2020 INTEGRATED REPORT

REMCO is chaired by an independent non-executive PPS Insurance director and is comprised entirely of non-executive directors of PPS Insurance. No employee is involved in deciding his or her own remuneration. The Group Chief Executive and the Group Executive: Human Resources attend the meetings of REMCO by invitation. The Chief Executive and Group Executive: Human Resources are recused from any discussion and/or decision pertaining to their own remuneration. The committee does not assume the functions of management, which remain the responsibility of the executive directors, officers and other members of senior management. REMCO operates in accordance with Terms of Reference (TOR) approved by the PPS Insurance Board. REMCO has complied with the obligations as set out in its TOR and is satisfied that the objectives of the Remuneration Policy have been achieved. The role of REMCO is to assist the PPS Group boards to ensure that: ~ The PPS Group remunerates non-executive directors and trustees, the CEO, executives, management and staff fairly, responsibly and competitively; ~ The disclosure of director/trustee and executive remuneration by the PPS Group is accurate and in accordance with the Companies Act and the recommendations of the PPS Group Audit Committee; ~ The functions prescribed by the Prudential Authority in terms of the Prudential Standards are performed. REMUNERATION PHILOSOPHY AND APPROACH The PPS Group is committed to a remuneration philosophy that is competitive in the market and focuses on rewarding individual and corporate performance. People are the PPS Group’s strategic differentiator in the industry, and the achievement of the PPS Group’s objectives is supported by the way in which it rewards people for their contributions. Remuneration is not only important when recruiting people into the organisation, but also in retaining, engaging and motivating them, and therefore forms part of the foundation of the psychological contract between employee and employer. This policy is important for the PPS Employee Value Proposition. Our total reward strategy includes various elements: guaranteed package (CTC); variable short-term incentive (STI); variable long-term incentive plan (LTIP); competitive staff benefit plans; various recognition programmes; individual learning and development opportunities; a stimulating work environment; and an employee wellness programme. REMUNERATION PRINCIPLES The following principles are followed in the implementation of the remuneration philosophy and total reward strategy: ~ Driving a high-performance culture: Performance contracts are defined at the beginning of the financial year, with financial and non-financial, qualitative and quantitative, as well as lag and lead metrics. Performance measurement metrics are set annually and reviewed for broader alignment to PPS Group objectives by identifying annual strategies. Risk metrics are included as part of the performance measurement metrics for each strategic initiative and are linked to the risk profile of the Group. Remuneration must be proportional to risk outcomes. The mix of short-term and long-term incentives must be aligned to risk, in order that management’s performance is aligned with members’ long-term interests. The remuneration structure should not induce excessive or inappropriate risk taking. The current risk profile is calculated and evaluated to determine the impact of the strategic initiatives on the risk profile of the PPS Group. ~ Balance between fixed and variable remuneration: The mix of guaranteed pay and short- and long-term incentives is in line with the risk appetite and culture of the company. The different subsectors should customise pay mix permutations to suit their market circumstances. The mix is designed to meet the PPS Group’s operational needs and strategic objectives, based on targets that are stretching, verifiable and relevant. ~ Long-term value creation: Given the long-term nature of the business, the remuneration structure needs to support both long-term value creation and the achievement of short-term PPS Group objectives. The appropriate balance needs to be maintained to manage focus on current and future perspectives. ~ Equal Pay for Work of Equal Value: PPS Group strives to comply with legislation governing equal pay for work of equal value. REMUNERATION STRUCTURE The total remuneration packages of employees are determined on an annual basis by REMCO within the context of a holistic approach, balanced design and pay mix. The PPS Group’s remuneration structure comprises of the following elements: ~ Guaranteed Pay: PPS Group manages total cost to company (TCTC), which incorporates base pay, retirement, medical aid and other optional benefits. The general approach to guaranteed pay is to target the market median or the 50th percentile of the industry we operate in. Benchmarking of the total remuneration components (guaranteed pay, short and long-term incentives, where relevant) is generally aligned with the industry benchmarks and CORPORATE GOVERNANCE REPORT | 101