Full integrated annual report - African Bank - Investoreports

Remuneration policy of African Bank Investments Limited
Introduction
The ABIL group conducts businesses that engage in the supply of credit, fi nancial services and goods and
related services to satisfy people’s personal needs, and it is indisputable that human capital is the most
important asset required in carrying out this objective in a differentiated way. As a dominant and signifi cant
player in the unsecured credit market and major retailer of furniture and appliances, the attraction and
retention of appropriate skills is an area that requires continuous focus at the highest level of the organisation.
In this regard, remuneration is one of the key drivers of aligning behaviour of human capital to the strategic
intent of the group. The importance of having a remuneration philosophy that is balanced so as to achieve long
term sustainable organisational objectives rather than being driven by short term profi t and executive gains
has been amplifi ed by the global fi nancial crisis, especially in the fi nancial sector internationally.
Remuneration governance
The board has a sub-committee, the group remuneration and transformation committee (Remco), which
comprises three independent non-executive directors. This committee is tasked with assisting the board in
formulating and monitoring the implementation of the group’s transformation and remuneration policies. The
transformation aspect of Remco’s responsibilities is dealt with in detail in the governance section of the annual
report. Remco has the following responsibilities, amongst others, with regard to remuneration:
Reviewing and approving the overall incentive pools for each fi nancial year, in accordance with the
group’s approved incentive policy and schemes, taking into account the changing competitive landscape
and in the context of the group’s strategic intent;
Determining and recommending to the board of directors for approval, the salary packages and incentive
allocations for executive directors and members of the group executive committee and the allocation
between short term and long term incentives; and
Reviewing and recommending to the board of directors for approval, the remuneration of non-executive
directors based on recommendations from the executive directors.
Remuneration philosophy and policies
The group continues to strive for sustainable long term growth and to this end a greater portion of management
and executive remuneration is put “at risk” against the delivery of key long term objectives and is linked to the
performance of the group over a period of years rather than being dependent or unduly weighted on a single
year’s results or performance. No share options or shares are issued to employees or directors. There are
three components to remuneration which is determined along the following basis:
Basic remuneration and employee benefits
The basic remuneration comprises fi xed salaries for all permanent employees and variable incentives paid to
collections and sales staff. Permanent employees are compensated according to market-related benchmarks,
which are assessed on an ongoing basis with some employees on a total cost to company package basis
whilst others are on cash packages, with certain statutory contributions to pension, provident, group life and
healthcare schemes being made. All non-managerial staff in the Ellerine Holdings Limited group (EHL) are
entitled to an annual bonus equivalent to a month’s salary.
Short term incentive payments
Approximately 65% of the total incentive pool is paid by way of short term incentives based on annual
performance of individual staff members, management and executive directors. These incentives encompass
the variable pay paid to African Bank sales staff based on sales targets, collections staff based on collections
target achievement and other performance targets and annual performance bonuses to all support services
staff, management and executive directors. Sales commission paid to EHL staff currently does not form part of
the incentive pool because sales commissions are an integral part of remuneration for sales staff in the furniture
retail industry as it is determined with direct reference to the actual sales concluded by the individual sales staff.
The short term bonus will be a smaller component of total incentives for senior management, executives and
executive directors and is not expected to exceed 40% of the total incentive payment to this group. There are
no future service conditions attached to the payment of short term incentives.
Integrated report 2011 | African Bank Investments Limited
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