INTEGRATED REPORT 2019

Remuneration

Background statement

Given that the attraction and retention of skills at Airports Company South Africa has been highlighted as a strategic priority, our remuneration philosophy aims to support the human resource and business strategy by offering competitive total rewards and promoting a high-performance culture. This report aims to demonstrate the total rewards approach used to stimulate performance at individual and Group level to help Airports Company South Africa execute its Vision 2025 objectives. This strategy, in combination with an improvement in branding and marketing, is in line with our goal of becoming and remaining an employer of choice.

Our remuneration policy and implementation report received a 96.99% favourable vote at our AGM.

The Board approved the employee remuneration policy, considering the following internal and external factors:

  • Affordability
  • Economic pressures
  • Industry changes
  • Applicable legislation
  • Market remuneration data

The Board, acting on the recommendations of the Remuneration and Nominations Committee of the Board and supported by management, is ultimately accountable for our remuneration philosophy and its policy application which includes remuneration governance, skills attraction and retention, succession planning, disclosure, benefits, conditions of employment and performance-linked remuneration. We conduct total rewards benchmarking against external comparatives, which inform our remuneration policy and practice by providing an indication of equitable market-related remuneration.

Our employees are a key component to achieving our strategic objectives, we therefore monitor pay parity and remuneration practices in line with competitive market practices.

We provide enhanced benefits such as housing and transport, which remain a focus area. Our housing scheme assists employees to become homeowners which improves their living conditions, financial security and potential of owning a tangible asset. There has been a significant increase in employee participation in the scheme Learn more. An employee transport programme to provide employees with safe and reliable transport commenced in FY2018/19 as a further benefit to improve employee working conditions and morale. Learn more

A project to re-align the executive total reward offering was approved in 2018 and now aligned with our business objectives and 2025 strategy. For the year under review, the Remuneration and Nominations Committee focused on reviewing and recommending the executive incentives scheme, employee remuneration and recognition-related policies to the Board. These reviews were based on the remuneration policy, aligned with the organisational strategic drivers, values and individual contributions linked to short-term and long-term strategic outputs.

The Remuneration and Nominations Committee will continue to monitor the effective implementation of these improvements to the total reward offering.

Overview of the remuneration policy

The Airports Company South Africa’s total reward framework allows for remuneration consisting of both fixed and variable pay, aligned with appropriate legislative frameworks, wider external factors and business strategy. Our guiding principles in the application of the remuneration policy are:

  • Equity, fairness and consistency in the remuneration of employees in accordance with the value of their work, competence and performance
  • Market-related remuneration to enable market competitiveness in the attraction and retention of scarce and relevant skills, behaviours and competence
  • Good governance in the management of remuneration

Our remuneration mix is made up of three elements:
1. Guaranteed pay and benefits
2. Variable pay: Short-term incentive (STI)
3. Variable pay: Long-term incentive (LTI)

Guaranteed pay and benefits

Guaranteed pay

Our pay philosophy is to benchmark to the median of the market (50th percentile), and we benchmark annually to ensure that our total reward remains aligned and competitive to the market. We use PwC REMchannel® (National All Industries circle) and bespoke peer group benchmarking for the purposes of benchmarking executive pay. For the purposes of the peer group benchmarking, we use two distinct peer groups, as follows:

  • The first peer group consists of JSE-listed companies considered to be of comparable size, complexity and performance; and
  • The second peer group consists of comparable state-owned entities. Employee guaranteed pay is reviewed annually, considering CPI, market trends, employee and Group performance, internal parity and Group affordability. The Group has a culture of awarding increases above CPI percentages, considering the cost of living relating to the Producer Price Index (“PPI”) in order to ensure fair and responsible remuneration.

Employee guaranteed pay is reviewed annually, considering CPI, market trends, employee and Group performance, internal parity and Group affordability. The Group has a culture of awarding increases above CPI percentages, considering the cost of living relating to the Producer Price Index (“PPI”) in order to ensure fair and responsible remuneration.

In addition, for the following employee categories, the following measures are also considered:

Executives Senior management,
middle management and professionals
Skilled and general workers
a. Internal parity
b. Individual and Group performance
a. Internal parity
b. Individual and Group performance
a. National negotiations
b. Internal parity

13th cheque forms part of the guaranteed pay
I

Benefits

Employees are contractually obliged to belong to an approved medical and retirement fund, inclusive of risk benefits. Our benefit policy is structured in a way that promotes the employee financial wellness.

Executives, senior management,
middle management and professionals
Skilled and general workers
a. Employees contribute 100% towards medical and retirement fund (inclusive of risk benefits)
b. Long service awards
a. Retirement fund: 13% employer and 8% employee contribution
b. Medical aid: 50% employer and 50% employee contribution
c. A once-off capital grant of R75 000 is offered to first-time homeowners
d. A monthly housing subsidy is offered to salaried employees
f. Employees are provided with branded uniforms
g. Long service awards

Circumstantial allowance

Circumstantial allowances paid are aligned to legislative requirements and operational effectiveness.

Executives, senior management, middle management and professionals Skilled and general workers
The following allowances are paid based on job-specific requirement:
a. Acting allowance (paid in line with the policy to employees who are required to act in roles that are higher than their designated roles)
b. Demand and capacity
c. Relocation
a. Shift
b. Standby
c. Overtime
d. Relocation
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