For Transaction Capital, compensation is a critical determinant of organisational performance and sustainability.
This view is based on the belief that all factors underpinning 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. Moreover, without attracting, motivating and retaining the best available talent, even the best strategies, business models and structures will fail.
These principles are reflected in one of the core components of Transaction Capital’s strategy, 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 teams across the organisation.
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 aim to sustain a performance-driven and entrepreneurial culture where the most talented people at all levels consider Transaction Capital and its divisions as an employer of choice.
Principle 14 of King IV 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, and in consultation with shareholders (as detailed in the shareholder engagement section). The board approved this remuneration report and believes that the performance criteria used to determine and measure short- and long-term incentive awards are fair and align appropriately with Transaction Capital’s goals, strategies and outcomes, taking the requirements of all stakeholders into account.
The board has ultimate responsibility for the appropriateness of remuneration policies and executive remuneration. The board delegates oversight of this responsibility to the group’s remuneration committee, which comprises the following non-executive directors, the majority of whom are independent:
Chairperson of the committee; independent non-executive director.
Independent non-executive director (appointed 1 November 2020).
Non-executive director (appointed 12 March 2020).
Chairman of the board; independent non-executive director.
The remuneration committee was augmented by the appointment of Ian Kirk as a member in 2020. Ian brings a wealth of experience to this critical committee.
The remuneration committee’s mandate is to ensure that the group’s remuneration policies:
Within this mandate, the remuneration committee believes that a well-designed remuneration policy maintains appropriate alignment 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 LTIs to meet the group’s needs and strategic objectives, in addition to reviewing the robustness of LTI schemes in ensuring continued contribution to shareholder value.
The remuneration committee is also responsible for ensuring that the implementation and execution of the remuneration policy achieves its objectives.
The following overarching principles are applied to remuneration:
At the 2019 AGM on 11 March 2020, 83.08% of shareholders voted in favour of the group’s remuneration policy, with 83.92% voting in favour of the remuneration implementation report.
Following engagements with shareholders after the 2019 AGM, several enhancements have been implemented to the remuneration policy in the 2020 financial year, as outlined below.
Sustainability targets included as a measure in the
qualitative component of STIs for key executives as the
ESE framework is operationalised in the 2021 financial year.
Performance vesting criteria for the CSP awards
extended to include both an income statement (earnings)
and balance sheet return measure.
As in prior years, disclosure on remuneration policies and their implementation has been further enhanced:
Weightings provided for the qualitative, quantitative and discretionary components of the executives’ STI awards.
Disclosure of the performance targets set for STI awards to enable stakeholders to better evaluate executive performance.
The group’s remuneration policy and implementation report are presented to shareholders annually for consideration and approval under the terms of separate non-binding advisory 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.