BUSINESS NEWS - A number of questions have been raised about a R19 million cash bonus paid to Santam chief executive Lizé Lambrechts in 2017. The bonus was paid under the group’s Outperformance Plan (OPP), one of its five long-term incentive plans. Because of this payment, Lamprechts was the second best-paid executive among listed insurance companies – and the best-paid South African-based one – with remuneration totalling R36.077 million last year, if one includes the value of long-term incentives which vested in the year* (read: Best-paid listed insurance execs).
Shareholder activist Theo Botha is urging investors to vote against the insurer’s remuneration policy and implementation report at Wednesday’s annual general meeting. He says the disclosure around the OPP has been opaque since its implementation and that the benefit awarded to the CEO and FD is “excessive”. He says that in its 2015 integrated report, Santam “highlighted that the maximum payment under the OPP would be 200% of TGP [total guaranteed pay]”. He argues that in 2016, this “maximum payment level was increased to 600% without any reasons given” and that the 2017 report “discloses for the first time who the current OPP participants are, as well as the measurement period”.
Why are these awards are hidden away in the annual financial statements?
He says that “despite the fact that the scheme was established in 2015, the HRRC [Human Resources and Remuneration Committee] has never disclosed either the performance measurements to be applied or targets to be achieved, nor the fact that the CEO and CFO were then already offered participation, and that payment of the benefit to the CEO would accrue in 2017”.
Santam, however, says that the award was disclosed in its audited financial statements in 2015 and 2016 (these documents are separate from its integrated annual report). The group also says its “latest Remuneration Report does contain increased disclosure … in order to enhance our application of the King IV Codes”. It is, however, unusual for details of an award like this to be excluded from a remuneration report. Botha highlights out that the “company refers shareholders to the integrated report and to its AGM resolution pack in regards to remuneration issues” and questions “why these awards are hidden away in the annual financial statements?”
e argues that “shareholders were unable in 2015 to consider and vote on the grants and whether or not these were in line with their interests”.
He says he would “recommend that the board withdraw the awards granted to the CEO and CFO, and if the benefits have already been paid out, they should be claimed back”.
Santam defends the OPP grant and payment and says its HRRC “extended the OPP to Ms Lambrechts to reward superior performance over a three year measurement period from 1 January 2015 to 31 December 2017. No payments were to be made under the OPP unless operational targets are outperformed and growth in net insurance results exceeds the hurdle set for the Santam Group, for the period. Full payment is only made if the stretch performance targets are met. There is no interim measurement period. The maximum payment under the OPP to the CEO is six times her 2017 TGP, payable in April 2018. The final payment was less than the maximum”.
