Sasol Limited Integrated Report 2021 - Book - Page 42
Report of the Remuneration Committee (CONTINUED)
This section provides an overview of the implementation of the Remuneration Policy. It also sets out the relationship between Company
performance and Executive Directors’ and Prescribed Officers’ remuneration outcomes as well as progress against the minimum shareholding
The structure of the Implementation Report, is as follows:
• Remuneration and benefits paid disclosed in terms of the single total figure methodology including the
STI amounts awarded for 2021 and an estimated value relating to the vesting of LTIs in September 2021,
in respect of the performance period ended 30 June 2021
• Fees paid during 2021
The unlocking of US$6 billion of cash in record time was exceptional; Sasol avoided having to carry out a rights issue; rating agencies declared
no further downgrades after June 2020; and the business did not breach debt covenant levels (the target was 4 times net debt: EBITDA in
December 2020 and the 30 June 2021 result was 1,5 times net debt: EBITDA). The GEC and Sasol’s leadership implemented the new operating
model less than 12 months after it was approved, and did so without impacting business operations and continuity; there was no labour unrest;
our safety results improved significantly; and there was a reduction in the complexity of our governance and approval structures. Sasol also
ensured the full remediation of SOX material weaknesses in relation to the LCCP. The leadership team’s focus can now shift to introducing
innovation and automation; building confidence with investors; and enhancing Sasol’s efforts to decarbonise our operations.
On the back of the exceptional results, the Committee considered on the basis of relative performance and contribution to the Group results,
the individual performance factor for the members of the GEC, in the range of 100% to 130%.
The tables in this section provide information on all amounts received or receivable by members of the GEC for 2021 (including the President
and CEO, other Directors and Prescribed Officers).
Determining the short-term incentive awards
a. Remuneration and benefits approved for payment in respect of 2021 for Executive Directors
The Committee has considered the excellent outcomes of the Sasol 2.0 programme considering the scale and complexity of the global Group
restructuring and the avoidance of a rights issue which would have been extremely dilutive to shareholders. The Sasol 2.0 global restructuring
was completed in record time with mostly improved diversity statistics despite the reduction in headcount. Management also endeavoured
to save as many jobs as possible through the restructuring process and the majority of severances were through the voluntary process.
The Committee therefore agreed to award the maximum outcome of 150% on the three Sasol 2.0 measures, increasing the total score from
110,25% (after the 3% fatality penalty) to 116,50% out of the maximum award of 150%. Asset disposals, strict management of cash fixed
costs an prudent allocation of capital mainly ensuring ongoing reliability of our operations, were excellent outcomes. On capex: Actual capital
expenditure amounted to R16,4 billion compared to R35,2 billion during 2020. The reduction in capital expenditure was not at the expense of
maintaining our asset integrity and was achieved through an optimised asset risk management process. In addition, the progression of the
Production Sharing Agreement (PSA) to FID stage was a key milestone for us in 2021.
On asset disposals: Of the transactions either concluded, or where SPAs have been signed to the value of US$3,5bn, transactions completed
with funds received amounted to US3,1bn. The bulk of the proceeds were received by December 2020 and the closing of the ASUs at 30 June 2021
was the last transaction of FY21 to be closed. Guarantees have been received in respect of the Rompco sale. The disposals have been challenging
due to the individual complexities with protracted negotiations and regulatory approvals requiring significant work to close off.
On Cash Fixed Costs: The organisation rallied as the business suffered cash flow constraints following the drop in crude oil prices and lower
demand for our fuels and chemicals following the COVID-19 spread across the numerous markets we operate in. The salary sacrifice and
postponement of annual salary increases were significant personal costs to Team Sasol and in addition strict cost discipline helped us deliver
R2,5bn reduction in fixed costs.
The sales volume target was set in anticipation of a quicker recovery of global demand and was not achieved. No normalisation in respect of
the impact of COVID-19 on the STI outcomes, was applied. The Committee was disappointed with the one fatality in Natref, but very satisfied
with the safety performance. The Committee was overall very comfortable with the STI outcome being representative of the business results
and agreed that the rounded score of 117% be applied in the calculation of the STIs for the members of the GEC.
Additionally, the Committee has the duty to assess the performance of the members of the GEC every year. We apply the outcome of the
assessment, in the form of an Individual Performance Factor (in the range of 0% – 150%), as a multiplier in calculating STIs. The Committee then
approves the performance outcomes for the Prescribed Officers and makes a recommendation to the Board, for its final decision, in respect of
the performance outcomes of the Executive Directors.
In assessing the performance outcomes, the Committee considers the following: business results in the specific areas of responsibility;
leadership displayed both in and outside the area of responsibility; values displayed; relationships; and collaboration in and outside
FR Grobler3 ,4
In recent years, GEC members have made financial sacrifices through sacrifices in their salaries as well as pension contributions. On average,
they have forfeited 50% of the total target reward for the past three years due to the non-payment of the short-term incentive, no salary
increase in the past financial year, the weakening of the share price and the low level of vesting of LTIs (which has been at an average of 44% over
the past four years).
Risk and Retirement funding
Vehicle insurance fringe benefit
VD Kahla6, 7
(as Exec Prescribed
Total salary and benefits
Annual short-term incentive1
Long-term incentive gains2
Total annual remuneration
STIs approved based on the Group results for 2021 and payable in the 2022 financial year. Incentives are calculated as a percentage of total guaranteed
package/base salary as at 30 June 2021 x Group STI achievement x Individual Performance Achievement.
LTIs for 2021 represent the award made on 3 September 2018. The illustrative amount is calculated in terms of the number of LTIs x corporate performance
target achieved (GEC: 44,7%; SVP: 66,8%) x average share price for June 2021. The actual vesting date for the annual awards is 3 September 2021 subject to
the company being in an open period. Dividend equivalents accrue at the end of the vesting period, to the extent that the LTIs vest. 50% of the vested LTIs
and accrued dividends will be released on 3 September 2021 and the balance in September 2023, subject to the rules of the LTI plan. As there are no further
performance conditions attached to the balance of the 50%, the full amount is disclosed in the single figure table.
Mr Grobler agreed to a voluntary contribution of 30% of his salary to the South Africa Solidarity Fund for the period May 2020 – July 2020.
Other benefits for Mr Grobler include tax corrections on pension fund contributions made over the period of the previous expatriate assignment (R1 518 846),
tax assistance rendered in respect of his previous expatriate assignment to Germany (R403 374) and subsidised business transport (R770).
Other benefits for Mr Victor include subsidised business transport.
Other benefits for Mr Kahla include a long service award (R2 000).
Messrs Victor and Kahla have voluntarily agreed to a salary sacrifice of 20% for the period May 2020 – July 2020. In addition, there was a suspension of
employer contributions to the pension fund for the same period. The increase in salaries in 2021 is as a result of the sacrifice only being applied for one month
in 2021 as opposed to two months in 2020. In addition, Messrs Victor and Kahla opted to reduce their contribution to the SA pension fund and allocate the
contribution to their salary.
The Committee is satisfied that over the past few years the Remuneration Policy has delivered reward results that have aligned with the
business results (including downward moderation of incentive outcomes at the Committee’s discretion). However, we recognise that in better
times, rewards should also be commensurate with the better business results. The leadership has done a sterling job in leading the organisation
through the perfect storm that Sasol faced during 2020 and 2021 not only because of the impacts of COVID-19, but also because of the
macroeconomic environment which severely impacted Sasol’s financial viability.
For 2021, we were particularly mindful of the fact that members of the GEC have had to apply an extraordinary effort over the past 18 – 24 months.
This was required to turn the Company around; maintain reliable and stable operations despite the devastating impacts of COVID-19; stabilise the
balance sheet; introduce the new operating model; regain the trust of our investors; and retain and motivate employees to perform at their best
during this very volatile and uncertain period.
P Victor5, 7
Sasol Integrated Report 2021