2012 Integrated report - Sappi

Component Purpose Characteristics
Variable
Long term incentive
Performance plan shares > Reinforce the guiding principle
for long term performance and
> Conditional grants awarded annually to executive directors and other
key senior managers of the company
shareholder interests
> Cliff vesting after four years if performance hurdles are met
> Align executive interests with
the long term operational
> Performance is measured relative to a peer group of 14 other industry
related companies
growth of the company
> The number of shares allocated is benchmarked externally and is
> Encourage long term
performance based
commitment to the company
> Is a wealth creation mechanism
for executive directors and
other key senior managers if
the company outperforms the
peer group
Broad-based Black Economic Empowerment
Management share > Provide black managers the > Established to meet the requirements of the Forestry Sector Charter
ownership plan
opportunity to acquire equity in
the company
> Eligible employees receive an allocation based on seniority of ‘A’
ordinary shares
> Attract, motivate and retain > Shares vest 40% after three years and 10% each year thereafter
black managers
> Shares can only be taken up after September 2019
> Managers receive the net value in shares or cash at the end of the
lock-in period
Base salary
Base salaries are normally reviewed annually with effect from
01 January each year.
Increases are determined by reference to market competitive
practices among companies of similar size and complexity in local
markets; individual performance; experience; and in the context of
salary increases across the group as a whole.
The policy is that salaries for executive directors and other key
senior managers should typically be at the median of the market.
The company’s policy on compa-ratios range from 80% to 120%
of market median.
The approach to reviewing the base salary of executive directors
is the same as that for other employees.
The base salary increase for executive directors and other senior
key managers in 2012, was in line with the general salary increase
mandate for all staff, dependent upon location.
Mr Boëttger received a salary increase of 6% on the South
African portion of his salary and 4% on the off-shore portion of his
salary, in line with general staff increases in South Africa and the
United Kingdom respectively. His base salary effective 01 January
2012 was US$760,640 per annum.
Mr M R Thompson received a salary increase in January 2012
of 10% on his South African salary and 4% on his off-shore
portion of his salary. Mr Thompson’s salary increases also contain
market adjustments to both the on-shore and off-shore portion to
bring his pay in line with other chief financial officers of companies
of similar size and complexity and to position his pay at the
median of the market. Mr Thompson’s base salary with effect
01 January 2012 was US$398,733 per annum.
Retirement benefits
It is the company’s policy that retirement benefits should,
wherever possible, be in the form of defined contribution
arrangements.
Some executive management may still be members of legacy
defined benefit plans. Almost all the group’s defined benefit funds
have been closed to new hires. The contribution rate to executive
directors depends on whether they are members of the defined
benefit fund or defined contribution fund.
Mr Boëttger and Mr Binnie (Mr Binnie was appointed 09 July 2012,
to succeed Mr Thompson who retired at the end of August 2012)
are members of defined contribution funds and the company
contributions are fixed at 27.7% of base salary. Mr Thompson was
a member of a defined benefit fund and a defined contribution
sappi Integrated Report 2012 87