Sasol Limited Integrated Report 2021 - Book - Page 37
Report of the Remuneration Committee
The Committee’s key task is to
ensure that executive remuneration
is aligned with stakeholder value
creation in the context of the shortmedium- and long-term strategy.
On the back of a much improved set of
business results, we believe that this
alignment has been achieved.
Chairman of the Remuneration Committee
This report provides an overview of Sasol’s Remuneration Policy,
the incentive targets that support the Group’s priorities as well as
the reward outcomes for Executive Directors and Prescribed Officers
informed by performance against targets.
It also details the feedback received from shareholders in 2021
and the actions the Committee took to address these, as well
as the impact of COVID-19 on remuneration decisions. The past
financial year has proven to be yet another challenging year
due to the continued impact of COVID-19 on our employees, our
customers, the communities in which we operate and the global
economy. Although the demand for our products improved during
the second half of the financial year, extreme weather events in
the US Gulf Coast and in South Africa disrupted our operations
during 2021. Despite these devastating impacts, our business
results have steadily improved over the reporting period showing
our resilience during adverse times. The Committee is grateful to all
Sasol people for their support and understanding of actions taken in
2020 and for their focused delivery of our priorities in 2021.
Focus areas in 2021
• Simplification of the short-term incentive (STI) formula with only one
group incentive scorecard;
• Review of target incentive awards. Target long-term incentive (LTI) awards
for the CEO and CFO were reduced;
• Extension of minimum shareholding requirements (MSRs) to
• Review of the LTI plan design principles to include some restricted shares for
Prescribed Officers and Executive Directors with a five-year vesting period;
At our AGM in November 2020, support for the Remuneration Policy
decreased to 71,46% from 83,37% in 2019. But more disappointing
was the fact that only 43,21% of shareholder votes were in support of
the non-binding advisory resolution on the Implementation Report,
compared to 71,65% in 2019.
To address this sharp reduction in support, Sasol invited shareholders
and the 40 largest investors to meet with me to discuss their
concerns and reasons for their dissenting votes. I am grateful for
the time that many of our investors devoted to these meetings,
for their transparent feedback and suggestions, certain of which are
reflected in policy changes that the Committee subsequently made,
remaining mindful of the impact of its decisions on all stakeholders.
▪ Strengthening the link between executive remuneration
and the achievement of sustainability related targets
▪ Acting on stakeholder feedback through the advisory notes
at the Annual General Meeting (AGM)
▪ Reviewing our Remuneration Policy in the context of
continual value creation for all stakeholders and our
Future Sasol strategy
▪ Rewarding outcomes in the context of a volatile
• Review of all STI and LTI targets to align with Future Sasol priorities
and include a holistic focus on sustainability matters;
• Review of the peer group to include a balance of South Africa listed
companies, energy and chemicals companies that represent our product
range of mining, chemicals, fuel and gas, geographical footprint and
• Delayed special salary adjustments for certain categories of employees;
• Review of Non-Executive Director (NED) fee structure.
Details of the policy changes are in the policy section of this report. The following table summarises the concerns raised as well as Sasol’s
• STI and LTI targets not directly related to the
reduction of GHG.
We will improve our climate change targets as we implement projects that will
directly reduce emissions. These projects will align with our climate change
roadmap and our Net Zero emissions ambition for 2050. See specific STI and
LTI targets linking Executive remuneration to ESG measures in the FY22 variable
pay plans detailed on page 40.
• The peer group used for remuneration benchmarking
does not include enough chemicals companies or
South African-listed entities.
We again reconsidered the peer group and have approved a combination of
JSE listed, chemicals and energy companies.
• STI targets should continue to be relevant as the
business transitions to the Future Sasol strategy.
The Committee annually reviews the STI and LTI targets to ensure ongoing
relevance as well as appropriate stretch to incentivise achievement across
a range of financial and non-financial targets which are informed by the Group’s
key priorities ensuring value creation for our stakeholders.
• ROIC should be reconsidered as a LTI target.
We will reconsider the use of ROIC as we annually review all targets in our
LTI plan. For FY22, we believe that return on capital invested into large scale
projects is still an appropriate metric.
• NED fees are too high in relation to the Company’s
We revised the fee structure for NEDs. This will be tabled for shareholder
approval at the 2021 AGM.
• Mutual separation packages agreed to for previous
The Board had considered the terms of the mutual separation agreements
with the Joint-CEOs to have been appropriate in the circumstances; however,
understands and acknowledges the views of shareholders on this matter.
COVID-19 and its impacts
Tragically, by 30 June 2021, 63 Sasol employees had succumbed to
COVID-19. We mourn their loss and extend our sincere condolences
to their families, friends and colleagues. Sasol continues to provide
various forms of COVID-19 support to employees, including access
to emotional wellbeing programmes, supplying them with hand
sanitisers and face masks and amending work practices and shifts
to ensure social distancing wherever possible. The Group continues
to encourage those employees who can work from home to do
so. Those exposed to COVID-19 or who fall ill from the disease are
granted paid leave for the period of absence. No employees have
had to claim from the South African government’s COVID-19 relief
fund to replace salaries lost because of suspended operations nor
had to take unpaid leave.
The spread of COVID-19, the oil price collapse and volatility in
chemical prices in 2020 came at a time when Sasol’s balance sheet
was at peak gearing. This necessitated a reset of Sasol’s strategy
and a revision of its operating model. In November 2020, the Group
launched Sasol 2.0, a plan to get to Future Sasol which included a
revised Purpose and refreshed values. The new operating model
required a review of the organisational design, a process which was
completed in the last quarter of 2021. Mindful of the impact that all
this change would have on employees, Sasol management further
increased its engagement with employees, ensuring comprehensive
and regular communication.
Preserving jobs was a key objective during the year. There were
1 355 employees who were displaced, or impacted by divestitures
and 766 voluntary severance packages were approved. Sasol
provided impacted employees with access to emotional and financial
planning support programmes to assist them in their transition.
As far as possible, the Group worked to ensure that those employees
transferred to new entities were offered remuneration and benefits
similar to those offered by Sasol.
The Committee’s most difficult decision in August 2020 was to
waive salary increases and STIs for most employees to conserve
cash and protect jobs. This was even though the Group had met
some of the incentive targets in 2020 which would have ordinarily
resulted in a pay-out of incentives in September 2020. However,
in the last quarter of 2021, in recognition of the delivery against the
Sasol 2.0 targets, the Committee approved limited salary increases
Sasol Integrated Report 2021
on a partial retroactive basis for those employees in role categories
below Leadership; Senior and Executive Management were excluded
from this process.
The Board also resolved to extend until November 2021, the 20%
Board fee sacrifice agreed to by NEDs in May 2020 and resident
NED fees were not increased to the approved levels.
Reward outcomes | 2021
For 2021, the Committee made no changes to inflight LTI awards;
neither to the STI or LTI plan targets that were set for this financial
year nor have outcomes been adjusted for COVID-19-related impacts.
Performance against the STI targets were mostly at or ahead
of target with a total score of 117% of the maximum of 150%.
This was after the application of a 3% penalty due to the tragic loss
of one of our employees due to a work-related accident at Natref*.
The Committee was particularly pleased with the management
of costs and the excellent progress made with the asset disposal
programme to avoid a rights issue. The high severity injury rate
improved and we are pleased with the delivery of the climate
The Committee believes that this outcome is a fair representation
of the excellent results which were achieved over 2021 across all
financial and non-financial metrics.
The vesting of LTIs which were issued in 2018, subject to
performance targets over the period 1 July 2018 – 30 June 2021, will
for members of the GEC, subject to further service criteria being met,
vest at 44,7%. This represents ~17% of the original award value due
to the share price depreciation and low level of vesting.
The year-on-year increase in remuneration totals on the single figure
tables is as a result of the termination of the salary and pension
contribution sacrifice in 2021, which was introduced in May 2020 and
the STI which has been awarded for the first time since 2018.
The Committee will propose to shareholders a revised Non-Executive
Director fee structure. For NEDs domiciled outside of the United
Kingdom, Europe or North America, a cost of living factor and a fixed
exchange rate will be applied.