Remuneration report

FOR TRANSACTION CAPITAL, COMPENSATION IS A CRITICAL DETERMINANT OF ORGANISATIONAL PERFORMANCE AND SUSTAINABILITY.

This view is based on the belief that all factors which underpin enhanced performance require the highest calibre of leadership and specialist technical expertise, and that stakeholders' interests are best served by aligning strategy, business model, structure, staffing and compensation.

Without attracting, motivating and retaining the best available talent, even the best strategies, business models and structures will fail.

These principles are reflected in Transaction Capital's fifth strategic objective, which emphasises the group's commitment to investing in human and intellectual capital. This investment is informed firstly by the view that there is a normal distribution of talent in every field of endeavour, and secondly that the performance and sustainability of Transaction Capital will correlate highly with where its employees rank within that distribution. Put simply, the better Transaction Capital's people, the better the company. This is all the more relevant in the current environment, where the entrepreneurial flair of the group is augmented by the depth and quality of management.

Attracting and retaining high-calibre talent depends on providing both intrinsic and extrinsic rewards. While this remuneration report deals with the latter, intrinsic rewards are reflected in Transaction Capital's employee value proposition, which strives to provide talented individuals with good leadership, personal development and support, and meaningful work in an intellectually stimulating and demanding environment. To complement this, compensation policies are directed at sustaining a performance-driven culture where the most talented people at all levels consider Transaction Capital and its divisions an employer of choice.

GOVERNANCE OF COMPENSATION

Principle 14 of the King IV report states:

"The governing body should ensure that the organisation remunerates fairly, responsibly and transparently so as to promote the achievement of strategic objectives and positive outcomes in the short, medium and long term."

To provide stakeholders with insight into Transaction Capital's remuneration policies and structures, the group continues to refine the remuneration report in line with King IV and the JSE Listings Requirements. The board of directors approved the remuneration report and believe that the performance criteria used to measure and determine short- and long-term incentive awards are appropriately aligned with Transaction Capital's goals, strategies and outcomes, and with the requirements of all stakeholders.

REMUNERATION COMMITTEE COMPOSITION AND MANDATE

The board of directors has ultimate responsibility for the appropriateness of remuneration policies and executive remuneration. The board delegated oversight of this responsibility to the group's remuneration committee, which comprises the following non-executive directors, the majority of whom are independent:

  • KUBEN PILLAY – chairperson of the committee; independent non-executive director.
  • CHRISTOPHER SEABROOKE – chairman of the board; independent non-executive director.
  • PAUL MILLER – non-executive director, who replaced Jonathan Jawno on the committee on 1 November 2017.

The remuneration committee's mandate is to ensure that the group's remuneration policies:

  • Are fair, responsible and transparent.
  • Attract, motivate, reward and retain human capital.
  • Promote the achievement of strategic objectives within the organisation's risk appetite.
  • Promote positive outcomes.
  • Promote an ethical culture and responsible corporate citizenship.

Within this mandate, the remuneration committee believes that a well-designed remuneration policy strikes a balance between the interests of shareholders and executives, and the principles of good governance. The remuneration committee assesses the mix of fixed remuneration, variable remuneration and long-term incentives to meet the group's needs and strategic objectives, in addition to reviewing the robustness of incentive schemes in ensuring continued contribution to shareholder value.

It is the responsibility of the remuneration committee to oversee that the implementation and execution of the remuneration policy achieves its objectives.

PRINCIPLES OF REMUNERATION

The following overarching principles are applied to remuneration:

  • Remuneration policies are approved by the remuneration committee and the board.
  • Transaction Capital attempts to eliminate differential compensation related to gender, race and location, and applies the principle of equal work for equal pay.
  • Compensation is defined on a cost-to-company basis, with all benefits included and fully taxed.
  • Formal and informal research and benchmarking are performed to determine market norms for similar positions.
  • Remuneration is aligned to individual financial and non-financial outputs measured through performance management systems that focus on goals achieved and exceeded.
  • Performance incentives are used to drive specific behaviours that support group, divisional or departmental performance and their ability to contribute as a responsible corporate citizen. Incentives and bonuses at executive level are aligned to profit growth and relevant returns metrics, key non-financial measures, and additional key outputs and personal performance. In certain instances, a portion of these incentives may be deferred or delivered in the form of share plan awards to support retention.
  • In instances where an executive's decisions are likely to have a material impact on shareholder value, an element of their compensation may be aligned with the medium to longer-term value of Transaction Capital or each respective division; specifically through defined long-term incentive schemes (see part 1 that follows belowfor the group's compensation principles).
  • Any change to the compensation of any individual at every level of the group must be approved by the supervisor of the individual's supervisor, with the remuneration committee approving the compensation of all executive directors, including the CEO and his direct reports, and certain functional specialists.
  • No employees or directors have employment terms that exceed six months' notice.
  • Where relevant, the company is not under any obligation to make exit payments for executives leaving the group, and this may be considered on a case-by-case basis. Subject to the remuneration committee's approval, 'good leavers' will receive a pro rata benefit due to them in terms of long-term incentives, subject to meeting each tranche's performance requirements.

SHAREHOLDER ENGAGEMENT

At the 2017 AGM (held on 8 March 2018), 84.93% of shareholders present at the meeting voted in favour of the group's remuneration policy, with 91.14% voting in favour of the remuneration implementation report. No significant changes in the remuneration policy have occurred in the current year.

The group's remuneration policy and its implementation is presented to shareholders annually for consideration and approval under the terms of separate advisory non-binding votes at the AGM as recommended by King IV and prescribed by the JSE Listings Requirements.

In the event that 25% or more of the votes cast are recorded against either the remuneration policy resolution or the remuneration implementation resolution, or both, then pursuant to paragraph 3.91 of the JSE Listings Requirements, the company will extend an invitation to dissenting shareholders to engage with the company to discuss the reason for their dissenting votes.

 
PART 1
 

OVERVIEW OF REMUNERATION POLICY

The success of Transaction Capital and its divisions relies on a wide range of leadership, managerial, functional and technical skills. Many of these skills are unique to specific divisions, departments or organisational levels. The entrepreneurial spirit of the group requires that the remuneration policy remains competitive and flexible, while encouraging positive outcomes and promoting an ethical culture and good corporate citizenship.

GENERAL STAFF

Throughout Transaction Capital, fixed and variable compensation policies and practices are structured to attract, motivate and retain the specific talent and skills required at each level for the progress of the group and its divisions. For the most part, these policies are determined by, and according to, divisional or departmental requirements within the governance guidelines described previously.

LEADERSHIP

Transaction Capital regards the individual and collective intellectual acuity, education, experience and industry knowledge of its most senior leaders and talent pool as a core capability and a source of competitive advantage. As such, the compensation, recruitment, performance, development and succession of the group's top executives are monitored directly by the CEO, together with his direct reports, with oversight by the remuneration and nominations committees and the board.

Executive compensation strives to attract, reward and retain the highest calibre of individuals in terms of education, expertise and experience, while aligning executive remuneration with stakeholder priorities.

The group operates on a total cost-to-company philosophy, where base package and benefits (including defined contributions to retirement funds, medical aid and other insured benefits) form part of the employees' fixed cost-to-company remuneration. Employees also participate in the short-term incentive scheme in the form of a performance bonus plan. Two key long-term incentive plans are in operation – the share appreciation rights (SAR) plan and the conditional share plan (CSP).

The different components of remuneration, the policy that governs it and the strategic intent and drivers are summarised in the table below.

REMUNERATION COMPONENT   REMUNERATION POLICY     STRATEGIC INTENT AND DRIVERS
Basic salary  

Total guaranteed package (TGP) measured against the 60th percentile of the market.

   

The TGP is market-related, provides executives with a competitive stable income and provides a standard of living consistent with the demands of a specific position.

The fixed portion represents a sufficiently high portion of the total remuneration to avoid overdependence on the variable components.

Benefits  

Group life, provident fund, medical cover and disability cover.

   

Provides financial structures for death, retirement, health and wellness.

Short-term incentives (STIs)  

Variable annual incentives based on achieving divisional/group quantitative objectives, with a qualitative portion of the bonus awarded based on non-financial measures as well as individual performance (where appropriate). A portion of the STI may be deferred in certain circumstances.

STIs are bespoke (according to the requirements of the group, division and function) and are specifically designed with individualised qualitative objectives to promote performance and/or achieve predefined performance requirements (which include financial objectives and other return metrics where appropriate).

Financial objectives include profit growth and relevant returns (for example, return on invested capital in SA Taxi or return on sales in TCRS.

Non-financial objectives include achieving employment equity targets (with growth in black senior and middle management), maintaining or improving B-BBEE scorecard levels, and executing strategy.

Additional qualitative STIs may be awarded for superior performance.

   

STIs reward specific behaviour and promote retention. Executives are assessed on their performance as well as the performance of the business.

In defining an individual's performance, the remuneration committee considers financial and non-financial performance.

The STI provides means to enjoy a higher quality of life through superior performance.

Long-term incentives (LTIs)  

Executives participate in LTI schemes where their decisions or behaviour is likely to have an impact on shareholder value. These schemes serve to harmonise the required attributes of shareholder alignment, retention of key talent and long-term sustained performance.

LTI schemes relate to the valuation of the group or its divisions, realisable over the medium to long term.

Refer below for a full description of the LTIs available to executives.

   

LTIs reward executives for achieving strategic objectives and positive outcomes in the medium to long term, while aligning objectives with stakeholders.

Market-related long-term reward and retention for executives and key talent provides an opportunity to accumulate wealth based on continued employment, and company performance and valuation.

Total reward  

Providing a competitive and attractive total compensation with a portion paid over the medium to long term.

   

To attract, motivate, align and retain scarce talent, and discourage dysfunctional short-term behaviour.

LONG-TERM INCENTIVES

SHARE APPRECIATION RIGHTS PLAN

The SAR plan allows executives and senior managers to participate in the appreciation of Transaction Capital's share price over time, subject to predefined performance criteria.

The SAR plan is an option-type plan (at no cost to the participant), with SARs awarded being equity-settled subsequent to the exercise thereof. The SAR plan awards a conditional right to a participant to receive a number of shares, the value of which is equal to the difference between the market value of the Transaction Capital share on the date of exercise and the date of grant. In other words, the participant is able to enjoy the increase in Transaction Capital's share price from the date of grant until the date on which the conditional rights are exercised.

The share price growth over the SAR plan period is settled in Transaction Capital ordinary shares, with the gain subject to income tax. To the extent that the SAR plan grant price exceeds Transaction Capital's share price at the time of exercise, no gain or cost is realised by participants.

Subject to the specific performance criteria of achieving continuous growth in group headline earnings per share of 5% above consumer price inflation (CPI), the SAR plan vests in full after four years of the award date and are exercisable for a 12-month period. SAR plan awards granted up to May 2014 were awarded with a three-year vesting period, with all awards after this date vesting four years after the award date.

While the SAR plan has been a successful retention mechanism since listing, the group favours the conditional share plan (discussed below) as a more appropriate retention tool with better alignment of performance to shareholder interests. This is in line with international trends towards less volatile and lower geared LTIs, which have proved to provide better alignment with shareholder interests and are more likely to avoid extreme payouts. As such, no new SAR plan awards were granted in the current year. The remuneration committee will assess the future use of SARs on a periodic basis, as required. Those SAR plan awards already in issue will continue to vest as per the SAR plan.

CONDITIONAL SHARE PLAN

Transaction Capital has adopted a decentralised management structure by devolving authority and responsibility to its respective divisions, namely SA Taxi and TCRS. This strategic objective has resulted in the requirement for an LTI scheme with a primary objective to link the scheme's performance to that of the division, which is achieved through the CSP.

The CSP caters for divisional executives who are believed to be in a position to directly impact and shape the performance of a division, while delivering on the division's strategy. Its purpose is to incentivise participants to deliver on the division's business strategy over the long term, and acts as a retention mechanism and tool to attract prospective employees. Furthermore, the CSP provides participants with an opportunity to share in the success of the division in which they are employed, and provides direct alignment between the participants and shareholders as the value of the CSP is based on the valuation of each division.

Transaction Capital group executives are incentivised based on the performance of the group as a whole.

The first tranche of CSPs was awarded in November 2016. Annual CSP awards occur in November/December each year, with interim awards catering for new joiners and special circumstances. All awards are subject to remuneration committee approval.

The remuneration committee believes that the CSP is a superior long-term incentive for Transaction Capital's objectives. The CSP offers participants certainty in that it comprises a fixed number of conditional shares. While its ultimate value will depend on performance, CSP awards will always have value.

The CSP mechanism is overseen and approved by the remuneration committee, and operates as follows:

  • A valuation of each division is performed by an independent expert on the date of the CSP award (to obtain a valuation per notional share of each division). Transaction Capital executives are awarded CSPs at the prevailing share price of Transaction Capital on date of award.
  • Key executives are awarded notional CSPs in each division (or in Transaction Capital for group executives) for zero cost, based on retention and/or performance criteria set by the remuneration committee.
  • The CSPs awarded to executives are based on a notional share held in each division, giving executives direct exposure to the performance of that division (or based on Transaction Capital's share price for group executives).
  • An updated valuation of each division is performed by an independent expert on the date of vesting of the CSP.
  • Employees are required to remain in the employ of the group to be eligible for vesting of the CSP (subject to standard 'good leaver' rules).
  • Employees who resign or are dismissed forfeit any CSP awards that have not vested.
  • Once the vesting period has passed and/or performance criteria are met (where relevant), the participant receives shares in Transaction Capital to the value of the notional CSP on date of vesting.

The CSP achieves the following objectives:

  • It motivates and rewards participants for creating longterm value through the opportunity to earn significant reward for superior performance.
  • It creates a direct line of sight between the performance of each division and the incentive earned.
  • Participants receive a right to a full share as opposed to the increase in value of a share.
  • The CSP directly aligns the interests of the participants with those of shareholders.

The remuneration committee approved a policy stipulating that the number of Transaction Capital shares issued in terms of the CSP awards will not exceed more than 5% of the issued ordinary shares of Transaction Capital at the time of approval of the CSP by shareholders. The CSP was approved by shareholders at a general meeting held on 20 October 2016.

GENERAL SHARE PURCHASE SCHEME

The general share purchase scheme facilitated voluntary investment, whereby executives were able to receive loan funding to purchase shares at market value. The scheme primarily operated prior to the listing of Transaction Capital in 2012 and was largely wound down in the 2014 financial year. No further allocations will be made in terms of this scheme, which terminated in December 2017.

DIRECT INVESTMENT

In appropriate circumstances, senior executives of a business may be afforded the opportunity to co-invest in that business (generally by way of an equity subscription partly funded by the company), thereby incentivising and aligning their long-term interests with those of the business, Transaction Capital and its shareholders.

FOUNDERS

Jonathan Jawno and Michael Mendelowitz are executive directors of the group, while Roberto Rossi is a non-executive director with a consulting and project contract, and therefore not independent by definition.

As the founding directors, Jonathan Jawno, Michael Mendelowitz and Roberto Rossi continue to be actively involved in various aspects of the group's businesses in supporting executive line management. This involvement includes strategy, operations, acquisitions, disposals, capital raising and management, regulatory matters and participation in group and divisional management where appropriate. The board believes that the founding directors' participation in this manner adds considerable value for shareholders on an ongoing basis.

Everglen Capital Proprietary Limited (in which the respective family trusts of Michael Mendelowitz and Roberto Rossi hold equal shareholdings) and the Kimberley Investment Trust (comprising the family trust of Jonathan Jawno) continue to be the largest shareholders of reference of the group.

Due to circumstances and history, the remuneration and fee arrangements of the founding directors are not conventionally structured. None of the founding directors participate in any of the group's employee share schemes or other LTI plans. The base packages of the executive founding directors are well below market-related fees for directors of their calibre. The non-executive directors' fees and consulting services of the non-executive founding director are also below market. At the end of each financial year, the independent non-executive members of the remuneration committee, in consultation with the CEO, consider the founding directors' inputs and successes during the year. The remuneration committee then awards incentive bonuses and contract adjustments relative to quantitative and qualitative performance, with reference to market benchmarks for listed companies comparable in size and industry.

NON-EXECUTIVE DIRECTORS

The annual fees paid to non-executive directors of the company for their services as directors and as members of the various board committees are determined on a marketrelated basis and are benchmarked against industry norms. No additional meeting attendance fees are paid.

The fees are approved by the remuneration committee and the board prior to being presented to shareholders for approval at the company's AGM.

Directors are required to retire on the third anniversary of their appointment and may offer themselves for re-election. As appropriate, the board, through the nominations committee, proposes their re-election to shareholders.

Non-executive directors do not participate in any of the group's LTI plans.

 
PART 2
 

IMPLEMENTATION REPORT

EXECUTIVE COMPENSATION

The following table provides a breakdown of the annual remuneration (excluding SAR and CSP awards) of directors and prescribed officers for the year ended 30 September:

  2018   2017  
  Salary
R
Benefits
R
Annual
incentive
bonus
R
Total
R
  Salary
R
Benefits
R
Annual
incentive
bonus
R
Total
R
 
EXECUTIVE DIRECTORS                    
David Hurwitz 3 320 046 563 914 3 501 816 7 385 776   3 150 802 548 207 2 728 688 6 427 697  
Mark Herskovits 2 320 484 412 310 2 530 628 5 263 422   2 194 536 436 401 2 618 140 5 249 077  
Jonathan Jawno 1 327 341 197 709 4 500 000 6 025 050   1 341 480 183 570 4 000 000 5 525 050  
Michael Mendelowitz 1 292 885 232 165 4 500 000 6 025 050   1 341 480 183 570 4 000 000 5 525 050  
Ronen Goldstein 1 719 900 201 663 1 102 500 3 024 063   1 592 500 186 725 1 166 667 2 945 892  
PRESCRIBED OFFICERS                    
Terry Kier 3 012 417 2 223 361 3 244 395 8 480 173   2 842 422 2 327 828 2 040 500 7 210 750  
David McAlpin 3 049 257 309 719 2 477 538 5 836 514   2 824 393 292 007 2 337 300 5 453 700  
TOTAL 16 042 330 4 140 841 21 856 877 42 040 048   15 287 613 4 158 308 18 891 295 38 337 216  
TOTAL GUARANTEED PACKAGE

Executive TGP is determined against the findings of an outsourced benchmarking engagement, utilising the Paterson Classic system as an indicator of grades for the executive team. Formal and informal research, coupled with market norms and industry practice, also influence the policies and practices in place. The remuneration committee believes that the TGP is fair in light of the outcomes of the benchmarking undertaken and relative market norms.

SHORT-TERM INCENTIVES
QUANTITATIVE

Bespoke and individualised quantitative targets are preset and assessed annually by the remuneration committee to promote individual and group performance. The following factors are taken into account:

  • Group:
    • Growth in headline earnings per share above CPI.
    • Return on equity achieved.
  • Divisions:
    • Growth in earnings per share above CPI.
    • Return on invested capital.
    • Where relevant, return on sales and new business origination.
  • Where appropriate, STIs were awarded for individualised targets being met.
  • In general terms, employees can achieve a maximum quantitative STI of up to nine months of the employee's TGP.
QUALITATIVE

Where individual performance warrants, the remuneration committee may reward superior qualitative performance over and above quantitative targets set. The remuneration committee will consider individual performance in meeting strategic imperatives such as capital management, acquisitions, operational projects and integration. In exercising this discretion, the remuneration committee must satisfy itself that such payments are fair and reasonable, and are disclosed to shareholders as required by remuneration governance principles.

The overall award of STIs for executive directors mirrors the performance of the business, and hence is determined as reasonable and aligned with shareholder interests. STIs promote the achievement of strategic objectives within the organisation's risk appetite as well as positive outcomes.

Non-financial key performance indicators are also considered in the qualitative STI awards.

The rationale and context for the remuneration of executive directors is as follows:

CHIEF EXECUTIVE OFFICER
David Hurwitz

David Hurwitz' incentive bonus of R3 501 816 for 2018 comprised:

  • A quantitative bonus for the growth of the group's headline earnings per share and return on equity achieved.
  • A qualitative bonus for the overall improvement in the state of the group during 2018, the continued integration of the acquisitions completed in 2017, and progress in achieving the group's strategic objectives, including stringent capital management in a challenging trading environment.
EXECUTIVE DIRECTOR: CAPITAL MANAGEMENT
Mark Herskovits

Mark Herskovits' incentive bonus of R2 530 628 for 2018 comprised:

  • A quantitative bonus for the growth of SA Taxi's earnings per share and return on equity achieved.
  • A qualitative bonus for meeting the group's capital management requirements well into the 2019 financial year, diversifying the group's funding sources and managing the group's cost of funding.
EXECUTIVE DIRECTOR
Jonathan Jawno

Jonathan Jawno's incentive bonus of R4 500 000 for 2018 comprised:

  • A quantitative bonus for the growth of the group's headline earnings per share.
  • A qualitative bonus for his specific role in the management of risk and capital.
EXECUTIVE DIRECTOR
Michael Mendelowitz

Michael Mendelowitz' incentive bonus of R4 500 000 for 2018 comprised:

  • A quantitative bonus for the growth of the group's headline earnings per share.
  • A qualitative bonus for his specific contribution toward capital deployment as well as strategic and acquisitive opportunities.
FINANCIAL DIRECTOR
Ronen Goldstein

Ronen Goldstein's incentive bonus of R1 102 500 for 2018 comprised:

  • A quantitative bonus for the growth of the group's headline earnings per share and return on equity achieved.
  • A qualitative bonus for the overall continued improvement in the state of the financial, risk and reporting structures of the group during 2018, and the implementation of key group projects.
PRESCRIBED OFFICER
Terry Kier

Terry Kier's incentive bonus of R3 244 395 for 2018 comprised:

  • A quantitative bonus for the growth of the division's earnings.
  • A qualitative bonus for the progress in achieving the division's strategic objectives, including stringent capital management in a challenging trading environment and the ongoing management of industry interaction as a key stakeholder of SA Taxi.
PRESCRIBED OFFICER
David McAlpin

David McAlpin's incentive bonus of R2 477 538 for 2018 comprised:

  • A quantitative bonus for the growth of the division's earnings.
  • A qualitative bonus relating to the continued integration of the acquisitions completed in 2017 and progress in achieving the division's strategic objectives.
LONG-TERM INCENTIVES
SHARE APPRECIATION RIGHTS PLAN

All SAR plan awards were approved by the remuneration committee. No SARs were awarded in the current year. In previous years, executives were awarded SARs based on executive performance, potential, tenure, job grade, current fixed compensation and STIs relative to market benchmarks; the recommendation of the CEO; and the reasonably expected growth in Transaction Capital's share price.

The following table shows the SAR position of executive directors and prescribed officers as at 30 September 2018:

  Present
value of
SARs
Number of
SARs
Vesting
period
(years)
Number of
SARs vested
during the
year and not
exercised
Number
of SARs
exercised
during
the year
Gains on
SARs
exercised
during
the year
R
 
EXECUTIVE DIRECTORS              
David Hurwitz              
Granted on 11 July 20131 3 2 004 494 22 303 067  
Granted on 18 November 20132 3 979 049 10 379 705  
Granted on 25 November 2014 1 029 000 300 000 4  
Granted on 26 November 2015 830 000 250 000 4  
Mark Herskovits              
Granted on 11 July 20131 3 939 607 10 099 004  
Granted on 18 November 20132 3 1 251 578 13 220 041  
Granted on 25 November 2014 857 500 250 000 4  
Granted on 26 November 2015 498 000 150 000 4  
Ronen Goldstein              
Granted on 18 November 20132 3 70 180 717 703  
Granted on 25 November 2014 343 000 100 000 4  
Granted on 26 November 2015 498 000 150 000 4  
PRESCRIBED OFFICERS              
Terry Kier              
Granted on 18 November 20132 3 979 049 10 012 188  
David McAlpin              
Granted on 25 November 2014 2 578 280 751 685 4  
Granted on 26 November 2015 664 000 200 000 4  
1. Tranche vested and exercisable from July 2016. SARs exercised by participants in the 2017 financial year.
2. Tranche vested and exercisable from November 2016. SARs exercised by participants in the 2017 financial year.

Jonathan Jawno and Michael Mendelowitz do not participate in the SAR plan.

Refer to note 22.1 in the annual financial statements for further details on the SAR plan.

CONDITIONAL SHARE PLAN

The CSP operates as a specific LTI scheme that directly links to the performance of each division. It caters for divisional executives who are believed to be in a position to directly impact and shape the performance of a division, while delivering on the division's strategy. Transaction Capital group executives are incentivised based on the performance of the group as a whole.

The purpose of the CSP is to incentivise participants to deliver the relevant division's business strategy over the long term, and acts as a retention mechanism and tool to attract prospective employees. The CSP will furthermore provide participants with the opportunity to share in the success of the relevant division in which they are employed, and provide alignment between the participants and shareholders.

In general terms, the remuneration committee approved the following criteria for the CSP awards:

Vesting period

  • Retention element (30% of award): to vest in equal proportions in full after years three and four, subject to continued employment (November 2016 and May 2017 awards: to vest in full after three years, subject to continued employment).
  • Performance element (70% of award): to vest as follows (and linked to performance criteria below):
    • Two years: 14.0%
    • Three years: 17.5%
    • Four years: 17.5%
    • Five years: 21.0%

(November 2016 and May 2017 awards: to vest in equal proportions in years two, three and four, and linked to performance requirements.)

Performance criteria

The following performance criteria have been set (per division for divisional executives, and on a consolidated basis for group executives):

CONTINUING HEADLINE EARNINGS PER SHARE GROWTH OVER VESTING PERIOD* % of CSP
to be
awarded
 
CPI 20%  
CPI +5% 100%  
* Growth levels between bands will be vested on a proportionate basis.

It is the view of the remuneration committee that STI plan awards serve to reward annual earnings growth rates of the group, while the LTI awards promote long-term value creation to employees and shareholders alike. As the value of the CSP on vesting is based on the valuation of each division (and Transaction Capital group for group employees), employees are rewarded for the quality and sustainability of earnings over the long term, thus aligning their interests with the group's shareholders. As a result, the growth hurdle of the CSP is viewed to be appropriate.

The performance and vesting periods of awards are assessed for appropriateness by the remuneration committee on an annual basis.

The following table shows the CSP position of executive directors and prescribed officers as at 30 September 2018:

  Component Present
value of
CSP award
on issue
R
Number
of CSPs
Vesting
period
(years)
 
EXECUTIVE DIRECTORS          
David Hurwitz Group        
Granted on 22 November 2016   1 684 672 131 821 2 to 4  
Granted on 22 November 2017   1 665 106 132 186 2 to 5  
Granted on 20 November 2018   2 990 230 183 554 2 to 5  
Mark Herskovits SA Taxi        
Granted on 22 November 2016   1 249 900 159 977 2 to 4  
Granted on 29 May 2017   1 663 004 214 988 2 to 4  
Granted on 22 November 2017   839 072 94 480 2 to 5  
Granted on 20 November 2018   1 286 537 130 059 2 to 5  
Ronen Goldstein Group        
Granted on 22 November 2016   1 273 374 99 638 2 to 4  
Granted on 22 November 2017   823 797 65 398 2 to 5  
Granted on 20 November 2018   1 345 616 82 600 2 to 5  
PRESCRIBED OFFICERS          
David McAlpin TCRS        
Granted on 22 November 2016   5 892 530 1 303 817 2 to 4  
Granted on 22 November 2017   5 689 807 1 181 474 2 to 5  

Jonathan Jawno, Michael Mendelowitz and Terry Kier do not participate in the CSP.

Refer to note 22.2 in the annual financial statements for further details on the CSP.

TRANSACTION CAPITAL GENERAL SHARE SCHEME

The following table shows the position as at 30 September:

  2018   2017  
  Number of
shares
R
Value of
shares
R
Value of
funding
R
  Number of
shares
Value of
shares
R
Value of
funding
R
 
EXECUTIVE DIRECTOR                
David Hurwitz   77 409 1 180 487 662 599  
TOTAL   77 409 1 180 487 662 599  

All amounts outstanding were settled in December 2017, with this scheme being discontinued.

DIRECT INVESTMENT

At 30 September 2018, Terry Kier (CEO of SA Taxi) held a direct investment of 2.0% (2017: 2%) in SA Taxi Holdings Proprietary Limited, incentivising him and directly aligning his long-term interests with those of SA Taxi, Transaction Capital and its shareholders.

Terry Kier owed a wholly-owned subsidiary of Transaction Capital an amount of R26 million at 30 September 2018. The loan was granted on an interest-free basis and will be repaid upon certain predetermined events. Appropriate fringe benefits tax has been levied on the interest-free loan, the benefit of which is included in the executive compensation table.

Terry Kier no longer participates in the SAR or CSP plans.

SHAREHOLDING

The executive directors of the group own (directly or indirectly) the following shares in Transaction Capital Limited as at 30 September, aligning their interests with the broader shareholder base:

  2018   2017  
  Number of
shares
‘000
Shareholding
%
  Number of
shares
‘000
Shareholding
%
 
INDIRECT NON-BENEFICIAL HOLDINGS            
Dovie Trust* 4 640 <1   4 562 <1  
Everglen Capital Proprietary Limited** 178 000 29   250 000 41  
DIRECT NON-BENEFICIAL HOLDINGS OF DIRECTORS            
David Hurwitz 125 <1   125 <1  
Mark Herskovits 1 368 <1   1 368 <1  
Ronen Goldstein 30 <1   30 <1  
TOTAL 184 163     256 885    
Percentage of issued shares 30%     42%    
* David Hurwitz is a discretionary beneficiary of Dovie Trust.
** The trusts of Jonathan Jawno, Michael Mendelowitz and Roberto Rossi each held equal holdings in Everglen Capital Proprietary Limited (Everglen) at 30 September 2018. See the chairman’s report for details on the off-market sale and acquisition of ordinary shares by the Kimberley Investment Trust (KIT, of which Jonathan Jawno is a trustee and contingent discretionary beneficiary). The combined shareholding of Everglen and KIT remains at 29%.
NON-EXECUTIVE DIRECTORS’ FEES FOR 2018

The following table details fees paid to non-executive directors for directorship and membership of committees, with no additional meeting attendance fees. This is due to board members providing input to the company on an ongoing basis, and is thus not limited to the attendance of meetings.

The fees paid to non-executive directors have been determined on a market-related basis, as recommended by the remuneration committee and the board, and approved by shareholders at the AGM. As from 1 June 2017, VAT is payable on non-executive directors’ fees, where appropriate.

BOARD MEMBERS C Seabrooke1
P Langeni2
R Rossi3
K Pillay4
O Ighodaro
P Miller5
D Radley6
  Total
R
 
Chairman (including committee attendance) 1 552 500  –  –  –  –  –  –    1 552 500  
Director –  362 250  362 250  362 250  362 250  362 250  77 292    1 888 542  
Audit, risk and compliance committee (chairperson) –  –  –  –  388 125  –  –    388 125  
Audit, risk and compliance committee (member) –  155 250 –  –  –  –  33 125    188 375  
Asset and liability committee (member) –  –  –  –  124 200  –  26 500    150 700  
Remuneration committee (chairperson) –  –  –  258 750  –  –  –    258 750  
Remuneration committee (member) –  –  –  –  –  114 200  –    114 200  
Nominations committee (member) –  –  124 200  124 200  –  –  –    248 400  
Social and ethics committee (chairperson) –  258 750  –  –  –  –  –    258 750  
Social and ethics committee (member) –  –  –  114 200  –  –  –    114 200  
TOTAL ANNUAL FEES 1 552 500  776 250  486 450  859 400  874 575  476 450  136 917    5 162 542  
1. Christopher Seabrooke is also the chairperson of the nominations committee and a member of the remuneration committee, ARC committee and asset and liability committee.
2. In addition to the fees reported above, Phumzile Langeni received directors’ fees of R117 700 for acting as an independent non-executive director of Transaction Capital Risk Services (Pty) Ltd and SA Taxi Finance Holdings (Pty) Ltd. Phumzile resigned as a director from the Transaction Capital Risk Services (Pty) Ltd board effective 28 March 2018 and the SA Taxi Finance Holdings (Pty) Ltd board effective 31 July 2018.
3. In addition to the fees reported above, Roberto Rossi received R1 096 667 for consulting services and R4 000 000 for corporate finance and legal services rendered to the group.
4. Appointed as a member of the social and ethics committee effective 1 November 2017.
5. Appointed as a member of the remuneration committee effective 1 November 2017.
6. Appointed as a non-executive director effective 15 July 2018. In addition to the fees reported above, Diane Radley received directors’ fees of R65 250 for acting as an independent non-executive director of SA Taxi Finance Holdings (Pty) Ltd and Transaction Capital Risk Services Holdings (Pty) Ltd.
NON-EXECUTIVE DIRECTORS’ FEES FOR 2017
BOARD MEMBERS C Seabrooke1
D Woollam2
P Langeni3
D Tabata4
R Rossi5
M Kgosana6
K Pillay
 R 
O Ighodaro7
 R 
P Miller8
  Total
 
Chairman (including committee attendance) 1 375 000  –  –  –  –  –  –  –  –    1 375 000   
Director –  104 167  308 333  104 167  308 333  286 458  308 333  175 000  87 500    1 682 291   
Audit, risk and compliance committee (chairperson) –  –  –  –  –  341 146  –  23 438  –    364 584   
Audit, risk and compliance committee (member) –  62 500  150 000  –  –  –  –  65 625  –    278 125   
Asset and liability committee (chairperson) –  52 083  –  –  –  –  –  –  –    52 083   
Asset and liability committee (member) –  –  –  –  –  –  –  60 000  –    60 000   
Remuneration committee (chairperson) –  –  –  52 083  –  –  148 833  –  –    197 916   
Remuneration committee (member) –  –  –  –  –  –  25 000   –  –     25 000  
Nominations committee (member) –  –  –   25 000  95 000  –  70 000  –  –     190 000   
Social and ethics committee (chairperson) –  –  197 917   –  –  –  –  –  –    197 917   
TOTAL ANNUAL FEES 1 375 000  218 750  656 250  181 250  403 333  627 604  549 166  324 063  87 500    4 422 916   
1. Christopher Seabrooke is also the chairperson of the nominations committee and a member of the remuneration committee, ARC committee and asset and liability committee.
2. Resigned as a non-executive director effective 2 March 2017.
3. In addition to the fees reported above, Phumzile Langeni received directors’ fees of R247 797 for acting as an independent non-executive director of SA Taxi Finance Holdings (Pty) Ltd and Transaction Capital Risk Services (Pty) Ltd.
4. Resigned as a non-executive director effective 2 March 2017.
5. In addition to the fees reported above, Roberto Rossi received R1 096 667 for consulting services and R2 400 000 for corporate finance and legal services rendered to the group.
6. Resigned as a non-executive director effective 8 September 2017.
7. Appointed as a non-executive director effective 1 April 2017.
8. Appointed as a non-executive director effective 1 July 2017.