2012 Integrated report - Sappi

Governance and compensation continued
Compensation report continued
Summary of reward components of executive directors and other members of the group executive committee.
The compensation of executive directors and other key senior management comprises fixed and variable components.
Component Purpose Characteristics
Fixed
Base salary
Retirement benefits
Medical benefits
Death and disability
benefits
Other benefits
Variable
Short term incentive
Annual incentive
To attract and retain talent by
ensuring base salaries are
competitive in the market in which
the individual is employed
> To provide income for an
individual after they have
stopped working
> To provide medical insurance
to employees and their
families in the event
of ill-health
> Appropriate in light of position
> To provide assurance to
employees’ family in the event
of disability and/or death
> Focus participants on key
annual metrics
> Motivate the attainment of
short term goals for the
applicable period
> Provide a competitive target
compensation opportunity
> Typically paid monthly
> Reviewed annually
> Target median of the market
> Individual increases are granted based on performance (merit), and
influenced by internal and external equity and budget constraints
> Defined benefit and defined contribution plans based on local
market practice
> Majority of defined benefit plans closed to new hires
> Employees in legacy defined benefit plans continue to accrue
benefits in such plans for both past and future service
> Non-pensionable
> Market related
> Based on local market practice
> Disability benefit at a percentage of base salary for a defined period
> Death benefit is a multiple of base salary
Dependent on location, seniority/grade and regional policy, eg car benefits,
education assistance, service awards etc.
> Variable compensation provided to reward performance over
the short term
> Short term incentive targets are determined annually
> Specific performance goals supporting both the company’s overall
goals for the year and the contributions of individuals in his/her own
area of responsibility are established
> Linked to the next higher business unit level. A portion of each unit’s
bonus calculations are linked to the next higher business unit level
eg a mill is linked to a region
> Paid out annually provided the threshold is achieved
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