Section B: Implementation of remuneration policy for financial year 2016
How did we perform and pay in 2016?
Our pay decisions took full consideration of financial performance, including progress against the Balanced Scorecard objectives. This is in line with improving returns to shareholders and accelerating delivery.
The total executive directors’ and prescribed officers’ remuneration decreased 3.1% as we revised our operating model and dedicated executive capability to South African banking, Rest of Africa banking, and Wealth, Investment Management and Insurance. As stated, our policy is to pay above market median remuneration for our top performers and critical talent. By retaining our very best people, we optimise our ability to deliver our strategy and shareholder value.
We continue to award higher increases to junior levels as shown below.
How do we incentivise performance?
All employees share in the overall performance of the Group. Accordingly, 50% of each business unit’s share of the bonus pool was determined based on Group’s performance. The balance was strongly differentiated by business unit performance.
The annual bonus incentive pool has increased by 3.5% in absolute terms, with a total value of R2 276m. A separate bonus pool (R82m) was approved for additional hires to support the successful separation from Barclays PLC, including the build out of technology and financial crime. Including the restricted awards, the total incentives increase is 8.7%.
Composition of 2016 total incentive awards
Executive Committee incentives are up by 8% on the prior year.
We are committed to sound governance as reflected in our clawback and deferral approach. For executive directors and prescribed officers, 2016 bonuses were delivered 20% in cash in March, 20% in shares retained for six months (being the non-deferred portion) and 60% of the annual award deferred over five years, subject to continued employment and malus provisions. For material risk takers, deferred share awards are also subject to an additional six-month retention period, with shares releasing in September of each year.
Our adjustments were informed by performance, market competitiveness, as well as role changes during the year. We finalised adjustments during the first quarter of 2017 and these will be effective from 1 April 2017.
|1||Role based pay is a unique element introduced to ensure that the remuneration of our executive directors, prescribed officers and material risk takers remains commensurate with market pay levels given the impact of European regulations. It will be phased out once the Barclays PLC sell-down is complete and the new LTIP begins to vest.|
|2||Appointed effective 1August 2016.|
|3||Appointed effective 1 September 2016.|
|4||Appointed effective 1 October 2015.|
|5||Resigned effective 30 September 2016.|
The variable remuneration for our executive directors and prescribed officers was determined based on a combination of Group, business unit and individual performance as outlined in the table below. For Group and business unit performance we consider headline earnings, return on equity and cost containment as adjusted for risk and control events. The variable remuneration (rand value) has been determined proportionally where there has been change in the individual’s role in the year.
All our executive directors and prescribed officers are material risk takers and therefore the maximum potential variable remuneration, in accordance with European Banking Association requirements, may not exceed 200% of total fixed remuneration.
|1||Fixed remuneration refers to the cost-to-company and role based pay package as at 31 December 2016.|
|2||Determined on individual performance and/or RemCo discretion.|
|3||Peter Matlare’s variable award (rand value) was calculated with reference to his total cost-to-company and his role-based pay for the five months of his employment.|
The RemCo granted Restricted Share Awards to 74 key employees (total value of R191m), including executive directors and prescribed officers, to retain skills critical during the Barclays PLC sell-down and beyond. The details of the awards were as follows:
Form of award: Cash, which will be converted to and settled as equity, once the executives are cleared to deal (as defined in the JSE Listings Requirements) having regard to the sell-down.
Award date: 1 October 2016
Performance period: Two years ending on 30 September 2018
Deferral periods: The deferral period for material risk takers will be aligned to the requirements as set out by the Prudential Regulatory Authority. The Group deferral approach will apply to non-material risk takers.
- Individual performance rating of ‘strong’ or above through to the end of the performance period. This will be measured through the achievement of key business and individual objectives including participant’s contribution to the successful separation from Barclays PLC.
- Participant remaining an employee of Barclays Africa or Barclays PLC and not being under notice when the payment, award or recommendation is made.
- The employee not being under investigation or suspension when the award is made.
Minimum shareholding requirements
To ensure greater executive exposure to the share price, Executive Committee members are required to have a minimum shareholding of 1.5 times their cost-to-company (salary and benefits, but excluding role based pay). This will be built up at a rate of at least 20% per annum over five years from 2016. The shareholding as at 31 December 2016 against the requirement for each executive director and prescribed officer is as follows (based on the Barclays Africa share price of R168.69 as at 31 December 2016):
|1||Peter Matlare was not granted any shares during the period.|
How much were executive directors and prescribed officers paid in 2016?
When we consider executive director and prescribed officer remuneration, we do so with a detailed understanding of remuneration for the broader employee population, and use the data to compare remuneration and ensure consistency across the Group.
These tables exclude the 2016 Restricted Awards as these awards relate to the retaining of critical skills during the sell-down and beyond.
Maria’s 2016 role based pay was split 50% in phantom shares and 50% in cash, with phantom share restrictions lifting over five years (20% each year), in line with the Barclays PLC approach.
Peter joined the Group as an executive director from 1 August 2016. His remuneration is for five months of employment.
Jason was appointed as Financial Director effective from 1 September 2016.
Nomkhita was appointed to the role of Chief Executive effective from 1 October 2015.
Stephen resigned effective from 30 September 2016.