Sasol executives are in clover

R106M: INCENTIVES PAID TO DIRECTORS, SUBSIDIARIES Joint presidents and chief executives received shares worth around R22.5m and $1.7m, respectively.

Sasol has granted executives share options under its long-term incentive plan, worth over R106 million at current prices.

The grants, made to 15 directors of the parent company and major subsidiaries, were disclosed on Wednesday.

Joint presidents and chief executives Bongani Nqwababa and Stephen Cornell received shares worth about R22.5 million and $1.7 million (R26 million) (Cornell received US-listed American Depository Receipts (ADRs). Chief financial officer Paul Victor received shares worth R12 million.

The options vest in two tranches: the first 50% after three years and the balance after five years. The shares and ADRs were awarded on September 3 at a strike price of nil. The price per share to indicate value was the closing price on August 31 (R576 and $39.26).

In its 2018 remuneration report, the group notes the following for its long-term incentive plan: “In line with the practice of our peer companies, the growth in attributable earnings target was replaced with a return on invested capital (ROIC) target, thereby incentivising effective capital allocations”.

It discloses four equal (25%) measures as the corporate performance targets (CPTs) for the equity settled plan:

Increase in tons produced per head; Return on invested capital; Total shareholder return (TSR) against the MSCI World Energy Index; and

Total shareholder return against the MSCI World Chemicals Index.

In the report, remco chair Mpho Nkeli thanked “all Sasol’s shareholders for their continued support of our remuneration policy. At the November 2017 annual general meeting, 92.96% (2016: 90.93%) of votes cast were in favour of the remuneration policy and 89.84% supported the implementation report.”

Nkeli highlighted that the “group’s total shareholder return performance was below target which again resulted in a below-target LTI plan vesting percentage. Despite low incentive scores, the committee has however, as in the past, agreed to not apply its discretion in changing the outcome of the formulaic calculations”.

For the 2018 financial year, the long-term incentive programme saw executives measured against three CPTs: increase in tons produced per head, growth in attributable earnings and total shareholder return (against three different indices.

In 2018, they achieved a CPT score of 69%. They underperformed on the TSR as well as growth in earnings measures.

In 2018, incentive gains for the executive directors was: Stephen Cornell: R8.956 million; Bongani Nqwababa: R7.754 million; Paul Victor: R2.744 million; and Nolita Fakude: nil. Six of the eight prescribed officers also had long-term incentive gains in the year.

Nkeli says planned remuneration policy enhancements for the year ahead include the “review of the design of our incentive plans to ensure ongoing relevance and competitiveness”.

Hilton Tarrant works at YFM