Maria Ramos, who retired as Absa Group CEO at the end of February 2019 “on reaching her contractual retirement age of 60 years”, was paid R3.8 million for her two months’ work at the banking group.
This was comprised of R1.6 million for her salary (plus smaller contributions in respect of medical aid and retirement benefits) and R2.1 million in “other employee benefits”. This latter figure is elevated due to leave pay that was owing to her.
However, the group says “consistent with [its] policy on retirement, Maria was granted eligible leaver status on her unvested restricted shares, deferred short-term incentive and long-term incentive awards. All awards subject to eligible leaver treatment remain in the respective plans until the originally scheduled vesting dates”.
As at the end of February 2019, Ramos had 316 222 shares under award/option for 12 different share-based and long-term incentive plans. Together, these were worth R47.2 million as at end-December. The plans stretch back to 2016 and include six interim periods of “role-based pay”, where a portion of salary was paid in shares to ensure market competitiveness under the previous policy implemented by Barclays.
On top of this, Ramos had an additional R7.5 million in cash-based awards outstanding as at end-February.
This means that on leaving the bank, Ramos had awards outstanding totalling R54.7 million. But, given that there is no disclosure beyond her retirement at the end of February, some of these shares may have vested during 2019.
While performance conditions related to the 2017 long-term incentive award ran to the end of 2019, the separation from Barclays will only be substantially complete by June. This means final vesting will only happen in July.
Aside from Ramos, the five executive directors and prescribed officers of the group were awarded total remuneration of R116 million in 2019.
remuneration in 2019
|René van Wyk||Interim Group CEO||R15 166 667|
|Peter Matlare||Deputy Group CEO, CEO: Absa Regional Operations||R18 259 314|
|Jason Quinn||Group FD||R29 509 313|
|Arrie Rautenbach||CE: RBB SA||R30 259 373|
|Charles Russon||CE: Corporate and Investment Banking||R23 509 313|
Arrie Rautenbach, who was appointed chief executive of Retail and Business Banking South Africa in April 2018, was awarded almost double the remuneration of interim CEO René van Wyk in 2019. Rautenbach was awarded a short-term incentive of R11 million, slightly below the amount awarded in 2018. His long-term incentive of R12 million will be measured over the 2020-2022 performance period. The remuneration committee says this is “higher than the value indicated in his on-target remuneration potential mix, as the board seeks to incentivise future performance and the creation of shareholder value over the long-term. This is also in line with the principle of, over time, making a greater proportion of the total remuneration mix subject to performance, and in this instance, longer-term performance.
New CEO Daniel Mminele, who was appointed effective January 15, will receive the following remuneration this year:
- A cost-to-company package of R9 million
- A long-term incentive award, to be made this month, of R15 million, subject to “group performance conditions” between now and the end of 2022. “This will vest on the third, fourth and fifth anniversaries of the grant date.”
- An on-target award of R15 million for this year’s “short-term incentive arrangements”.
Absa notes that there were “no sign-on or buy-out awards applicable as a result of Daniel joining the group”.
Long-term incentive measures for the next three financial years (to December 2022) are clear.
Less clear is the obvious impact Covid-19 will have on these. Alex Darko, chair of the group’s remuneration committee (RemCo), notes in the integrated report that: “The RemCo will assess the impact of the Covid-19 pandemic and will, at the appropriate time, consider the performance metrics and vesting conditions of performance-linked share awards.”
In addition, the group’s share price has halved during the first quarter of 2020 making all previously granted share-based incentive awards significantly less attractive.