Telkom AR front.qxp

Headcount movement
Compensation and benefits
• Remuneration
While the fixed, or guaranteed, remuneration
packages are reviewed each year,
in certain critical skills areas, depending on
the supply and demand of those skills in the
market, there are ad hoc reviews to ensure
we remain competitive.
• Non-executive directors
The directors, on recommendation of the
human resources review and remuneration
committee, determine the fees of nonexecutive
directors who do not participate
in the incentive scheme for top
management. These fees are set out on
Page • and in Note • in the consolidated
annual financial statements.
• Executive remuneration
Fixed remuneration is currently set at
the market median and independent
remuneration consultants advise the Board’s
remuneration committee on executive
management packages.
Guaranteed packages are influenced by the
scope of each individual’s role, knowledge,
skills and experience. These are reviewed
2006 2007 2008 2009(**)
Opening balance 28,972 25,575 25,864 24,879
Employee gains 706 1,512 918 1,047
Appointments 686 1,486 891 1,034
Re-instatement 20 26 27 13
Employee losses 4,103 1,223 1,903 2,406
Employee retrenchments 2,990 20 4 10
Voluntary early retirement 674 7 2 5
Voluntary severance 2,295 13 2 5
Involuntary reductions 21 0 0 0
Natural attrition 1,113 1,203 1,899 2,396
Closing balance 25,575 25,864 24,879 23,520
Other employees* 4,227 5,807 3,801 4,307
* Other employees refer to contract and temporary employees but exclude Board members,
learnerships and bursary students.
** Employee retrenchments for 2009 were employee initiated.
each year as part of our overall
remuneration review process and they are
assessed against individual performance.
The difference between the upper quartile
and the market median for guaranteed
packages is used when calculating
incentives for top management.
• Other employees
Salary increases for all employees –
management and bargaining unit – are
approved by the Board. Non-management
employees are paid in terms of the
negotiated agreements with the relevant
unions.
• Short-term incentive plan
There is an incentive scheme for our
management based on a balanced set of
measures determined by the Board. The
measures consist of financial and key
performance driven targets, based on the
approved business plan. All other
employees participate in an incentive
scheme with different measures applied at
the lower levels.
Telkom Annual Report 2009 63
In the top management scheme, the
financial driver accounts for 45% of the
total award, and this is measured by the
basic earning per share, return on assets
(ROA) and the defend and grow revenues
strategy. Performance drivers (customer
satisfaction and organisational renewal
components) account for 35% and 20% is
allocated for individual performance.
• Long-term incentive plan
All employees receive conditional shares,
subject to their individual performance for
each year preceding the allocation. The
allocation is based on the average share
price 10 days before the award date of
June 1 each year, using a percentage of
the employees’ total package. Our
employees have no right or title to the
shares and cannot receive dividends until
the shares have vested. The shares will only
vest if we meet our annual financial targets
which are set out in the relevant team
award plan, and employees must remain in
continuous employment. The Company will
introduce a new share scheme subject to
shareholders’ approval.
• The Telkom Pension Fund and
Retirement Fund
The old Pension Fund, only had 123
members and the Telkom Retirement Fund
had 23,389 members at March 31, 2009
and both are financially sound.
Performance management
The performance management system has
been enhanced to ensure that our
leadership is measured on the right criteria
to drive behaviours that will ensure we
continuously improve on the value we
obtain from our employees. A five point
assessment scale has been introduced that
ranges from ‘consistently exceeds job
requirements’ to ‘consistently does not meet
job requirements’ to distinguish those who
do from those who do not.
Group
overview
Management
review
Sustainability
review
Performance
review
Financial
statements
Company
Financial
Information