Sasol Limited Integrated Report 2021 - Book - Page 41
1
2
3
4
5
6
Report of the Remuneration Committee (CONTINUED)
Remuneration Implementation Report
In order to drive the delivery of our material matters as reflected in our top priorities, which are aligned to delivery our strategy, our executives’ remuneration is linked
to key performance indicators marking progress on these priorities.
EBIT growth (US$ real) >5% CAGR
through the cycle
Dividend returns stepping up
payout to 40% of core HEPS
(2,5 times cover) by 2022 thereafter
moving payout towards 45%
(2,2 times cover)
Zero harm at all our operations
globally
• advance
sustainability; and
•transition to
Future Sasol.
LTI
5,00%
Advancing sustainability:
Energy Efficiency Improvement of 1% using 30 June 2021 as the basis
for assessment of FY22
5,00%
20 Significant fires, explosions and releases (FERs) were recorded mostly due to severe
fluctuations in demand for product causing ramp-up/ramp down of our operations
3,75%
The decrease in the number of significant fires, explosions and releases
(FERs) is important to us as it ensures safe and reliable operations and
improved energy efficiency
Delivered the 2030 GHG Emission Reduction Roadmap as well as the 2050 GHG ambition
and roadmap. We selected the short-list of bidders to provide 600 MW of Renewable Energy
10,00%
11,17%
A 0,4% year-on-year improvement on Energy Efficiency was achieved mainly as a result
of the ramping-up and down of our operations in response to the volatility in demand
due to COVID-19
Implementation of global structures aligned with the new operating model and through
filling of > 80% of positions by 30 April 2021
12,75%
Sustainable free cash flow target
for FY22-FY25 approved by the Board in November 2020
6,00%
Through the development of and delivery against our GHG emission reduction
roadmap we aim to reduce our carbon footprint thereby contributing to a
cleaner, safer environment. Our commitment to energy efficiency (EE) is a
contributor to decarbonising our operations
PEOPLE
FERs = 17 to 21
Process Safety (FERs) of 17 – 23
Reducing absolute GHG emissions
Securing 200 MW of Renewable Energy at our Secunda site
Shifting to lower-carbon products
and green hydrogen
The setting up of the new sustainable business venture, establishing of
two PtX partnerships and competition of two feasibility studies submitted
for approval
Pursue zero harm through relentless focus
on preventing high-severity injuries and
eliminating fatalities
Improving sales volumes increases turnover, cash flow and profitability
Sales Volumes
FY22 Sales volumes = 17mt – 19mt
25,00%
Cash Cost Optimisation:
Absolute CFC
FY22 CFC = R56,3bn – R60,3bn
20,00%
Sustenance Capital: Capital
Expenditure
Capital expenditure = R24bn – R28bn
15,00%
10,00%
5,00%
Promote diversity and inclusion
Advance sustainability through the
delivery of our road maps and the
identification of opportunities to grow
and participate in sustainable products
and gain access to emerging future
value pools
Commitment to conservatively manage our cash fixed costs over the
medium to long term
Cash Fixed Costs of
R58,5bn – R62,5bn
15,00%
Cash Fixed Costs were R5bn below a budget of R60,5bn
22,50%
Fixed-cost control is a key element in improving our gross margin. Optimising
our balance sheet and maintaining overall competitiveness
Capital deployment
R18bn – R22bn
15,00%
Capital expenditure was R3,3bn below budget
22,50%
Prudent management of our capital to ensure ongoing reliable operations
and allocation to growth projects which will deliver positive returns to
our shareholders
Asset disposals of non-core assets
of $1,5bn – $3,5bn
15,00%
Total sales and purchase agreements signed of US$3,6bn against a target of US$2,5bn
22,50%
Honouring our commitment to our shareholders that we would undertake an
accelerated and expanded asset disposal programme executed to strengthen
our balance sheet
Net Working Capital/ turnover of
12% – 17%
10,00%
Working Capital of 14,5% achieved
10,83%
To optimally manage our working capital, improve our operational efficiency
and strengthen our balance sheet
Net working capital to turnover
NWC to turnover % = 13% – 17%
Link to value creation
2022 LTI corporate
performance targets
2022 LTI corporate performance targets
(performance period 1 July 2021 – 30 June 2024)
Growth on adjusted EBITDA
Adjusted EBITDA growth of compound CPI +2% for three financial years
Deliver and maximise value through the
delivery of our Sasol 2.0 commitments, to
strengthen our balance sheet and to drive
reliable and predictable feedstock supply
and operations
-3,00%
116,50%
2021 LTI corporate
performance targets
Link to 2022 Group Strategic
Priorities
Transforming Sasol through the restructure of the global organisation to
enable the new operating model for a sustainable future
Sales volumes were 5% below target
Safety adjustment –
Penalty for fatality
15,00%
PPAs/VPPAs (or equivalents) signed by 30/6/2022 to achieve
0.65Mt CO2e by end FY2024
12,50%
0%
Weighting
%
Rebuild trust and create shared value
Sales Volumes of
18mt – 20mt
•strengthen our
financial position;
•deliver LCCP;
Process Safety: FERs vx
We strive to achieve zero harm by focussing relentlessly on preventing
high-severity injuries and eliminating fatalities
4,00%
• pursue zero harm;
5,00%
7,50%
8,5%
Our Group
strategic
priorities for
2021 were:
HSI Rate = 9 to 14
HSI rate = 9,79
Deliver the Sasol 2.0 Programme
– Our Future
STI
Occupational Safety: High
severity injury (HSI) rate
5,00%
Culture ensuring maximum
engagement and growth of all
our employees
2022 GEC STI
Unit of Measure
High-severity injuries (HSI) rate
of 12 to 17
Climate change programmes to lay
the foundation for decarobonisation
of our operations:
– 2030 GHG roadmap
– 1% energy efficiency improvement
– D elivery of the 600 MW business
construct
– D elivery of the 2050 ambition
and roadmap
2022 GEC STI Target range (for EVPs, the final outcome
will be a combination of this score, in addition to the
BU and Individual performance factors)
Link to value creation
PROFIT
ROIC (US$) >12% through the cycle
>2% uplift by 2022
Weighted
Score
2021 Achievement
Weighting
%
Weighted
Score
Outcome after the three year performance period:
1 July 2018 – 30 June 2021
2,8% compound growth in production volumes over headcount. The Committee approved
that the outcome be normalised by 442kT lost production as a result of adverse weather
conditions; two hurricanes in the United States and a severe hailstorm in Sasolburg, which
caused extended electricity outages which were completely out of management’s control.
No normalisation for production volumes lost due to COVID-19-related impacts
2% Compound increase in
production volumes/headcount
25,00%
Three year average ROIC
(excluding assets under
construction) at 1,3x WACC
25,00%
rTSR against the MSCI World
Energy Index @60th percentile
25,00%
Below threshold
0,00%
rTSR against the MSCI Chemicals
Index @60th percentile
25,00%
Below threshold
0,00%
-10% three-year average ROIC (mainly due to the impairments in FY20)
44,70%
0,00%
100,00%
Through production improvements and an efficient workforce we increase
earnings for our shareholders. Our EBITDA results is a clear indication of our
profitability and financial success
ROIC reflects earnings return measure in respect of capital investments,
effective capital allocation and driving timely project completion
PROFIT
Strategic targets
Weighting
%
PLANET
2021 GEC STI
Target range
Total Shareholder return (TSR) is a measure of the performance of Group’s
share price over time, and combines both share price appreciation and
dividends paid to indicate the total value created in alignment with
shareholders
On our journey towards our ambition of Net Zero by 2050, Sasol is
incentivising key milestones, inclusive of our 2030 targets as a start, that if
achieved will allow us the ability to deliver on our ambition
Return on Invested Capital
Relative TSR measured against
the peer group
PLANET
Remuneration as a
strategic enabler
Holistic focus on ESG
ROIC (excl AUC) at SA WACC of 13,5% +1% = 14,5% per annum
ROIC (excl AUC) at US WACC of 8% +0,5% = 8,5% per annum
60th percentile of the peer group
Achieve a 3.8% reduction (equating to 2.36mtpa CO2e) in
scope 1 and scope 2 emissions off a 2017 baseline by end FY24
for the Energy Business
60% RE power for our Chemical operations in Europe and America
by end FY24
Weighting
%
Link to longer-term
Group Priorities
25,00%
Deleverage the balance sheet, with
reduced debt levels and headroom
to allow for discretionary growth and
alternative energy and chemicals projects
25,00%
To deliver ROIC above WACC for our global
portfolio by FY25
25,00%
Pay a step-up dividend from FY24
25,00%
Deliver on our commitment to achieve a
30%# emission reduction by 2030
Introduce alternative feedstocks to our
operations
Within 6% of the DJSI inclusion score by November 2023
GEC CPT score for LTIs
to vest in FY22
44,70%
100,00%
#
40
Sasol Integrated Report 2021
Off 2017 base and excluding Natref