Annual report 2016 |

Remuneration report




Download the full remuneration report


Background statement

Introduction

Sanlam’s remuneration philosophy and policy support the Group strategy by incentivising the organisational behaviour required to meet and exceed predetermined strategic goals. Both short and long-term strategic objectives are measured and rewarded and this blended approach strongly mitigates excessive risk-taking and balances longer-term strategic objectives with short-term operational performance. The remuneration philosophy is therefore also an integral part of the Group’s risk management structure. In setting up the reward structures, cognisance is taken of prevailing economic conditions, as well as local and international governance principles.

A great deal of attention is given to correctly position both the nature and the scale of remuneration relative to relevant comparator groups and international best practice. Steps are also taken to ensure alignment with the applicable regulatory and governance requirements in each of the countries in which the Group operates. In South Africa, those specifically include the King Code of Corporate Governance (King III), while also conforming to the remuneration principles contained in the codes of good practice, which support Employment Equity legislation.

Sanlam is the sole or part owner of a number of subsidiaries, joint ventures and associates. While compliance with the Sanlam Group remuneration strategy and policy is primarily targeted at Group operating subsidiaries, Sanlam will use its influence to encourage the application of sound remuneration practices in those businesses where it does not hold a controlling interest.


Group Human Resources and Remuneration committee

The Group Human Resources and Remuneration committee of the Sanlam Board (GHRRC) is responsible for developing the remuneration strategy of the Group and presenting it to the Board for approval. Its activities include approving the guidelines and philosophy to be applied in formulating mandates for all bonus and long-term incentive schemes and setting remuneration packages of the Sanlam Group Executive committee (Executive committee) and the Sanlam Heads of Control functions (Actuarial Control, Internal Audit, Compliance and Risk Management), relative to industry benchmarks. The GHRRC has the prerogative to make all remuneration decisions it deems appropriate within an approved framework and may propose amendments to any part of the Group’s remuneration policy as necessitated by changing circumstances. It also makes recommendations to the Board regarding the remuneration of Sanlam directors, other than the GHRRC’s committee fees. To fulfil the role described above, the GHRRC undertakes the following:

  • Develops and recommends to the Board for approval, short and long-term incentive schemes for the Group, subject to shareholder approval, where applicable. It includes the setting of guidelines for annual allocations and a regular review of the appropriateness and structure of the schemes to ensure alignment with the Group strategy and shareholder and other stakeholder interests.
  • Sets appropriate performance drivers for short and long-term incentives, as well as monitoring and testing those drivers.
  • Develops and recommends to the Board for approval, the remuneration strategy as far as the remuneration of Sanlam’s executive directors, members of the Executive committee and Heads of Control functions are concerned.
  • Reviews the management of the contracts of employment of Sanlam executive directors, members of the Executive committee and Heads of Control functions to ensure that their terms are aligned with good practice principles.
  • Determines specific remuneration packages for Sanlam executive directors, members of the Executive committee and Heads of Control functions, including total guaranteed package, short and long-term incentives, and other conditions of employment.
  • Develops and recommends to the Board for approval, short and long-term incentive schemes for the Group Chief Executive and other members of the Executive committee. It includes the setting of annual targets, monitoring those targets and reviewing the incentive schemes on a regular basis to ensure that there is a clear link between the schemes and performance in support of the Group strategy.
  • Recommends to the Board the remuneration of the Sanlam non-executive directors for approval at the AGM.


Read more about the GHRRC’s terms of reference and about the composition and summarised terms of reference for the GHRRC in the Corporate Governance Report




During 2016, the GHRRC considered the following matters:
  • Benchmarking of remuneration levels and practices with international and local comparator groups.
  • Continued alignment of Sanlam’s remuneration practices in South Africa with King III governance principles and pending regulations that provide a risk-based governance framework for the regulation of life and general insurers.
  • Appointment of the Group Financial Director.
  • Recruitment and appointment of other executive staff members.
  • Monitoring and approval of short- and long-term incentives.
  • Introduction of new vesting conditions for three of the Group’s four long-term incentive schemes.
  • Accelerated measures to support existing strategies to correct the under-representation of black people at executive and senior management levels of the organisation.
  • Monitoring of the work and decisions of other Sanlam Group companies’ HR and Remuneration committees.



The South African Companies Act, 71 of 2008 (the Act), introduced the concept of a ‘prescribed officer’. The duties and responsibilities of directors under the Act also apply to ‘prescribed officers’ as well as members of board committees who are not directors. The Board has considered the definition of ‘prescribed officers’ and resolved that the members of its Executive committee are the prescribed officers of Sanlam. Remuneration details of the Executive committee are accordingly also disclosed in this report.


Shareholder voting

The Group’s remuneration policy and the implementation thereof are subject to a non-binding advisory vote at the annual general meeting (AGM) of Sanlam Limited. At the 2016 AGM, a total of 1 526 513 492 votes (2015: 1 432 620 987) were cast on the advisory vote, with the vast majority of shareholders supporting the Group’s remuneration policy and practices. The result of the voting was as follows:

voting

Sanlam’s corporate governance practices, including the remuneration policy, are discussed with major shareholders and proxy voting organisations as part of the Group’s stakeholder engagement process.

The lower level of shareholder support in 2016 compared to 2015 related to revised views of an international proxy voting agency and commensurately some shareholders that the performance measurement of pre-2017 Deferred Share Plan (DSP), Performance Deferred Share Plan (PDSP) and Restricted Share Plan (RSP) awards effectively amounted to retesting. This is not in line with the Group’s view and the intention of the schemes. After extensive engagement with stakeholders, it became clear that unanimity is unlikely to be reached. The performance measurement of these LTIs were accordingly amended with effect from 2017, as outlined further in this report, to ensure that the Group’s remuneration practices remain fully aligned with prevailing shareholder requirements or those guided by international proxy voting agencies.

Overview of remuneration policy

Remuneration philosophy

The Board recognises that appropriate remuneration for executive directors, members of its Executive committee and other employees is inextricably linked to the attraction, development and retention of top-level talent and intellectual capital within the Group. Given the current economic climate, changes in the regulatory requirements and the ongoing skills shortage, it is essential that adequate measures are in place to attract and retain the required skills. In order to meet the strategic objectives of a high-performance organisation, the remuneration philosophy is positioned to reward exceptional performance and to maintain that performance over time.

Sanlam’s remuneration philosophy aims to:

  • Inform stakeholders of Sanlam’s approach to rewarding its employees;
  • Identify those aspects of the reward philosophy that are prescribed and to which all businesses should adhere;
  • Provide a general framework for all the other elements of the reward philosophy;
  • Offer guidelines for short and long-term incentive and retention processes; and
  • Offer general guidelines about how the businesses should apply discretion in their own internal remuneration allocation and distribution.

The Sanlam Board recognises certain industry specific and other relevant differences between Group businesses and where appropriate, allows the businesses relative autonomy in positioning themselves to attract, retain and reward their employees appropriately within an overarching framework. In this regard, there are some areas where the dictates of good corporate governance, the protection of shareholder interests and those of the Sanlam brand or corporate identity require full disclosure, motivation and approval by the Human Resources committees either at Group or business level. The principle of management discretion, with regard to individual employees, is central to the remuneration philosophy on the basis that all rewards are based on merit. However, the overarching principles and design of the remuneration structure are consistent, to support a common philosophy and to ensure good corporate governance, with differentiation where appropriate. In other instances, the Sanlam remuneration philosophy implies that the businesses are mandated to apply their own discretion, given the role that their own Remuneration/Human Resources committees will play in ensuring good governance. The Group has continued to apply a total reward strategy for its staff members. This offering comprises remuneration (which includes cash remuneration, short-term incentives and long-term incentives), benefits (retirement funds, group life, etc.), learning and development, an attractive working environment and a range of lifestyle benefits.

Design principles

In applying the remuneration philosophy and implementation of the total reward strategy, a number of principles are followed:
  • Pay for performance: Performance is the cornerstone of the remuneration philosophy. On this basis, all remuneration practices are structured in such a way as to provide for clear differentiation between individuals with regard to performance. It is also positioned so that a clear link is maintained between performance hurdles and the Group strategy.
  • Competitiveness: A key objective of the remuneration philosophy is that remuneration packages should enable the Group and its businesses to attract and retain employees of the highest quality in order to ensure the sustainability of the organisation.
  • Leverage and alignment: The reward consequences for individual employees are as far as possible aligned with, linked to and influenced by:
    • the interests of Sanlam shareholders (and, where applicable, minority shareholders in Group subsidiaries);
    • the sustainable performance of the Group as a whole;
    • the performance of any region, business unit or support function; and
    • the employee’s own contribution.
  • Consistency and fairness: The reward philosophy strives to be both consistent and transparent. Where there is differentiation between employees performing similar work, the differentiation is required to be fair, rational and explainable. Differentiation in terms of market comparison for specific skills groups or roles is, however, necessary and differentiation concerning performance is imperative. Unfair differentiation is unacceptable.
  • Attraction and retention: Remuneration practices are recognised as a key instrument in attracting and retaining the required talent to meet the Group’s objectives and ensure its sustainability over the long term.
  • Shared participation: Employee identification with the success of the Group is important owing to the fact that it is directly linked to both the Group and individual performance. All employees should have the chance to be recognised and rewarded for their contribution and the value they add to the Group, and in particular, for achieving excellent performance and results, in relation to the Group’s stated strategic objectives. The performance management process contributes significantly towards obtaining this level of participation and towards lending structure to the process.
  • Best practice: Reward packages and practices reflect local and international best practice, where appropriate and practical.
  • Communication: The remuneration philosophy, policy and practices, as well as the processes to determine individual pay levels, are transparent and communicated effectively to all employees. In this process the link between remuneration and the Group’s strategic objectives is understood by all employees.
  • Market information: Accurate and up-to-date market information and information on trends is a crucial factor in determining the quantum of the remuneration packages.
  • Clawback: Where performance achievements are subsequently found to have been significantly misstated so that the bonuses and other incentives should not have been paid, provision is made for redress through clawback.

For the Group to remain competitive, remuneration policies and practices are evaluated regularly against local and international remuneration trends and governance frameworks, most notably King III in South Africa. Alignment with King IV™, effective from 2017, will be the focus area during the coming year.

Executive contracts

Sanlam executive directors and members of the Sanlam Executive committee are contracted as full-time, permanent employees for employment contracting purposes. As a standard element of these contracts, a restraint of trade (up to 12 months) is included, which Sanlam has the discretion to enforce depending on the circumstances surrounding the individual’s departure. Notice periods are three months’ written notice. Bonus payments and the vesting of long-term incentives that are in place at the time of an individual’s termination of service are subject to the rules of the relevant scheme with some discretion being allowed to the GHRRC based on the recommendations of the Group Chief Executive. No clauses are included in employment contracts that relate to any form of payments in the event of a change in control of Sanlam. In the event of a change in control the vesting of share awards will only be accelerated if an offer is made that does not substitute unvested LTI’s with arrangements on terms similar to that of the existing terms and conditions.


Structure
The different components of remuneration applied in the Sanlam Group are summarised in the table below. These are applicable to all South African-based Group employees and are used as guidance by other international Group businesses.

A detailed description of each component follows in the next section.

Where applicable, the quantum of the different components of the package is determined as follows:

  • The guaranteed component is based on market-relatedness in conjunction with the individual’s performance, competence and potential.
  • The short-term incentive component of remuneration is based on a combination of individual and annual business performance.
  • The long-term incentive component is based on the individual’s performance, potential and overall value to the Group and/or business, and above a certain level also on the Group’s performance.

View table


Total guaranteed package (TGP)
Purpose
TGP is a guaranteed component of the remuneration offering. It forms the basis of the organisation’s ability to attract and retain the required skills. In order to create a high performance culture, emphasis is placed on the variable/performance component of remuneration rather than the guaranteed component. For this reason TGP is normally positioned on the 50th percentile of the market.

As an integral part of TGP, Sanlam provides a flexible structure of benefits that can be tailored, within certain limits, to individual requirements. These include:

  • retirement funding;
  • group life cover; and
  • medical aid.

Process and benchmarking
Average TGP is normally set by referencing the median paid by a group of comparator companies which Sanlam considers to be appropriate. The comparator group is made up of a sizeable and representative sample of companies that have similar characteristics to Sanlam in terms of being in the financial services sector (but not limited only to this sector), market capitalisation and international footprint. In terms of the process followed in benchmarking TGP against these comparator companies, Sanlam obtains and analyses data from a number of global salary surveys. In addition to this benchmarking process, Sanlam also takes into account the skills, potential and performance of the individual concerned as well as the current consumer price index of the country.

GHRRC’s role
  • Upon conclusion of the benchmarking process, proposals regarding increases for the following year are considered and approved by the GHRRC. The GHRRC also reviews and approves adjustments made to total guaranteed packages for each of the Sanlam executive directors, members of the Executive committee and Heads of Control functions.




Levels
TGP levels are positioned around the 50th percentile of the comparator market. In certain instances, however, there may be a salary sacrifice in favour of the variable component. Where specific skills dictate, TGP levels may be set in excess of the 50th percentile.

Short-term incentives
Purpose
The purpose of the annual bonus plan is to align the performance of staff with the goals of the organisation and to motivate and reward employees who outperform the agreed performance hurdles. Over recent years, the focus has shifted from operational matters to growing the business and ensuring that it is managed in a sustainable way. The design and quantum of the annual performance bonus is regularly reviewed against best market practice and the quantum is benchmarked against the market using a robust comparator group.

GHRRC’s role
The GHRRC’s role with regard to the annual bonus plan is to:
  • Determine the overall structure of the annual bonus plan, ensure that it provides a clear link to performance and is aligned with the Group’s business strategy.
  • Set the overall principle in respect of thresholds, targets and stretch levels for the annual bonus plan as well as the percentage of total guaranteed package that can be earned at each level by each group of employees.
  • In respect of members of the Executive committee: agree on the performance drivers for their annual bonus plan, and agree on the split between business, Group and personal performance criteria.



Vesting levels
The annual bonus plan is a cash-based bonus scheme. Where the annual business and individual bonus targets are achieved in full, 100% of the bonus will be paid. In instances where expected target goals have been exceeded, the cash component is capped at a percentage of TGP, but the total value of the bonus awarded can exceed the capped cash bonus. (Refer to ad hoc performance bonus rewards below.)

Where the bonus targets are not achieved in full, a reduced bonus, based on a sliding scale, will be paid only if a minimum threshold performance level has been achieved.

Where the annual business bonus targets are not achieved, an amount may be set aside to reward exceptional individual performance at the discretion of the Group Chief Executive.

The annual bonus targets at a Group and cluster level incorporate a number of financial and non-financial performance measures that are directly linked to the Group strategy and key performance indicators, including net result from financial services, adjusted Return on Group Equity Value (RoGEV) and employment equity. The specific performance targets and relative weighting is determined per cluster based on the cluster’s strategic initiatives. The Group office targets reflect the overall performance of the Group.

The Group delivered an overall satisfactory performance during the 2016 financial year, as elaborated upon in the 2016 Integrated Report. A number of businesses outperformed targets for the year, with the Group in general largely meeting the stretched overall targets. Adjusted RoGEV in particular significantly exceeded the Group hurdle with substantial shareholder value created during 2016. This resulted in a weighted average bonus achievement of 129,1% (2015: 110%) at a Group office level.



Adjusted RoGEV
In order to exclude the impact of investment market volatility during the performance period in question, adjusted RoGEV is used. This assumes that the embedded value investment return assumptions as at the beginning of the reporting period were achieved for the purposes of the investment return earned on the supporting capital of covered business and the valuation of Group operations. Any other ad hoc items, which are not under the control of management are also excluded, such as, for example, tax changes, interest rate movements and exchange rate volatility.


Ad hoc performance bonus rewards
Where it is determined by the Group Chief Executive that an individual has demonstrated such exceptional performance within his or her area of expertise that justifies a bonus payment in excess of the maximum cash bonus percentage of TGP, the GHRRC may award restricted shares under the Sanlam Restricted Share Plan to acknowledge such out-performance. Companies within the broader Sanlam Group may use other mechanisms such as cash retentions for amounts in excess of the cap.

The rationale of this mechanism is to encourage retention of high-performing individuals and ensure the sustainability of performance-driven behaviour. To the extent that performance is not sustained, the performance condition attached to a portion of the restricted awards will not be satisfied and the award will not vest.

Long-term incentives

Overview and general policy
Sanlam currently grants awards under the following four long-term incentive plans (LTIs):
  • The Sanlam Deferred Share Plan (DSP);
  • The Sanlam Performance Deferred Share Plan (PDSP);
  • The Sanlam Restricted Share Plan (RSP); and
  • The Sanlam Out-Performance Plan (OPP).

With the exception of the OPP, these long-term incentive plans are equity-settled plans from a Sanlam perspective. The OPP is a cash or share-based plan, which rewards long-term performance.

In respect of the DSP and the PDSP, Sanlam’s general policy is that awards are made annually to ensure that the total face value of outstanding awards (calculated on their face value at date of grant) is equal to a set multiple of the individual’s TGP. The set multiples are determined by reference to the individual’s job grade and value to the Group. In addition, transformation considerations and the role and performance of an individual and the need to attract and/or retain key talent are taken into account when determining the final multiple. In general, the award level ranges from 35% to 280% of TGP but may exceed this in the specific circumstances referred to above.

Long-term incentive awards granted are split between individual performance (granted under the DSP and awards made without business-related performance conditions under the RSP) and business-related performance awards (granted under the PDSP and awards made with business-related performance conditions under the RSP).

Awards granted to any one individual under all equity-settled plans (the DSP, PDSP, RSP and OPP) are subject to an overall limit of 6,5 million unvested shares.


Participation
The LTIs are aimed at attracting and retaining key employees. While participation is available to all employees of the Sanlam Group, the practice is to target allocations to employees in management or key functional roles. Non-executive directors do not participate in any of the LTIs.


Deferred Share Plan (DSP)
Awards granted under the DSP are conditional rights to acquire shares for no consideration subject to vesting conditions being satisfied. The award has individual performance hurdles attached to it. The vesting conditions are that the individual remains employed by the Group throughout the vesting period and maintains agreed upon individual performance hurdles.

For all shares awarded under the DSP pre-2017, the measurement period is five years and early vesting may occur as follows, provided that all the vesting conditions have been met:

  • After three years — 40%;
  • After four years — 70% less any portion that vested earlier; and
  • After five years — 100% less any portion that vested earlier.

A rule change in the DSP scheme has been approved by the GHRRC for implementation in 2017 to address shareholder concerns around retesting (refer above). All new share awards under this scheme will, with effect from 2017, be subject to the following measurement of performance conditions:

  • 40% of the award to be measured after 3 years since the date of grant, and to the extent that the performance hurdle is not achieved, the entitlement to the DSP shares will lapse;
  • 30% of the award to be measured after 4 years since the date of grant, and to the extent that the performance hurdle is not achieved, the entitlement to the DSP shares will lapse; and
  • 30% of the award to be measured after 5 years since the date of grant, and to the extent that the performance hurdle is not achieved, the entitlement to the DSP shares will lapse.

The award granted under the DSP is not subject to the satisfaction of the Group performance conditions but does require meeting individually contracted performance hurdles. Typically, the award granted under the DSP has a face value of up to 105% of TGP. To the extent that this percentage falls, whether through vesting or due to a promotion or salary increase, an additional award may be granted on an annual basis to maintain the level of participation under the DSP. For the year ended 31 December 2016 allocations in respect of 4 516 170 shares (2015: 3 921 545) were made to 828 participants (2015: 813) under the DSP.


Performance Deferred Share Plan (PDSP)
To the extent that the face value of the awards granted under the DSP does not satisfy the specified multiple of TGP to be granted as long-term incentive awards, the individual will be granted an award under the PDSP. Awards granted under the PDSP are conditional rights to acquire shares for no consideration subject to various vesting conditions being satisfied.

In addition to the individual remaining employed by the Group throughout the measurement period and maintaining agreed upon individual performance hurdles, the vesting of the award is also subject to the condition that the Group’s RoGEV exceeds its cost of capital for the relevant measurement period (Group performance hurdle-(adjusted RoGEV for pre-2016 grants)). Cost of capital is defined as the nine-year government bond rate in South Africa plus 400 basis points (300 basis points in respect of awards made before 2016). The exact condition varies by reference to the value of the performance award as a proportion of the individual’s TGP. The higher the award allocated, the more stretching the vesting conditions are. For awards in excess of 175% of TGP the vesting conditions also include a business- specific hurdle in addition to the individual and Group performance hurdles.

The exact performance conditions are set by the GHRRC at the relevant date of grant.

The use of RoGEV as a performance condition is considered appropriate as this is the key performance indicator of the Group’s strategy and long-term sustainability, and the use of this measure means a direct link between the long-term incentive reward, Group strategy and shareholders’ interests.

For all shares awarded under the PDSP pre-2017, the performance measurement period is six years. To the extent that they are not met at the end of this period, the performance- related awards will lapse.

However, awards accepted by participants under the PDSP pre-2017 can vest prior to the end of the six-year performance measurement period on a proportional basis similar to the pre-2017 DSP. This arrangement was aimed at encouraging performance that will result in performance hurdles being met earlier within the agreed performance measurement period.

A change in performance measurement similar to that proposed for awards under the DSP from 2017 will apply to awards made under the PDSP with effect from 2017 to address shareholder concerns around retesting (refer above).

To the extent that the value of performance awards falls below the specified multiple of TGP, whether through vesting or due to a promotion or salary increase, an additional award may be granted on an annual basis to maintain the level of performance awards and encourage ongoing long-term performance.

For the year ended 31 December 2016 allocations in respect of 1 593 330 shares (2015: 1 375 071) were made to 236 participants (2015: 227) under the PDSP.


Restricted Share Plan (RSP)

The RSP has to date been operated in conjunction with the annual bonus plan (refer to short-term incentives section above) for selected senior staff. Where a bonus payment is awarded that is in excess of the cash bonus cap, that excess amount will be awarded as restricted shares under the RSP. Under this plan, individuals receive fully paid-up shares in Sanlam. The individual owns the shares from the date of grant and is entitled to receive dividends. However, the shares are subject to vesting conditions and may be forfeited and the dividends repayable if these conditions are not met during the measurement period.

The restricted shares awarded require the individual to remain employed within the Group until the final vesting date and maintain the agreed individual performance hurdles. A portion of the restricted shares awarded is subject to a Group performance condition. The performance condition for awards granted to date is that the Group’s RoGEV (adjusted RoGEV for pre-2016 grants) per share exceeds the Group’s cost of capital – and such condition varies between 0% and 100% of the award depending on the individual’s role.

For awards pre-2017 the measurement period is six years, but early vesting can occur on a basis similar to that of the pre-2017 PDSP on the third, fourth and fifth anniversary of the date of grant, provided that all vesting conditions are met on such dates, as determined by the GHRRC. For the year ended 31 December 2016, allocations in respect of 385 671 shares (2015: 391 830) were made to 13 participants (2015: 17) under the RSP.

A change in performance measurement similar to that proposed for awards under the DSP and PDSP from 2017 will apply to awards made under the RSP with effect from 2017 to address shareholder concerns around retesting (refer above).


Out-Performance Plan (OPP)

From time to time, at the discretion of the GHRRC, participation in an individual OPP is extended to certain members of the Sanlam Executive committee who are leaders of the Group’s main operating businesses or, in very limited circumstances, to senior leaders within the main businesses. The OPP rewards superior performance over a three to five-year measurement period.

No payment is made under the OPP unless the agreed growth target over the period is exceeded and full payment is only made if the stretched performance target is met. The maximum payment that can be made under the OPP is 200% of the annual TGP in the final year calculated over the respective three or five-year measurement period (e.g. 6 or 10 times the annual TGP of the final measurement year).

No payment is made under the OPP unless the agreed performance target over the period is exceeded and full payment is made only if the stretched performance target is met. The maximum payment that can be made under the OPP is 200% of the annual TGP in the final year calculated over the respective three or five-year measurement period (e.g. six or 10 times the annual TGP of the final measurement year).

In exceptional circumstances, a collective OPP arrangement may be extended to a business Executive committee. This has been implemented for the Santam Executive committee.


Minimum shareholding requirement (MSR)

To encourage alignment between executive and stakeholder interests, Sanlam applies a minimum shareholding policy to all current and future members of the Sanlam Executive committee, including executive directors (participating executives). In terms of these arrangements, the following minimum shareholding levels, expressed as a percentage of annual TGP, must be reached by later of 31 December 2021 or within six years from the date of appointment of a participating executive:

Group CE
Financial director
Business executives
Support executives
175%
125%
100%
50%

Participating executives are required to maintain the target shareholding throughout their tenure with the company. Unvested shares under any long-term incentive arrangement will not be taken into account when assessing compliance with the MSR policy.

Incentive arrangements implemented after 1 January 2016 may include MSR terms and conditions as determined by the GHRRC to ensure compliance with the prescribed levels in the prescribed periods, as well as the implications of not adhering to the MSR.

For the purposes of determining compliance with the MSR levels, the value of a participating executive’s shareholding at the end of each financial period will be determined by using the average closing price of Sanlam ordinary shares on the JSE for the trading days in that financial period and expressed as a percentage of the participating executive’s annual TGP at the end of that financial period.

Implementation report

Remuneration details for executive directors and members of the Group Executive committee

Executive remuneration summary

Remuneration earned by executive directors and members of the Sanlam Executive committee was as follows:


View table











Total Guaranteed package

The TGP (in rand) of the executive directors and members of the Executive committee are reflected in the table below. Due to increases in TGP being granted during the year, the TGP amounts reflected in the table will not correspond to those included in the summary remuneration table.


View table



More

The average salary increase paid to executive directors for 2016 was 5,3% (2015: 5,6% – excluding Johan van Zyl and Ian Kirk) and that of members of the Executive committee was 7,7% (2015: 5,2% – excluding Anton Gildenhuys, Hubert Brody and Robert Roux) compared with an average salary increase paid to all employees of 7,0% (2015: 6,5%). The exclusions in respect of 2015 took account of changes in positions and the special arrangement that applied to Johan van Zyl in order to determine a normalised increase. The higher than normal overall increase to Executive committee members (7,7%) is due to benchmarking corrections related to both competitiveness and performance. The remuneration increase trends for the last seven years are as follows:


View chart
Short-term incentives
Performance targets

The performance targets for the annual bonus plan are set by the GHRRC on an annual basis for executive directors and members of the Executive committee. In respect of the 2016 annual bonus, the split between business, Group and personal performance criteria for executive directors and members of the Executive committee was as follows:


View table

More

The payments that can be achieved by executive directors and members of the Executive committee at the target and stretch levels are as indicated below. These levels are benchmarked with comparator groups together with other components of remuneration.


View table


Download the full implementation section