111 | Corporate governance report PPS Integrated Report 2021 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 Group Chief Executive, 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 IFRS; ~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 the remuneration structure set out below, augmented by 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 include 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. The mix of short-term and long-term incentives are aligned to risk, in order that management’s performance is aligned with members’ long-term interests and the remuneration structure does not induce excessive or inappropriate risk taking. ~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 and 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. ~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: The 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 and is benchmarked against the industry annually. Increases are determined by REMCO in conjunction with executive management and take into consideration market related increases, individual and PPS Group performance and other economic indicators. REMCO reviews staff increases as determined by management and approves increases for Group Executives and senior management. ~Benefits: PPS Group provides its employees with additional elements of remuneration, including medical aid, retirement fund and risk benefits. These benefits form part of the TCTC package. Employees also participate in reward and recognition schemes to enable performance and motivation to drive PPS Group initiatives and objectives and living up to the PPS Group’s values.
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