Vodacom Integrated Report 2018

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Remuneration report continued
70 Vodacom Group Limited Integrated report for the year ended 31 March 2018
Non-executive director (NED) remuneration
NED fees are benchmarked annually against fees published by a
peer group of companies in their respective most recent AGM
notices. The peer group of companies for NED benchmarking is
different from the TSR peer group, since the skills required from
NEDs come from a pool of more appropriately sized companies,
including financial services companies. Banks have, however,
specifically been excluded, since their NED fees are noticeably
higher than other industries. Vodacom targets to pay NED fees at
the median of the following peer group companies:
g g AngloGold Ashanti
g g Anglo Platinum
g g Aspen Pharmacare Holdings
g g Bidvest Group
g g Discovery Holdings
g g Mediclinic
g g MTN Group
g g Naspers
g g Sanlam
g g Sasol
g g Telkom SA SOC
g g Tiger Brands
g g Woolworths Holdings
Further details on our payments to non-executive directors are
provided in our Remuneration report at
Executive contracts and policies
Executives have permanent contracts of employment. The notice
periods applicable to members of executive management are:
Role Notice period
CEO 12 months
Executive director 6 months
Payments for termination of office
The RemCo has the discretion to approve termination benefits to
executive directors when required. The maximum termination
benefit potentially payable will be limited to the notice period and a
maximum of a six months ex-gratia amount. These benefits will not
apply in the event of a normal voluntary resignation or retirement.
Remuneration framework
Guaranteed package (GP)
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 affect the net
remuneration of the employee.
Short-term incentives (STIP)
All employees, including executive directors, but excluding
employees on a commission, quarterly or bi-annual bonus
structure, participate in the annual STIP plan. STIP payments are
discretionary and depend on financial performance and individual
performance. Payments are made in cash in June each year.
Where annual targets are achieved in full, 100% of the on-target
STIP will be paid. In instances where target goals are exceeded, the
STIP is capped at a percentage of the guaranteed package. Where
the STIP targets are not achieved in full, a pro rata STIP is paid only
if the threshold performance level has been achieved. Where
performance is below threshold, no STIP is payable.
Financial and personal multipliers are applied as separate multiples
of the on-target percentages to determine the final award.
On-target and maximum STIP
The on-target and maximum STIP percentages are set out in the
table below:
Role
On-target
% of GP
Maximum
% of GP
CEO 100% 200%
CFO 60% 180%
The maximum % of GP is based on a combination of the business
performance multiplier and the personal multiplier.
Business performance multiplier
The business performance multiplier ranges from 0% – 200%. The
metrics comprise three financial measures, which focus on the
core operations of our business and one strategic measure, being
customer appreciation.
Metric
2018
Weighting
2017
Weighting
Service revenue 20% 20%
EBITDA – 20%
EBIT 20% –
Operating free cash flow (OFCF) 20% 20%
Customer appreciation 40% 40%
The assessment of customer appreciation consists of the
following metrics:
g g Net promoter score (NPS) for both Consumer and Enterprise
business units.
g g Brand consideration.
g g Churn, revenue market share and ARPU.
NPS is used as a measure of the extent to which our customers
would recommend us, while brand consideration acts as a
measure of the percentage of people who would consider a
certain brand as their telecoms provider.
For executives, business performance is split between the relevant
operating company and the Group. The Group business multiplier
is used for the CEO and CFO, and for other SLT members the
business multiplier is based on a weighted average of the
multipliers for the relevant operating company and the Group.
Personal multiplier
The personal multiplier ranges from 0% – 150%. The personal
performance multipliers are based on the performance of
executives relative to their objectives.
As the CEO does not have a personal performance multiplier,
his STIP is based on business performance only.