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Vodacom Group Limited
Integrated report for the year ended 31 March 2017
Abridged remuneration report
continued
Guaranteed package
Within the context of our GP, Vodacom offers a selection of
benefits that are both best practice and compliant with legislative
practices. In terms of our total cost to company philosophy, any
change in the price of a benefit or contribution level will not have
a cost impact on the employer but will impact on the net
remuneration of the employee.
As a standard, we offer the following benefits to all our employees,
including our executive directors and prescribed officers:
Retirement funding
All permanent employees have to join the Vodacom Group
Pension Fund, a defined contribution pension scheme. Executives
also participate in the Vodacom Group Executive Provident Fund,
which is also a defined contribution scheme. Employees have the
option to choose their level of contribution to the pension fund.
They also have the option to choose where they would like their
money to be invested based on their own individual risk profile.
Normal retirement age is 60 for executive directors and other
executives. For all other employees it is 65.
Insured benefits
In the unfortunate event of an employee’s death, a lump sum
amount of three times annual pensionable salary (core cover) is
paid to the beneficiaries. If the employee had a qualifying spouse
and/or qualifying children upon death, a spouse’s pension of 40%
of monthly pensionable salary and a child’s pension of 10% of
monthly pensionable salary becomes payable. The scheme also
covers the cost of children’s education fees.
All employees have the option to select additional death cover of
up to seven times their annual pensionable salary, inclusive of the
compulsory core cover of three times annual pensionable salary.
These additional contributions are calculated at a percentage of
pensionable salary.
Disability
In the event of employees becoming unable to perform their
duties as a result of disability, they will receive a monthly income
of 75% of their monthly pensionable remuneration. The disability
premiums are also funded from the GP. This benefit is payable
until the employee recovers sufficiently to return to work, or if not,
up to normal retirement age, whereafter the employee will retire
normally. During the period of disability, payment to the
retirement fund and to Group life insurance continues.
Medical aid
Employees can choose to participate in any nominated medical
aid scheme. The schemes available at Vodacom were chosen
for cost effectiveness and to address the needs of the diverse
Vodacom workforce. On an annual basis we review the medical
aid schemes to assess their appropriateness for our employees.
As part of the medical aid benefit offering, we have a full-time
Alexander Forbes consultant on site to assist with any
medical aid-related queries.
We do not offer post-retirement medical benefits and have no
such liabilities.
Short-term incentive
All employees, including executive directors and prescribed
officers, excluding employees on a commission, quarterly or
bi-annual bonus structure, participate in the annual STIP plan.
Bonus payments are discretionary and depend on financial
performance and individual contribution. Payments are made
in cash in June each year.
Where annual targets are achieved in full, 100% of the on-target
bonus will be paid. In instances where target goals are exceeded,
the bonus is capped at a percentage of the guaranteed package.
Where the bonus targets are not achieved in full, a pro rata bonus
is paid only if the threshold performance level has been achieved.
Financial and personal multipliers are applied as separate multiples
of the on-target percentages to determine the final award.
The financial multiplier ranges from 0% – 200% and the personal
multiplier from 0% – 150%. The personal performance multipliers
are based on the performance of executives relative to their
objectives.
The CEO does not have a personal performance multiplier and as
such his STI is based on business performance only.
The on-target and STI cap percentages are set out below:
Role
On-target %
of GP
Maximum %
of GP
CEO
100%
200%
Executive director
60%
180%
Prescribed officers
60%
180%
The metrics and weightings used in the business performance
scorecard remained unchanged from FY2016. The targets
comprise three financial measures, which focus on the core
operations of our business and one strategic measure, being
customer appreciation.
Measure
Weighting
Service revenue
20%
EBITDA
20%
Operating free cash flow
20%
Customer appreciation
40%
These weightings align short-term incentives to our strategic
focus on service revenue growth and market performance.
Long-term incentives
These incentive plans aim to retain key skills and motivate
executives over the long-term, which is essential to sustainable
performance.
The current policy for annual LTI awards split the total award into
the following elements at the time of the awards:
g
g
33% awarded as Vodacom retention FSP shares;
g
g
33% awarded as Vodacom performance FSP shares; and
g
g
33% awarded as Vodafone performance shares.