Corporate governance review

Remuneration report

  Part 1: Background statement  

Remuneration strategy

In the 2018 year, we revised our long-term incentive (LTI) performance conditions and targets to align with our adjusted strategy as a REIT.

Our reward philosophy is based on fair and transparent remuneration for all employees, and formulated to attract, retain, motivate and reward high-calibre employees. Remuneration components are designed to reward excellent team and individual performance, while aligning with our values and strategic objectives.

Guaranteed remuneration is mostly positioned at the market median, with key and critical skills remunerated at the higher end of median scales.

To track employee performance, our remuneration model focuses on contribution plans linked to each role profile with clear KPIs. These individual KPIs are associated with a divisional contribution plan that supports the company strategy and growth objectives.

In line with the requirements of King IV, the remuneration policy and the remuneration implementation report will be presented to shareholders for two separate non-binding advisory votes at the 15 November 2018 AGM. If more than 25.0% of the voting rights against either of these resolutions, the remco will engage with these shareholders to understand their objections and concerns on the company’s remuneration policy and remuneration implementation report.

Remco may engage with shareholders using various means of communication and will provide more detail, explain certain elements in the policy and/or remuneration implementation report to clarify any concerns that could have caused them to vote against these resolutions. Remco has the discretion to take the necessary steps to address valid and reasonable concerns raised by shareholders. The process to address these matters will be fully disclosed as part of the shareholder engagement process in the remuneration report for the next financial year.

  Part 2: Overview of remuneration policy  

Key principles underpinning our remuneration policy

Attacq’s philosophy is to structure remuneration to ensure a fair and equitable level of pay for all employees. Through the various components of remuneration, high and sustainable levels of team and individual performance are encouraged, aligned with the strategic direction and specific values of the group.

Employees’ total remuneration includes guaranteed total package (GTP), short-term incentives (STI) and LTI. Key principles shape our remuneration philosophy:

  • Remuneration policies are aligned with the business strategy and reviewed regularly
  • Our remuneration policy is transparent and understandable, both for stakeholders and internal use
  • Total rewards are set at competitive levels in the relevant market
  • Incentive-based rewards are earned by achieving performance conditions consistently, measured against targets structured to ensure the business operates effectively throughout the financial cycle
  • Risk management forms part of all employees’ KPIs and is underpinned by the financial performance of the company
  • The application of the LTI scheme is prudent and does not expose shareholders to unreasonable financial risk.

Remuneration policy snapshot

Remuneration policy snapshot

Elements of remuneration

Fixed remuneration

  • The strategic purpose of GTP is to attract and motivate high-calibre employees in a competitive market and to recognise their skills, experience and contribution to group performance
  • The GTP of each employee is based on their role and responsibilities
  • GTP is paid monthly on a cost-to-company basis
  • GTP represents payment for satisfying each employee’s day-to-day job requirements
  • The company does not rigidly adhere to market benchmarks, but does consider pay levels of companies in the real estate sector as well as other companies of comparable size and scope
  • Employees have access to several benefits: leave, four months’ paid maternity leave, subsidised lunches, death and disability cover, pension fund contributions as well as funeral and education cover for dependants
  • GTPs are reviewed annually with changes effective 1 October; however, the company is not obliged to award an increase following the review
  • Annual increases are based on several factors, including inflation, financial performance of the group, market movements, and are expressed as a percentage increase to individual GTP
  • Annual increases thus consider:
    • Cost-of-living adjustments
    • Market adjustment and/or parity increases that seek to address internal inequalities, particularly in terms of pay scales
    • The degree to which market-related pay levels have moved since the last review and other external considerations
    • Affordability and business strategy considerations
    • The outcome of each employee’s annual review.
Variable remuneration

STI scheme

The strategic purpose of the STI scheme is to reward staff for delivery of annual goals, to strive for superior performance and to achieve specific targets that support the business strategy, particularly for total property returns and recurring distributable earnings.

Performance is assessed against specific KPIs that relate to achieving key financial and/or non-financial measures, including personal objectives.

The bonus pool quantum is reviewed each financial year to ensure performance measures and targets are appropriate to support the business strategy. Individual bonuses are payable annually in October following the financial performance of the company and the individual. An individual’s bonus amount exceeding six months’ GTP is deferred and will be paid in two equal tranches in February and June of the following year. These deferred amounts accumulate interest at prime less 3.0%. Deferred balances are forfeited if the employee leaves the group. Commissions are payable as an incentive for leasing staff and considered part of their STI.

The measurement period for assessing performance is normally 12 months, coinciding with the group’s financial year. Distribution of the bonus pool is based on the group’s performance, employees’ GTP and personal performance score (individual and divisional key performance areas). The bonus pool will not exceed 50.0% of annual group GTP.

LTI scheme

Our LTI scheme aligns our strategic objectives with employee performance to unlock shareholder value for a sustained period. It is the mechanism used to retain top performers and key employees who are vital to our organisation. Remco believes the best way to retain these individuals through our LTI scheme is to focus on the unvested value of an individual’s share portfolio.

Conditional share plan (CSP) options are awarded to employees based on specific performance conditions agreed by remco. The quantum of options that will vest at maturing date is based on the actual performance of the company for the rolling three-year period. Vesting LTIs are staggered on a 60%/20%/20% split, vesting over a three, four and five-year period respectively. This supports remco’s view of creating an employee-owner culture in Attacq, with a balanced view between short and long-term decisions.

LTI scheme

LTI scheme

With the company’s conversion to a REIT, amendments to existing performance conditions and targets were approved by remco in June 2018 to accommodate the company’s changed business model. The revised performance conditions and targets create an alignment between the company’s strategic objectives and the LTI scheme. In line with our LTI scheme, employees may not be prejudiced if performance criteria linked to an allocation are changed.

The amended performance criteria for 2017 share option allocations are shown below. These will be applied to 60.0% of the share options, ie the three-year employment condition, which will vest in 2020.

Performance conditions   Weighting
Financial 80.0        
Growth in DPS relative to peer group over a three-year period*   35.0   100.0%   110.0%   120.0%  
Share price performance relative to peer group over a three-year period   35.0   90.0%   100.0%   120.0%  
Annual average development surplus for a rolling three-year period   10.0   R60.0 million   R120.0 million   R150.0 million  
Non-financial 20.0        
Transformation (based on new charter) as at date of vesting   10.0   Level 5   Level 4   Level 3  
Annual average Waterfall bulk roll out for a rolling three-year period   10.0   35 000m2   70 000m2   90 000m2  

* Emira Property Fund; Growthpoint Properties Limited; Hyprop Investments Limited; Redefine Properties Limited.

Linear vesting is applied to performance between the different vesting scales. The proposed vesting scale is:

  • Threshold achievement (minimum level of performance for any incentive to vest) – 30.0% vesting
  • Target achievement (level of performance to pay an on-target incentive) – 100.0% vesting
  • Stretched achievement (exceptional performance in the current business environment) – could attract vesting greater than 100.0% up to 150.0%.

Participants are not entitled to any shareholder rights prior to exercising their vested share awards. If the company is in a closed or prohibited period on the vesting date, exercising these options will be postponed to the first business day after the closed or prohibited period has been lifted. This is in line with scheme rules.

Based on the strategic objectives of the company, management recommends to the annual September remco meeting the three-year performance criteria for the LTI awards issued during that year. This will be in line with projected company growth communicated to the market.

Executive directors’ remuneration

Remuneration for our executive directors is structured on a total remuneration basis that includes GTP, STIs and LTIs. These rewards are linked to agreed objectives set by the board and designed to support achieving the company’s strategy, growth targets and performance levels.

Salient terms and conditions of existing executive directors’ employment agreements include:

  • The notice period for the CEO is six months and three months for the COO and CFO respectively
  • If an executive director is dismissed after a disciplinary procedure, a shorter notice period could apply without entitlement for compensation for the shorter notice period
  • Contracts do not commit the company to pay on a termination arising from a director’s failure to fulfil their duties
  • In exceptional situations of terminating executive directors’ services, contracts provide for remco, assisted by labour law advisers, to oversee settlement of terms
  • Under the rules of the plan, remco has discretion to declare a director leaving the company to be a “good leaver” as defined in the respective rules of the scheme.

The employment agreements with Morné Wilken (in his capacity as CEO) and Melt Hamman (in his capacity as CFO) in July 2013 included a set formula where the STI was a function of the group’s annual growth in adjusted net asset value per share. The formula was based on a multiple of monthly GTP equal to every percentage point of growth above 7.0%. With the anticipated conversion to a REIT, remco approved revised KPIs for the STI calculations of the CFO, who at that point acted as interim CEO. Refer to the executive directors’ remuneration.

A STI structure for Melt Hamman was agreed in the February 2018 remco meeting and replaced the existing scheme in the CFO’s employment agreement. If 100.0% of KPIs are met, a multiple of 12 times monthly GTP will be awarded in October 2018, applied on a linear level and capped at 18 times monthly GTP. These KPIs were reviewed by remco in September 2018 and Melt Hamman’s actual performance as CFO against these performance criteria is included under the implementation report. The STI will be awarded in the 2019 financial year.

With the appointment of Melt Hamman as CEO, Raj Nana as CFO and Jackie van Niekerk as executive director on 19 June 2018, the following KPIs were agreed for the 2019 financial year:

KPIs for 2019   Weighting
Melt Hamman (CEO)          
Financial 70.0        
DPS growth 50.0   8.3% – 10.5% 9.4% – 11.9%  
Interest cover ratio 20.0   >1.5 times >1.7 times  
Non-financial 30.0        
Development roll-out* 20.0        
Retail, office and mixed-use, industrial, hotel 15.0   70 000m2 90 000m2  
Successful sale of residential units 5.0   200 units 300 units  
Transformation 10.0        
Transformation (based on new charter) as at date of vesting 5.0   Level 4 Level 3  
Actual staff composition to be in line or better than EE plan as approved by transformation, social and ethics committee and submitted to Department of Trade and Industry 5.0   50.0% of staff complement as per EE plan    
Raj Nana (CFO)          
Financial 55.0        
DPS growth 40.0   8.3% – 10.5% 9.4% – 11.9%  
Debt management 15.0        
Interest cover ratio 7.0   >1.5 times >1.7 times  
Gearing ratio 2.0   35.0% 32.0%  
Debt expiry profile 2.0   >3 years >4 years  
Weighted average cost of funding 2.0   <prime less 1.0% <prime less 1.5%  
Interest rate hedging 2.0   >70.0% >90.0%  
Non-financial 45.0        
Risk and compliance 10.0   Positive feedback from audit and risk committee, external audit and internal audit  
People development 6.0   360° evaluation from direct reports and implementation of personal development plans for the individual and their staff  
Reporting 10.0   Timely, quality reporting as rated by the chairperson of each committee and an excellent rating in EY’s Excellence in Integrated Reporting Awards 2019  
Actual staff composition to be in line or better than EE plan as approved by transformation, social and ethics committee and submitted to Department of Trade and Industry 4.0   50.0% of staff complement as per EE plan  
Strategic support to the CEO and collaboration with the rest of exco 15.0   360° evaluation from exco  
Jackie van Niekerk (COO)          
Financial 65.0        
DPS growth 30.0   7.5% – 9.5%
plus 10.0%
7.5% – 9.5%
plus 25.0%
Property and asset management 10.0        
Trading density growth for the year 4.0   3.0% 5.0%  
Vacancies as at reporting date 3.0   4.0% 2.5%  
Arrears as at reporting date 3.0   2.5% 2.0%  
New business development 25.0   40 000m2 50 000m2  
Non-financial 35.0        
Risk and compliance 3.0   Positive feedback from audit and risk committee, external audit and internal audit  
IT and process environment 3.0   IT and process enhancements  
People development 3.0   360° evaluation from direct reports and implementation of personal development plans for the individual and their staff  
Reporting 3.0   Timely, quality reporting as rated by the chairperson of each committee and an excellent rating in EY’s Excellence in Integrated Reporting Awards 2019  
Strategic support to the CEO and collaboration with the rest of exco 15.0   360° evaluation from exco  
Actual staff composition to be in line or better than EE plan as approved by transformation, social and ethics committee and submitted to Department of Trade and Industry 4.0   50.0% of staff complement as per EE plan  
Transformation (based on new charter) as at date of vesting 4.0   Level 4 Level 3  

* Effective share of PGLA for newly completed buildings.

If 100.0% of the KPIs are achieved, then an STI equivalent to six times monthly GTP will be payable to the respective executive director. A linear approach will be followed between reaching the target (100.0%) and the stretched target (150.0%). Certain non-financial performance metrics, as indicated above, are capped at target level (100.0%). A minimum of 50.0% of the KPIs have to be achieved to qualify for a STI reward.

As part of appointing Melt Hamman as CEO, Raj Nana as CFO and Jackie van Niekerk as executive director, remco approved retention conditional share options. The performance conditions linked to these retention awards are shown below:

KPIs for the awards to be vested in October 2021   Weighting
Compounded DPS growth for the three years ending 30 June 2021     50.0   20.0%   27.5%  
Cumulative development roll-out over a rolling three-year period ending 30 June 2021*     25.0   210 000m2   270 000m2  
Cumulative residential developments over a rolling three-year period ending 30 June 2021       500 units   600 units  
Interest cover ratio for the year ending 30 June 2021   25.0 2.00 times 2.35 times  

* Effective share of PGLA for newly completed buildings.

  • These options will not have a strike price linked to them
  • To qualify for these conditional share options, the executive director has to achieve at least 50.0% of their LTI KPIs over the rolling three-year period
  • A linear approach will be followed between 50.0% and 150.0% with a cap at 150.0%
  • At vesting the executive directors will only be allowed to sell shares to cover the taxable amount on this incentive
  • Executive directors will be required to retain the issued shares of this award in their share portfolio for three years from vesting, regardless of whether they leave the employ of the company.

LTIs are calculated taking into account the value of the unvested portfolio of executive directors, capped at a maximum multiple of annual GTP of 3.5 times for the CEO and 3 times for the CFO and COO.

Remco conducts an annual benchmarking exercise to ensure that total remuneration of executive directors is market related and aligned with the strategic objectives of the company to create sustainable growth and value for its stakeholders.

Remuneration of non-executive directors (NEDs)

The strategic purpose of NED remuneration is to attract and retain non-executives of suitable expertise to constructively challenge the executives in delivering the group’s strategy. NEDs’ remuneration is a function of the number of meetings attended in a one-year cycle from the start of each financial period. Fees are based on an assessment of the NEDs’ time as well as their responsibilities and risk as directors.

Attacq’s policy is to pay competitively for the role, while recognising the required time commitment. For this reason, and to ensure fairness, fees are benchmarked against a suitable comparator group of JSE-listed companies.

In line with the provisions of King IV, NEDs do not participate in any performance-related remuneration and they do not receive any benefits, nor do they participate in any LTI plans except where they previously held executive office and remain entitled to unvested benefits arising from their period of employment. NEDs do not receive remuneration other than the fees but are entitled to be paid all reasonable travelling, hotel and other expenses properly incurred in attending meetings of the board, its committees, general meetings or otherwise in connection with the business of the group.

Remco reviews NEDs’ fees annually based on benchmarking provided by external service providers. These recommendations are made to the board, which in turn proposes fees for approval by shareholders at the AGM.

Proposed fees for the calendar year to 31 December 2019 below have been recommended by the board to the November 2018 AGM.

Annual fees     Recommended
Chairperson     424 000   400 000  
Lead independent NED     368 000   347 700  
Board member     320 000   302 400  
Audit and risk committee
– Chairperson       150 000     132 300  
– Member     120 000   105 900  
Investment committee
– Chairperson       100 000     92 400  
– Member     80 000   73 920  
Remuneration and nominations
– Chairperson       50 000     46 200  
– Member     40 000   37 000  
Transformation, social and ethics committee
– Chairperson       50 000     46 200  
– Member     40 000   37 000  
Fees per ad hoc meeting            
Investment committee
– Chairperson       25 000     23 100  
– Member     20 000   18 500  
Audit and risk committee            
– Chairperson     25 000    
– Member     20 000    

Remuneration of employees

Considering economic conditions, remco approved an average increase linked to CPI of 6.06% on GTP, effective from 1 October 2017.

Taking into account the lower-than-expected financial performance of the company for the year ended 30 June 2017, the STI pool was reduced from the previous year’s average of 2.1 times monthly GTP to 1.7 times monthly GTP for staff.

The financial performance for the year ended 30 June 2018 determines the actual vesting percentage for the share awards issued in 2015. Actual results were approved by remco in September 2018 with the actual vesting percentage being 89.4%. The vesting date of these LTIs are 14 October 2018 and they have vested as shown below.

Performance conditions     Weighting
Financial     70.0            
DPS declared for June 2018 financial year     30.0 66.4cps 73.0cps 87.6cps 74.0cps 103.4  
Compounded annual adjusted NAVPS growth over a rolling three-year period ended June 2018     40.0 CPI + 3% CPI + 10% CPI + 16% 8.5% 31.7  
Non-financial     30.0            
Transformation (based on new charter) as at vesting date     10.0 Level 7 Level 6 Level 5 Level 2 150.0  
Annual average bulk roll-out for a rolling three-year period*     20.0 35 000m2 52 500m2 65 000m2 100 888m2 150.0  

* Effective share of PGLA for newly completed buildings.

Key senior management and prescribed officers are set out below:

2018     2017
D Theron     D Theron
P Mackenzie – resigned 31 December 2017     P Mackenzie
MW Clampett     MW Clampett
G Pendleton – appointed 13 March 2018     JR van Niekerk – appointed 1 April 2017
      R Nana

* P de Villiers was appointed as prescribed officer from 1 July 2018.

Remuneration of executive directors

For full disclosure of executive directors’ remuneration, which is in line with the company’s remuneration policy, please see note 32 of the AFS, available on

Both executive directors received a 6.06% increase in GTP, effective from 1 October 2017.

Due to the lower-than-anticipated financial performance of the group for the 2017 financial year, remco agreed there would be no STI paid to the CEO. Remco did approve a cash incentive for the CFO of R67 100 due to a number of non-financial KPIs that he successfully implemented. The STI multiple, as determined by the set formula in their employment agreements, was calculated as follows:

Adjusted NAVPS growth for June     2.7   15.3  
Less: Minimum required to qualify for bonus     7.0   7.0  
Equal to a multiple of monthly GTP       8.3  

Melt Hamman was appointed as CEO and Raj Nana as CFO on 19 June 2018. Raj Nana and Jackie van Niekerk (COO) were appointed executive directors on the same date. Executive directors’ total remuneration compared to the previous year is summarised below:

Morné Wilken: CEO until 31 December 2017            
GTP*     2 202   4 342  
STI       2 710  
LTI CSP** (2018: 170 611 share options; 2017: 488 831 share options)       8 368  
Total     2 202   15 420  
Melt Hamman: interim CEO and CFO from 1 January to 19 June 2018            
GTP#     3 951   2 999  
STI     67   1 799  
LTI (2018: 147 826 share options; 2017: 263 622 share options)     2 686   4 513  
Total     6 704   9 311  
Raj Nana: CFO from 19 June 2018            
GTP     1 588   n/a  
STI     380   n/a  
LTI (2018: 55 000 share options; 2017: 63 202 share options)     999   n/a  
Total     2 967   n/a  
Jackie van Niekerk: COO, executive director from 19 June 2018            
GTP     2 692   n/a  
STI       n/a  
LTI (2018: 183 175 share options)     3 328   n/a  
Total     6 020   n/a  
# GTP was adjusted for the period 1 December 2017 to 30 June 2018 for fulfilling the dual role of CEO and CFO.
* GTP is for the six months ended 31 December 2017.
** With the resignation of Morné Wilken, his CSPs awarded in September 2017 were not accepted and therefore not reflected in his share portfolio summary.

Below is the STI structure for Melt Hamman in his capacity as CFO for the 2018 financial year. Melt’s actual performance in 2018 will be measured against these criteria and the STI will be awarded in October 2018 (2019 financial year).

KPIs for the year ended 30 June 2018       Weighting
    Target   Achievement Weighted achievement
Pay-out of maiden distribution     35.0   73.0cps payable in October 2018 74.0cps 35.5  
Actual management cost below budget     5.0   Less than the approved budget 100.0% 5.0  
Debt management     10.0       12.0  
Gearing ratio (as defined)         <35.0% 34.0%    
Interest cover ratio         >1.5 times 1.6 times    
Interest rate hedging         >70.0% 97.7%    
Debt expiry profile         >3 years 4.4 years    
Weighted average cost of funding         <Prime less 1% 8.7%    
Qualitative factors     25.0       25.0  
Compliance: risk, governance, legal agreements     6.0   Achieve positive feedback from audit and risk committee, external and internal auditors 100.0%    
People development     3.0   Personal development plans for all staff in reporting structure 100.0%    
Employee satisfaction score     3.0   360° feedback from direct reports 100.0%    
Transformation (EE and B-BBEE)     4.0   Implement strategy and improve scorecard 100.0%    
Reporting: results, integrated report, board     4.0   Reports on time and improved quality 115.0%    
IT and process environment     5.0   System and process enhancement 80.0%    
Strategic initiatives     25.0       28.5  
Strategic support to CEO and COO     15.0   360° feedback from CEO and COO 110.0% 16.5  
Conversion to REIT     10.0   Conversion prior to 30 June 2018 achieved 12.0  
Total     100.0       106.0  

Total long-term incentive portfolio of executive directors

Morné Wilken (number of awards)
Morné Wilken (number of awards)
Melt Hamman (number of awards)
Melt Hamman (number of awards)


Raj Nana (number of awards)
Raj Nana (number of awards)
Jackie van Niekerk (number of awards)
Jackie van Niekerk (number of awards)

Remuneration of independent NEDs

The table below summarises actual fees paid to NEDs for the 2017 and 2018 financial years, as disclosed in note 32 of the AFS.

P Tredoux     694   566  
MM du Toit*     381   363  
HR El Haimer     466   433  
IN Mkhari – appointed 15 March 2018     76    
KR Moloko*     472   478  
BT Nagle     614   494  
S Shaw-Taylor     626   527  
JHP van der Merwe*     369   382  
LLS van der Watt – resigned 1 July 2017       383  
Total     3 698   3 626  

* Including travel fees per meeting.

Our NEDs are paid quarterly in arrears for attendance. Travel fees are added for directors based outside Gauteng and they receive a flat fee per meeting involving travel. The travel fee was introduced in January 2017 at R8 000 per trip and increased to R8 400 in January 2018. Travel fees will increase to R8 800 and will be included in the annual review of directors’ remuneration presented to the AGM for approval on 15 November 2018.