Full integrated annual report - African Bank - Investoreports

Sign-on bonuses
Sign-on bonuses are paid to attract specialised skills and to compensate employees for loss of benefi ts from
previous employers. The amounts paid as a sign-on bonus is at the discretion of the respective member
of the group executive committee and carries minimum service periods depending on the quantum of the
sign-on bonus.
Severance payments
Severance payments are made to employees on early termination of contracts or employment either through
retrenchment or mutual termination. This does not apply to executive directors or members of the group
executive committee as there are no fi xed term service contracts or guaranteed period of employment.
Guaranteed bonuses
Guaranteed bonuses are paid to employees whose contracts contain a clause covering a guaranteed annual
bonus equal to a month’s salary. This does not apply to executive directors or members of the group executive
committee as their bonuses are dependent on individual and group performance.
Short and long term incentives
Incentive payments are compensations paid to our people whose performances are at or above expectation
having regard to their basic remuneration, and for their contribution towards the creation of sustainable
shareholder value. The incentive structures are designed to encourage and reward superior performance at
all levels of the organisation, but are more focused at the management and executive level.
The basic premise for the determination of incentives is that there must be creation of shareholder value in any
given year or else there will be no incentives paid. All incentives paid by the group are funded out of a pool
derived from the economic profi t of the group, but evaluated at business unit level.
1. Short term incentive payments
In aggregate approximately 70% of the incentive pool is used to pay short term incentives including:
Sales incentives paid to branch staff on a monthly and quarterly basis for achieving or exceeding sales
and new client targets;
Collections incentives paid on a monthly and quarterly basis for achieving or exceeding cash
receipting targets;
Annual profi t share paid to non-managerial staff which is a fi xed portion of the pool with a maximum
amount paid per employee, differentiated based on an individual’s level of performance; and
Annual discretionary bonuses for executive directors, executives, management and support services
staff.
The sales commissions paid to the Ellerines sales staff do not form part of the incentive pool because sales
commissions are an integral part of remuneration for sales staff in the retail industry, as the commission is
based directly on each sale concluded by the staff member.
Senior management earn a proportionately higher amount of their incentives through the long term incentive
plan than through the annual bonus with approximately 60% in long term incentives. For members of the group
executive committee typically 70% of incentives are awarded as long term incentives.
2. Long term incentives
Thirty percent of the pool is used to fund a long term incentive plan, designed to encourage and reward
superior long term shareholder value creation.
Integrated report 2011 | African Bank Investments Limited 73