Sasol Limited Integrated Report 2018

Aligning remuneration to our strategic targets

To drive our top priorities which are aligned to delivery of our strategy, we make executives accountable through key performance indicators (KPIs) aligned with our strategy and also align their remuneration with these KPIs.

STRATEGIC TARGETS

ROIC
(US$) >12% through the cycle >2% uplift by 2022

EBIT GROWTH
(US$ real) >5% CAGR through the cycle

ZERO HARM
at all our operations globally

DIVIDEND RETURNS
stepping up pay-out to 40% of Core HEPS (2,5x cover) by 2022 thereafter moving pay-out towards 45% (2,2x cover)

ASPIRATIONAL CULTURE
ensuring engagement and growth of all our employees

 

OUR TOP PRIORITIES

Our Group top priorities are annually determined by our Joint CEOs in response to the external and internal environments in which we operate and focus the organisation on those key deliverables that will bring us closer to realising our strategy.

Our top priorities for 2019 are:

• pursue zero harm;
• nurture our foundation business and secure license to operate;
• deliver sustainable growth and clarify future investment opportunities;
• build a resilient organisation for the future; and
• drive customer, operational and capital excellence.

Short-term incentives (STI)

2018 key performance targets

How does it link to value creation

Weighting %

2018 Achievement

Score

2017

2016

Year-on-year growth in headline earnings – 2017 CPI +2%

Growth in earnings create value for shareholders and stakeholders

30%

16% below target

0%

Below threshold

Below threshold

2% year-on-year growth in production volumes (fuel equivalent tons)

Through production improvements and an efficient workforce we increase earnings for our shareholders

15%

0,9% growth

13,50%

1,8% growth

1,25% growth

Year-on-year growth in cash fixed costs including BPEP savings

Reduced cash fixed costs increase earnings and make cash available for other projects or incremental projects which can create value for all stakeholders

15%

R216m above target

18,22%

On target

Exceed stretch target

Working capital and gross margin

Increase in gross margin translate into increased earnings and increased value to all stakeholders

5%

4% below target

3,66%

8,8% below target

99,7% of target

Project delivery

Delivering projects within estimated time and budget increase cash available for other projects and ensure increase in outputs

5%

On target

5,00%

–

–

Preferential procurement (PP) score of 11 out of 25

Delivering projects within estimated time and budget increase cash available for other projects and ensure increase in outputs

5%

PP score of 16

7,50%

Exceed stretch target

Exceed stretch target

Employment equity – African and Coloured appointments into senior positions

Integral to our aspirational culture is that we value and promote diversity and inclusion

5%

49% of opportunities utilised

0%

53% of opportunities utilised

77% of senior external appointments African and Coloured

RCR = 0,27

Nothing matters more than everyone returning home safely and, as such, improving safety in our operations is of the utmost importance

5%

RCR of 0,27

5,00%

RCR of 0,28

RCR of 0,29

19 FERs

The decrease in the number of significant fires, explosions and releases is important to us as it ensures safe and reliable operations

5%

15 FERs

7,50%

Achieved stretch target

Exceed stretch target

Injuries and fatalities below six

Given our commitment and approach to safety we believe zero harm is possible

5%

10 injuries and 4 fatalities

0%

Energy efficiency improvement of 0,5% in South African operations

We have a long-standing commitment towards promoting energy efficiency (EE) as a key business driver. We strive to continuously improve the EE of all our manufacturing in support of asset integrity, and this year we committed to the global Energy Productivity 100 initiative

5%

0,4% energy intensity improvement

2,63%

1,67% improvement

Fatalities

4

5

1

GEC STI score

63,01%

72,79%

81,99%

Long-term incentives (LTI)

Corporate performance targets (CPT)

How does it link to value creation

Weighting %

2018 Achievement

Score

2017

2016

Increase in tons produced/head

Through production improvements and an efficient workforce we increase earnings for our shareholders

25%

72%

50%

Achieved stretch target

Achieved stretch target

Growth in attributable earnings

Growth in earnings create value for shareholders and stakeholders

25%

Below threshold

0%

Below threshold

Below threshold

TSR vs. MSCI World Chemical Index

Total shareholder return (TSR) is a measure of the performance of the Group’s shares over time, and combines both share price appreciation and dividends paid to indicate the total value created to shareholders

50%

31st percentile

0%

Between median and lower quartile

TSR vs. JSE Resi 10 Index

6th in group

TSR vs. MSCI World Energy Index

52nd percentile

19%

47nd percentile

GEC CPT score for LTI

69%

90%

93%

Executive Directors

Factors considered in the final determination of the annual STI award. The final individual performance factors (IPFs) are disclosed in a range:

• Gross US dollar salary

Remuneration and benefits paid (disclosed in rands) and approved in respect of 2018 for Executive Directors:

• Details of benefits offered on page 34 of the Annual Financial Statements.
• Short-term incentives approved based on the Group results for the 2018 financial year and payable in the 2019 financial year. Incentives are calculated as a percentage of total guaranteed package/base salary as at 30 June 2018.
• Long-term incentives for the 2018 financial year represent the number of units x corporate performance target achieved (2018) x closing share price on 16 August 2018. The actual vesting date for the annual awards made on 21 September 2015 is 21 September 2018. Dividend equivalents accrue at the end of the vesting period, to the extent that the LTI units vest. It represents: number of units awarded x corporate performance targets achieved during financial year 2018 x dividend equivalents up to 21 September 2018.
• Long-term incentive grants made in 2016 vest in 2019 with a vesting result of 69%; 50% of the vested shares are subject to a further holding period of two years.
• Long-term incentives granted in 2016 to Mr P Victor, whilst he was a Senior Vice President will vest in 2019.
• Ms Fakude resigned from the Group with effect from 31 December 2016.

Details of long-term incentives and share appreciation rights on page 34 of the Annual Financial Statements.

Prescribed Officers

Factors considered in the final determination of the annual STI award. The final individual performance factors (IPFs) are disclosed in a assignment range:

• STI based on Net Indicative Assignment Salary (NIAS) and net STI value.
• Pro rata STI value for the period 7 August 2017 to 30 June 2018, STI based on gross salary and NIAS. STI indicated as a gross value.
• Mr Rademan retired with effect from 31 October 2017.
• Actual score determined by performance against individual scorecard, in a range of 0% – 150%.

Remuneration and benefits paid (disclosed in rands) and approved in respect of 2018 for Prescribed Officers:

• Details of benefits offered on page 35 of the Annual Financial Statements.
• Short-term incentives approved based on the Group results for the 2018 financial year and payable in the 2019 financial year. Incentives are calculated as a percentage of total guaranteed package/base salary/net indicative expatriate salary as at 30 June 2018.
• Long-term incentives for the 2018 financial year represent the number of units x corporate performance target achieved (2018) x closing share price on 16 August 2018. The actual vesting date for the annual awards made on 21 September 2015 is 21 September 2018. Dividend equivalents accrue at the end of the vesting period, to the extent that the LTI units vest. It represents: number of units awarded x corporate performance targets achieved during financial year 2018 x dividend equivalents up to 21 September 2018.
• Long-term incentive grants made in 2016 vests in 2019 with a vesting result of 69%, 50% of the vested shares are subject to a further holding period of two years.
• Mr Rademan retired with effect from 31 October 2017. A service penalty of 15% was applied on Long-term incentives.

Details of long-term incentives and share appreciation rights on page 36 and 37 of the Annual Financial Statements.

Beneficial shareholding

The aggregate beneficial shareholding at 30 June 2018 of the directors of the company and the Prescribed Officers and their associates (none of whom have a holding greater than 1%) in the issued ordinary share capital of the company are detailed in the following tables:

• There has been no change in the above shareholding between the end of the financial year and the date of approval of the Annual Financial Statements. Interest in Employee Share Savings Trust and Long-term Incentives excluded.
• Sasol Inzalo Public (RF) Limited shares.
• Direct beneficial shareholding comprise of American Depository Receipts.
• Ms Fakude resigned with effect from 31 December 2016, no disclosure required for 2018.
• Direct beneficial shareholding comprise of Sasol ordinary shares.
• Appointed with effect from 1 April 2018.
• Direct beneficial shareholding comprise of Sasol BEE ordinary shares.
• Resigned with effect from 17 November 2017.
• Direct beneficial shareholding comprise of Sasol ordinary shares.
• Retired with effect from 31 October 2017.
• Direct beneficial shareholding comprise of 5 014 Sasol ordinary shares and 285 Sasol BEE ordinary shares.

Non-executive Directors' remuneration for the year was as follows:

• Fees include value added tax (VAT) paid from 1 June 2017.
• Board and committee fees paid in US dollars.
• Mr Dijkgraaf retired from the Board on 30 April 2018.
• Mr Njeke was appointed as Lead Independent Director on 1 May 2018.
• Ms Dube appointed effective 1 April 2018.
• Dr Flöel appointed effective 1 January 2018.
• Ms Mkhize retired from the Board on 17 November 2017.