to a higher level of accountability.
Imperial's remuneration policy is formulated to attract and retain high-calibre executives and motivate them to develop and implement the group's strategy to optimise long-term shareholder value. The group's remuneration policy also aims to align the entrepreneurial ethos and long-term interests of senior managers and executives with those of shareholders.
The remuneration policy is intended to conform to best practice. It is structured around the following key principles:
Total rewardsare set at levels that are responsible and competitive within the relevant market |
Incentive-based rewardsare capped and earned through the achievement of demanding growth and return targets consistent with shareholder interests over the short, medium and long term |
Incentive plans, performance measures and targetsare structured to operate soundly throughout the business cycle |
The design and implementation of long-term incentive schemesare prudent and do not expose shareholders to unreasonable financial risk |
Elements of executive remuneration
Executive remuneration comprises the following key elements:
| 1. | Base salary. |
| 2. | Annual incentives. |
| 3. | Share-based long-term incentive and retention schemes. |
| 4. | Other benefits may include vehicle benefits, pension or provident fund contributions, medical insurance, death and disability insurance. |
The remuneration committee seeks to ensure an appropriate balance between the fixed and performance-related elements of executive remuneration and between those aspects of the package linked to short-term performance and those linked to longer-term shareholder value creation.
The group's general philosophy for executive remuneration is that the performance-based pay of executive directors and senior managers should form a significant portion of their expected total compensation. There should also be an appropriate balance between rewarding operational performance (through annual incentive bonuses) and rewarding long-term sustainable performance (through long-term and/or share-based incentives).
1. Base salary
Base salary is the total cost to company before short-term incentives. The fixed remuneration of each executive is basedon roles in similar companies, which are comparable in terms of size, market sector, business complexity and international scope.
When determining annual base salaries, factors taken into account include inflation and salary trends, group and divisional performance, individual performance and changes in responsibilities.
2. Annual incentive
All executives are eligible to receive a performance-related annual bonus. The bonus is non-contractual and not pensionable. The committee reviews bonuses annually and determines the level of each bonus based on performance criteria set at the beginning of the performance period.
The criteria differ depending on the position of each executive and the division in which they operate. Criteria include:
|
Group return on invested capital (ROIC) The base target for ROIC is achievement of the WACC and the measurement pays on the gap between ROIC and WACC. |
Group headline earnings per share (HEPS) growth The measurement starts to pay out above a base target for HEPS growth. |
Divisional operating profit The measurement starts to pay out above a base target for profit before interest and tax (PBIT) growth. |
Employment equity achievement
Measurement of the 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.
Talent management
This measurement is based on the implementation of a strategic talent management plan and the development of a three- to five-year succession plan for key staff members.
Project-based and discretionary
Project-based and discretionary bonuses allow flexibility to nominate particular projects and allow for performance on non-quantitative aspects during the year to be taken into consideration. The remuneration committee has further discretion to authorise special bonuses for projects successfully completed during the year, which are awarded in exceptional cases. This component allows the committee to make adjustments in circumstances which could not be foreseen at the start of the period or are not in the control of a particular executive, such as a general market downturn or the demise of a significant competitor, which could affect divisional or group performance downwards or upwards beyond the control of the executive in question.
Annual short-term incentive bonus (STI)
| STI as % of TCTC for
on-target performance (maximum) % |
||
| Executive directors | 150 | |
| Senior management | 50 to 100 | |
| Other senior staff | 33 |
The committee sets the minimum performance levels required for any annual incentive bonus to be paid. The on-target annual incentive bonus is payable on achieving agreed targets. The committee awards additional performance incentives in exceptional circumstances.
3. Share-based long-term inventive and retention schemes
Executive participation in long-term incentive and retention schemes is based on criteria such as seniority, performance during the year and retention drivers. Any senior employee with significant managerial or other responsibility, including any director holding salaried employment or office in the group, is eligible to participate in long-term incentive schemes. Non-executive directors may not be awarded rights in any of the incentive schemes. The group has three long-term incentive plans:
Share appreciation rights
Selected participants receive annual grants of SARs, which are conditional rights to receive Imperial shares equal to the difference between the exercise price and the grant price. Vesting of rights is subject to performance conditions being met and participants remaining employed with the group for the vesting period. The performance conditions and the performance period are determined by the board annually in respect of each new grant of rights.
The SARs allocated since F2016 vest after three years and lapse two years after vesting and core EPS performance measure was changed to HEPS since F2017.
The current performance targets employed in the SARs are the achievement of specified targets set by the committee. These include:
| Percentage of SAR awards % |
||
| Growth in core EPS or HEPS since F2017, relative to the growth in HEPS of a selected peer group of JSE-listed companies | 50 | |
| ROIC compared to WACC, over a three-year period | 50 |
An extensive review of the peer group of companies was conducted during the year with the assistance of PricewaterhouseCoopers.
The extent to which each performance condition has been met is determined on the vesting date as follows:
HEPS or core EPS growth
of SARs vest
If the core EPS or HEPS growth of the company is below the lower quartile of the selected peer group
of SARs vest
If the core EPS or HEPS of the company is equal to the lower quartile of the selected peer group
of SARs vest
If the core EPS or HEPS of the company is equal to or above the upper quartile of the selected peer group
Linear vesting occurs between 30% and 100%, depending on the company's performance relative to the peer group if HEPS or core EPS growth falls in the second or third quartile
ROIC
of SARs vest
If the average ROIC for the company over the performance period is lower than the average WACC of the company over the performance period
of SARs vest
If the average ROIC over the performance period is equal to the average WACC over the performance period
of SARs vest
If the average ROIC over the performance period is equal to or above the predetermined target percentage
Linear vesting occurs between 30% and 100%, depending on the company's performance if ROIC is between WACC and the target percentage
In addition to performance of the group, the minimum core EPS/HEPS and ROIC target threshold level takes into account the important objective of retention of key employees during times when business conditions are challenging.
The targets and measures relating to each issue are detailed in a letter of grant. After vesting, the rights may be exercised by a participant within four years after vesting; this has been changed to two years from 1 July 2016. Upon exercise by a participant, the difference between the exercise price and the grant price is paid by:
- Delivering Imperial shares that will be purchased on the open market; or
- Delivering Imperial shares that will be purchased through call options (hedges); or
- As a fall-back provision only, by the issue of new shares; or
- Settling the value in cash.
Deferred bonus plan (DBP)
Qualifying senior employees are required to purchase Imperial shares which are held in escrow by the company. On the condition that the participant remains in the employ of the group and retains the shares over a three-year period, a matching award of Imperial shares is made on vesting. A participant remains the owner of the shares for the duration of the three-year period and enjoys all shareholder rights in respect of the shares. Although shares can be sold by the participant at any stage, the matching award is forfeited in line with the level of sales of the shares.
Allocation of SARs and DBPs
Allocations under SARs and DBPs are made annually based on the following criteria:
| Performance of the participant |
The job grading of the participant |
Key retention
considerations regarding participants |
The quantum of allocations of SARs and DBPs is calculated using a model developed by PricewaterhouseCoopers and is determined on the expected value of an allocation expressed as a percentage of TCTC (fixed remuneration). The percentage allocated is determined based on retention considerations and the job grading of the participant, which also determines whether a participant receives both SARs and DBPs or only SARs or only DBPs.
Benchmark awards for SARs and DBPs:
| Expected values as %
of total guaranteed package % |
|||
| Executive directors | 100 | ||
| Senior management | 50 to 70 | ||
| Other senior staff | 20 to 35 |
The value of long-term share-based incentives is determined in the financial year of allocation using the Binomial tree valuation methodology. This is based on a number of assumptions, which include the original award price, the expected rate of share price growth and the expected fulfilment of related performance conditions. The eventual gains from long-term share-based incentives will vary from year to year depending on vesting and exercise patterns, as well as the impact on share price performance and external factors such as market sentiment, interest rates, commodity prices and exchange rates.
Conditional share plan (CSP)
The CSP is utilised in exceptional circumstances only. Employees receive grants of conditional awards and the vesting is subject to performance conditions. The performance conditions for the CSP will be based on individual targets set by the board.
In light of the proposed unbundling of Motus, the board decided to award CSPs to certain members of management who are viewed as essential to the continued success of Logistics and Motus in future. The CSPs will be awarded upon unbundling and will be subject to stretch performance criteria disclosed in the individual remuneration disclosures. It is not intended to repeat such awards in future as the awards are considered exceptional but warranted in the circumstances to serve both as a retention tool and an incentive aligned to the interests of shareholders.
4. Other benefits
Executive directors are entitled to vehicle benefits, pension or provident fund contributions, medical insurance and death and disability insurance. Providing these benefits is considered to be market competitive for executive positions.
Termination of employment
Resignation or dismissal
If a participant's employment terminates due to resignation or dismissal on grounds of misconduct, poor performance or proven dishonest or fraudulent conduct (whether such cessation occurs as a result of notice given by the employee or otherwise or if he/she resigns to avoid dismissal on grounds of misconduct, poor performance or proven dishonest or fraudulent conduct) before the vesting date, all share appreciation rights, conditional awards and all matching awards will lapse, unless the board determines otherwise.
Retirement, retrenchment, death, ill health, disability or other reasons for cessation of employment
If a participant ceases to be an employee due to retrenchment, death, ill health, disability or reasons other than resignation or dismissal, the board will by written notice to the participant or the executor of the deceased estate permit a pro rata portion of the unvested SARs and/or unvested conditional awards and/or matching awards to vest on the date of cessation of employment.
The pro rata portion of the SARs and conditional awards that vest will, unless the board determines otherwise, reflect the number of months served since the date of grant and the extent to which the performance conditions have been satisfied. In the case of matching awards, the allocation will be based on the number of bonus shares held and the DBP period at the time of cessation of employment, unless the board determines otherwise. The balance of the unvested SARs not permitted to be exercised or unvested conditional awards or matching awards that do not vest will lapse.
Hedge
The group hedges its exposure to deliver shares in terms of share-based long-term incentive schemes by taking out hedges or buying back shares. SARs awards are hedged through a combination of shares purchased and the purchase of call options, after allowing for attrition over the vesting period. DBPs and CSPs are hedged with shares held in treasury for that purpose.
Retirement schemes
Executives participate in contributory retirement schemes which include pension and provident funds established by the group. Executive retirement is governed by their retirement scheme rules, subject to the ability of the company to enter into fixed-term contracts to extend the services of any executive within certain prescribed limits.
Succession policy and plans
The committee considers succession plans for executives and regularly reviews identified successors for key positions in the group. This process includes:
- The identification of current incumbents in key positions.
- An assessment of how long the current incumbent is expected to remain in the position.
- Identification of candidates vulnerable due to age, health or attractiveness to competitors.
- Identification of potential short-term successors, both internally and externally.
- Identification of potential long-term successors, both internally and externally.
- Positioning and development of potential successors.
- Taking into consideration the transformation objectives of the group.
In line with its strategic objective of implementing leading-edge talent management processes, the group has embarked on a process to measure and develop the executive talent pool.
External appointments
Executives are not permitted to hold external directorships or offices without the approval of the board.
Directors' service contracts
Directors' contracts can all be terminated by giving them between one and six months' notice.
Directors' appointments are made in terms of the company's memorandum of incorporation and are initially confirmed at the first AGM of shareholders following their appointment, and thereafter by rotation.
Non-executive directors' fees
The remuneration committee reviews and recommends to the board fees payable to non-executive directors. The board in turn makes recommendations to shareholders after considering the fees paid by comparable companies, responsibilities of the non-executive directors and considerations relating to the retention and attraction of high-calibre individuals. The group has decided to maintain a structure where directors' fees are not split between membership and attendance fees, as the efforts and contribution of non-executive directors goes well beyond their attendance at formal board or sub-committee meetings, and the group has not had significant instances of non-attendance of meetings.
Implementation of remuneration policy
Total share scheme allocations
A total of 15,245 123 SARs remain unexercised in terms of the SARs scheme at an average price of R159,18 per share. A total of 1 119 028 DBPs have been taken up and remain unvested. A total of 201 315 CSPs have been taken up and remain unvested.
Non-executive directors' fees
At the AGM to be held on 30 October 2018, shareholders will be requested to approve the following increases in non-executive directors' remuneration by special resolution in terms of section 66(9) of the Companies Act, granting authority to pay fees for services as directors, which will be valid with effect from 1 July 2019 until 30 June 2020. The proposed increase in fees is 6% for all boards and committees as follows:
| Fees from 1 July 2018 to 30 June 2019 |
Fees from 1 July 2019 to 30 June 2020 |
|||
|---|---|---|---|---|
| Chairman* | R993 000 | R1 052 500 | ||
| Deputy chairman and lead independent director* | R496 500 | R526 000 | ||
| Board member | R284 000 | R301 000 | ||
| Assets and liabilities committee chairman* | R181 000 | R192 000 | ||
| Assets and liabilities committee member | R120 500 | R128 000 | ||
| Audit and risk committee chairman* | R375 000 | R397 500 | ||
| Audit and risk committee member | R187 500 | R198 000 | ||
| Divisional board member | R168 500 | R179 000 | ||
| Divisional finance and risk committee member | R67 500 | R71 500 | ||
| Remuneration committee chairman* | R135 500 | R143 500 | ||
| Remuneration committee member | R90 000 | R95 500 | ||
| Nomination committee chairman* | R135 500 | R143 500 | ||
| Nomination committee member | R90 000 | R95 500 | ||
| Social, ethics and sustainability committee chairman* | R181 500 | R192 000 | ||
| Social, ethics and sustainability committee member | R120 500 | R128 000 |
* Fee paid in addition to a member's fee.
In determining the proposed fees, cognisance was taken of market trends and the additional responsibilities of non-executive directors in terms of increased legal and governance requirements.
Executive directors receive no director or committee fees for their services as directors in addition to their normal remuneration as employees.
Non-executive fees for 2018
The table below provides an analysis of the emoluments paid to non-executive directors for the year ended 30 June 2018.
| Directors’ fees R000 |
Subsidiary/ associate and sub-committee R000 |
2018 Total R000 |
2017 Total R000 |
||||
|---|---|---|---|---|---|---|---|
| Non-executive directors | |||||||
| P Cooper | 268 | 610 | 878 | 753 | |||
| GW Dempster | 268 | 912 | 1 180 | 818 | |||
| SP Kana | 1 205 | 509 | 1 714 | 1 523 | |||
| RM Kgosana1 | 45 | 191 | 236 | 1 136 | |||
| P Langeni | 268 | 707 | 975 | 683 | |||
| MV Moosa | 268 | 284 | 552 | 521 | |||
| T Skweyiya | 268 | 366 | 634 | 526 | |||
| RJA Sparks | 737 | 1 098 | 1 835 | 1 639 | |||
| A Tugendhaft | 737 | 282 | 1 019 | 961 | |||
| Y Waja2 | 69 | 221 | 290 | 950 | |||
| Total | 4 133 | 5 180 | 9 313 | 9 510 |
| 1 | Resigned on 7 September 2017. |
| 2 | Resigned on 13 October 2017. |
MP de Canha relinquished his executive duties on 30 June 2017 and retired from the board on 31 January 2018. His 2018 compensation relates to the role he played until his retirement in ensuring a smooth handover and continuity post his retirement.
| Salary R000 |
Bonus R000 |
Retirement and medical contributions R000 |
Other benefits R000 |
Directors’ fees R000 |
Subsidiary/ associate and subcommittee fees R000 |
2018 Total R000 |
2017 Total R000 |
Gain long-term incentives R000 |
Total taxable remuneration R000 |
|||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| MP de Canha | 3 012 | 2 100 | 191 | 93 | 5 396 | 7 750 | 9 894 | 15 290 |
Executive remuneration
The group remunerated its executive directors during the year as further explained below.
OS (Osman) Arbee – Group CEO from 1 May 2018 and CEO: Motus
2018 remuneration
| Basic salary R000 |
Retirement and medical contributions R000 |
Other benefits R000 |
Short-term incentive bonus R000 |
Total cash remuneration R000 |
Gains on exercise of long-term incentive awards R000 |
2018 Total taxable remuneration realised R000 |
2017 Total taxable remuneration realised R000 |
||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 8 872 | 451 | 360 | 12 065 | 21 748 | 8 520 | 30 268 | 20 155 |
Fixed compensation and benefits
Osman's fixed compensation and benefits increased by 30% to R9 683 000 (2017: R7 444 000) commensurate with his appointment as Motus CEO, effective 1 March 2017 and group CEO, effective 1 May 2018. The remuneration for this position was externally benchmarked against companies with a similar size, complexity and geographic spread.
Annual incentive bonus
Osman received an incentive bonus of R12 065 000 (2017: R8 200 000). Osman's incentive was based on performance measures applicable to CEO: Motus position for the first 10 months of the year and performance measures applicable to the position of group CEO for the remainder of the year in addition to his position as CEO: Motus.
| 2018 measure | 2018 weighting % |
Performance against target % |
||
|---|---|---|---|---|
| Group HEPS growth | 20 | 100 | ||
| Group achievement of ROIC target over WACC | 20 | 100 | ||
| Group growth in black senior and middle management, bee scorecard, succession and talent management | 20 | 100 | ||
| Divisional Motus PBIT growth | 35 | 48 | ||
| Divisional Motus ROIC | 35 | 80 | ||
| Discretionary | 20 | 20 | ||
| Maximum as percentage of deemed fixed compensation | 150 | 125 |
Long-term incentive and retention payments
Osman will be awarded Motus DBP in line with LTI award benchmarks for executive directors to the value of R10 600 000 upon implementation of the proposed unbundling of Motus. These shares are to be held in escrow and will vest on 15 September 2021.
In addition, Osman will also receive Motus CSP in an amount of R30 000 000 upon implementation of the proposed unbundling of Motus. The CSP will be subject to performance criteria relating to Motus and 40% will vest in November 2020 and 60% in November 2021.
CSP performance conditions:
| Condition | Weighting % | |
| ROIC over WACC | 20 | |
| Operating profit growth | 20 | |
| Succession planning | 15 | |
| Discretionary | 10 | |
| HEPS versus peer group | 35 |
M (Mohammed) Akoojee – Group CFO
2018 remuneration
| Basic salary R000 |
Retirement and medical contributions R000 |
Other benefits R000 |
Short-term incentive bonus R000 |
Total cash remuneration R000 |
Gains on exercise of long-term incentive awards R000 |
2018 Total taxable remuneration realised R000 |
2017 Total taxable remuneration realised R000 |
||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 6 938 | 442 | 120 | 11 250 | 18 750 | 4 037 | 22 787 | 11 819 |
Fixed compensation and benefits
Mohammed's fixed compensation and benefits increased by 62% to R7 500 000 (2017: R4 633 000) in line with his new responsibilities as group CFO, effective 1 March 2017. The remuneration for this position was externally benchmarked against companies with a similar size, complexity and geographic spread.
Annual incentive bonus
Mohammed received an incentive bonus of R11 250 000 (2017: R6 650 000) based on performance measures applicable to the group CFO.
| 2018 measure | 2018 weighting % |
Performance against target % |
||
|---|---|---|---|---|
| Group HEPS growth | 40 | 100 | ||
| Group achievement of ROIC target over WACC | 40 | 100 | ||
| Group growth in black senior and middle management, bee scorecard, succession and talent management | 20 | 100 | ||
| Discretionary | 50 | 100 | ||
| Maximum as percentage of deemed fixed compensation | 150 | 150 |
Long-term incentive and retention payments
Mohammed will be awarded DBP in line with LTI award benchmarks for executive directors to the value of R9 250 000 upon implementation of the proposed unbundling of Motus. These shares are to be held in escrow and will vest on 15 September 2021.
In addition, Mohammed will also receive CSP in an amount of R30 000 000 upon implementation of the proposed unbundling of Motus. The CSP will be subject to performance criteria relating to Imperial Logistics and will vest over a three-year period commencing 15 September 2021, vesting 25% in 2021, 25% in 2022 and 50% in 2023.
CSP performance conditions:
| Condition | Weighting % | |
| ROIC over WACC | 20 | |
| Operating profit growth | 20 | |
| Succession planning | 15 | |
| Discretionary | 10 | |
| HEPS versus peer group | 35 |
M (Marius) Swanepoel – CEO: Logistics
2018 remuneration
| Basic Salary R000 |
Retirement and medical contributions R000 |
Other benefits R000 |
Short-term incentive bonus R000 |
Total cash remuneration R000 |
Gains on exercise of long-term incentive awards R000 |
2018 Total taxable remuneration realised R000 |
2017 Total taxable remuneration realised R000 |
||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 8 678 | 442 | 180 | 10 700 | 20 000 | 7 204 | 27 204 | 17 916 |
Fixed compensation and benefits
Marius' fixed compensation and benefits increased by 15% to R9 300 000 (2017: R8 077 000) due to the significant increase in his responsibilities as CEO of the entire Logistics division effective 1 July 2017. The remuneration for this position was externally benchmarked against companies with a similar size, complexity and geographic spread.
Annual incentive bonus
With reference to the criteria below and the successful transition to CEO of the entire Logistics division, Marius received an incentive bonus of R10 700 000 (2017: R9 000 000).
| 2018 measure | 2018 weighting % |
Performance against target % |
||
|---|---|---|---|---|
| Group HEPS growth | 20 | 100 | ||
| Group achievement of ROIC target over WACC | 20 | 100 | ||
| Group growth in black senior and middle management, BEE scorecard, succession and talent management | 20 | 100 | ||
| Divisional Logistics PBIT growth | 35 | 0 | ||
| Divisional Logistics ROIC | 35 | 100 | ||
| Discretionary | 20 | 100 | ||
| Maximum as percentage of deemed fixed compensation | 150 | 115 |
Long-term incentive and retention payments
Marius will be awarded DBP in line with LTI award benchmarks for executive directors to the value of R10 600 000 upon implementation of the proposed unbundling of Motus. These shares are to be held in escrow and will vest on 15 September 2019.
MJ (Mark) Lamberti – Group CEO to 30 April 2018
Mark resigned as CEO with effect from 30 April 2018. In terms of his employment contract he would have retired as CEO at the end of February 2019, after completing a five-year term. Mark served Imperial with distinction since March 2014, leading a multifaceted portfolio, organisation and management restructuring, which has culminated in the decision to unbundle Motus, providing it and Imperial Logistics with direct access and accountability to capital markets.
In contrast to F2017 when Mark's annual fixed compensation and incentives were paid to him predominantly in the form of DBP and CSP, his 2018 remuneration was paid in cash.
2018 fixed compensation and benefits
Mark received annual fixed compensation in an amount of R11 000 000 (2017: R7 265 000 – R1 600 000 in cash and R5 665 000 in DBP) and an amount of R7 333 333 to the end of his contractual term as CEO on 28 February 2019.
Annual incentive
The following STI performance criteria and weightings, as determined by the board, were used to calculate Mark's annual STI in an amount of R16 500 000 (2017: R13 000 000).
| 2018 measure | 2018 weighting % |
Performance against target % |
||
|---|---|---|---|---|
| Group HEPS growth | 40 | 100 | ||
| Group achievement of ROIC target over WACC | 40 | 100 | ||
| Group growth in black senior and middle management, BEE scorecard, succession and talent management | 20 | 100 | ||
| Discretionary | 50 | 100 | ||
| Maximum as percentage of deemed fixed compensation | 150 | 150 |
Vesting of 2014 CSP and DBP
Consistent with his election to be aligned with the interests of shareholders, Mark received no cash compensation in 2014, 2015 or 2016.
Mark received 67 064 CSP to the value of R12 816 000 in 2014 in lieu of his variable remuneration for 2015 and 60 787 DBP to the value of R8 060 000 in terms of the group's LTI scheme. On 18 September 2017, due to partial fulfilment of the CSP vesting conditions, 63 318 CSP shares vested and all of the DBP shares vested. The market value on the date of vesting was R11 951 235 in respect of the CSP shares and R11 473 546 in respect of the DBP shares.
Future vesting of CSP and DBP
Mark's CSP and DBP awarded to him in 2015, 2016 and 2017 in lieu of his annual fixed compensation, his annual incentive and his long-term incentives, will vest on 15 September 2018, in accordance with the rules of the respective schemes.
Prescribed officers' remuneration
The group had no prescribed officers for the financial year. Prescribed officers are persons, not being directors, who either alone or with others exercise executive control and management of the whole or a significant portion of the business of the company.