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Performance-based remuneration

The Sanlam Board recognises that appropriate remuneration for executive directors, members of its Executive committee and other employees is inextricably linked to the attraction, development and retention of top-level talent and human capital within the Group.

Given the current economic climate, changes in regulatory requirements and the ongoing skills shortage, it is essential that adequate measures are in place to attract and retain the required skills. In order to meet the strategic objectives of a high-performance organisation, the remuneration philosophy is positioned to reward exceptional performance and to maintain that performance over time.

In applying the remuneration philosophy, a number of principles are followed:

  • Pay for performance: Performance is the cornerstone of the remuneration philosophy. On this basis, all remuneration practices are structured in such a way as to provide for clear differentiation between individuals with regard to performance. It is also positioned so that a clear link is maintained between performance hurdles and the Sanlam strategy.
  • Competitiveness: A key objective of the remuneration philosophy is that remuneration packages should enable the Group and its businesses to attract and retain employees of the highest quality in order to ensure the sustainability of the organisation.
  • Leverage and alignment: The reward consequences for individual employees are as far as possible aligned with, linked to and influenced by:
    • The interests of Sanlam shareholders (and, where applicable, minority shareholders in subsidiaries);
    • Sustainable performance of Sanlam as a whole;
    • The performance of any region, business unit or support function; and
    • The employee’s own contribution.
  • Consistency and fairness: The reward philosophy strives to be both consistent and transparent. Where there is differentiation between employees performing similar work, the differentiation is required to be fair, rational and explainable. Differentiation in terms of market comparison for specific skills groups or roles is, however, necessary and differentiation concerning performance is imperative. Unfair differentiation is unacceptable.
  • Attraction and retention: Remuneration practices are recognised as a key instrument in attracting and retaining the required talent to meet Sanlam’s objectives and ensure its sustainability over the long term.
  • Shared participation: Employee identification with the success of Sanlam is important owing to the fact that it is directly linked to both Sanlam’s and individual performance. All employees should have the chance to be recognised and rewarded for their contribution and the value they add to Sanlam, and, in particular, for achieving excellent performance and results, in relation to Sanlam’s stated strategic objectives. The performance management process contributes significantly towards obtaining this level of participation and towards lending structure to the process.
  • Best practice: Reward packages and practices reflect local and international best practice, where appropriate and practical.
  • Communication and transparency: The remuneration philosophy, policy and practices, as well as the processes to determine individual pay levels, are transparent and communicated effectively to all employees. In this process the link between remuneration and Sanlam’s strategic objectives is understood by all employees.
  • Market information: Accurate and up-to-date market information and information on trends is a crucial factor in determining the quantum of the remuneration packages.
  • Clawback and malus: Where performance achievements are subsequently found to have been significantly misstated so that the bonuses and other incentives should not have been paid, provision is made for redress through either malus (pre-vesting forfeiture) or clawback (post-vesting forfeiture).

For Sanlam to remain competitive, remuneration policies and practices are evaluated regularly against both local and international remuneration trends and governance frameworks, most notably King IV™.

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