People and remuneration report

MTN’s people

The calibre of MTN’s people will be a key differentiator in the increasingly competitive communications sector. In 2011, MTN had 24 252 permanent employees across 21 operations.*

MTN recognises that to achieve its strategic objectives and sustain its business, the Group needs appropriately skilled, culturally diverse employees who are motivated by, and enjoy, their work. MTN people must be encouraged to develop their careers and be offered opportunities to hone their skills to meet the needs of the evolving business. This will help the Group grow its leadership position, implement a full ICT offering, enhance its operational efficiencies and ultimately increase its returns to shareholders.

MTN strives to be an employer of choice and so retain key skills. As the number of mobile licences increases, demand for industry talent grows, making retention efforts that much more important. And as the business evolves towards a broader service offering, from one that provides mainly voice services, MTN’s philosophy is to employ experienced individuals who share and relate to MTN’s brand values.

These are:

	a ‘can do’ attitude;
	innovation;
	leadership;
	relationships; and
	integrity.

The first value, a ‘can do’ approach refers to the entrepreneurial spirit on which the business was founded. MTN people are positive they will find solutions to problems; they are energetic and motivated to succeed. The second value, innovation, underscores the importance MTN gives to inventiveness. From introducing the first ‘pay as you go’ model back in the 1990s to launching dynamic tariffing with MTN Zone in 2010, MTN continues to develop new ways of doing things. Creating an environment conducive to innovation is critical.

MTN’s leadership value refers to the Group’s visionary plans for the industry and the markets in which it operates. MTN understands the importance of sound relationships with its numerous stakeholders. It endeavours to treat everyone fairly and with respect and to coordinate its efforts with its stakeholders toward a common goal.

MTN’s integrity value means the Group acts honestly, guided by strong ethics in all operations.

In April 2011, the Group launched ‘The MTN Deal’, a revised employee value proposition which is a pledge to better understand employees, develop career opportunities and improve the employment offering beyond reward and recognition. It has five key components aimed at attracting, engaging and retaining appropriate talent.

These are:

	Brand strength: This is one of the main features that attract people to work at MTN. It is supported by the Group’s commitment to social responsibility programmes which enrich and improve the lives of the communities in which it operates.
	A leadership brand: In 2011, MTN created a profile of what it considers to be the attributes of an effective and successful leader at MTN. This profile is aligned to the Group’s talent management process and programmes.
	Investing in MTN talent: MTN offers various career development courses. The Group is working to enable employees to better understand the opportunities available within MTN to hone their skills. Operating companies across the footprint have started hosting ‘trade fairs’ to give employees an idea of the development opportunities available.
	A globally diverse culture: MTN’s employees come from more than 55 different nationalities. We have five official business languages. The Group sees strength in diversity and is developing global communication tools and social networking platforms aimed at sharing and connecting employees across operations.
	Total reward and recognition: This is a holistic reward and recognition framework with various common components, although it is customised by individual operations to incorporate local priorities.

*In the 2010 integrated report, 34 588 employees were reported (this number included contractors which are not permanent employees).

Talent management

In 2011, MTN introduced a new approach to leadership talent management to better align it to the business strategy and allow for the improved identification of key talent risks. The introduction of this process has led to a notable increase in the level of engagement with key talent and significant development of the Group’s succession pool for its highest level of executives (known as “c-suite” executives). It has also resulted in an increase in promotions and rotation opportunities across the Group. In 2012, MTN plans to introduce more rigour and structure to the identification and management of critical positions across the Group, as well as to develop greater skills among MTN’s talent management practitioners and improve the capability of internal talent data systems.

Learning and development

The MTN Academy was launched in 2008 and is now fully operational as a strategic human investment and development resource to the Group and its operations. The Academy delivers over 100 classroom courses across the key areas of business acumen, commerce, leadership and behaviour, organisational development and technology systems. In 2011, the MTN Academy successfully deployed the Global Advancement Programme (GAP) for the highest level executives as well as The Future Leadership Investment Growing High-Potential Talent (FLIGHT) for high-potential middle managers. In total, 2 668 high-potential employees were trained in the year.

The MTN Academy also launched an e-learning system called e-Live which offers MTN employees access to over 3 000 online courses (including titles in French and Portuguese) which cover every aspect of MTN’s business functions. The uptake by MTN people of online learning has far exceeded expectations with 24 591 course registrations and 7 449 completed courses by the end of 2011, within four months of the launch.

MTN uses the Metrics that Matter global benchmarking solution to measures delegates’ experiences of learning services provided by the MTN Academy and its strategic partners. In terms of the effectiveness measure (meaning significant knowledge and skills were gained), MTN Academy courses scored 87,8%. On the value measure (which means training was considered a very worthwhile investment), MTN Academy courses scored 85,4%. Both these scores were significantly higher than the global benchmark.

The MTN Academy continues to evolve as it anticipates changes in the industry, ensuring that the Group delivers on its strategic goals. In 2011, the Group spent R265 million on employee learning and development, 97% of its budget for the year.

Health and safety

Nominated employees represent their colleagues on health and safety committees, which were formed to monitor and advise the Group on occupational health and safety in the operations. The Group follows strict procedures in the installation, operation and maintenance of masts, base stations and in laying cables. Of particular concern to some employees is their exposure to electro-magnetic fields (EMF) and radio frequencies (RF) emitted by mobile phones and the antennae of base stations. MTN adheres to international guidelines on exposure to radio frequencies for its employees as well as the public at large. Details on the various guidelines, as well as answers to frequently asked questions are in the ‘Sustainable Societies’ section of the Group website. In addition to compliance training for technical staff, MTN has developed an approach to certification training for all employees and contractors working close to antennas on the network. This basic RF awareness training minimises occupational exposure and MTN intends to ensure that this teaching forms part of the annual compliance training carried out throughout the Group.

MTN operates in many countries with high rates of HIV/Aids prevalence. The Group provides access to wellness programmes for employees and their immediate families through its medical scheme and other professional service providers. Malaria is a major cause of death in many of the countries in which MTN operates and the Group initiates and supports projects in the fight against the mosquito-borne disease.

To mitigate the risks to employees of sociopolitical instability, MTN continues to improve its facilitation of various medical, security, safe travel and crisis risk management initiatives.

Equitable labour practices

MTN’s recruitment policy reinforces the Group’s focus on eliminating all prejudice based on race, gender, ethnic origin, marital status, religion, age, physical disabilities and other social facts in filling vacant positions and the management of employees. Where applicable, the Group gives preference to employees who are at risk of being retrenched.

MTN has formal disciplinary processes in place to guide manager and employees engagements and prevent arbitrary dismissals and unfair labour practices and treatment. These processes conform to International Labour Organisation (ILO) standards. The Group is committed to upholding and enforcing codes of conduct that promote fundamental human rights as defined by the Universal Declaration of Human Rights. In addition, the ILO convention on the freedom of association is adhered to and union recruitment is not prohibited at any operations.

Remuneration overview

Rewards and recognition form part of MTN’s revised employee value proposition (EVP). The policy considers both local and group perspectives and is reviewed periodically.

Regular benchmarking exercises against internal and external comparatives, including economic and lifestyle factors, are also carried out across the Group in order to provide comparative data.

Remuneration governance

The MTN Group board of directors delegates responsibility for the Remuneration Policy to the Group Remuneration and Human Resources Committee (R & HR committee). The name of this committee was changed from the Nominations, Remuneration, Human Resources and Corporate Governance committee on 1 January 2012. These changes were introduced in line with the King Code (King III) guidelines. Full details of the committee’s role, constitution and attendance are outlined in the corporate governance report available on www.mtn.com.

In setting remuneration policy, the Group R & HR committee recognises the need to be competitive but responsible in an international context. This includes the promotion of a common interest with shareholders and performancelinked, share-based incentives.

Remuneration components

Although the approach to delivering the various components of pay may differ from country to country, the current remuneration arrangements for all staff and direction in all Group companies are outlined in the following table:

Remuneration component		Strategic intent
Base salary (fixed)		Provides the non-variable element of an employee’s package
		Typically, base salaries are positioned at the market median of the identified group of similar organisations as obtained from credible survey consultants
Benefit programmes (security)		The purpose of these benefits is to increase the economic security of employees and act as an incentive to attract or retain employees
Short-term incentive (pay at risk)		The purpose of short-term incentives is to align individual efforts and performance with the short-term objectives of the company
		Focuses participants on achieving annual performance goals, which are based on the Group’s KPIs, to create sustainable shareholder value
Long-term incentive scheme (pay at risk)		Long-term incentives promote a longer term view of the business and are a form of wealth creation to both shareholders and employees
Other elements (lifestyle)		Supplement the cash earnings outlined above

One of the key considerations adopted during the design of the structure was the alignment of individual job levels representing job worth to pay mix with due regard to the significance and contribution of the job. The magnitude of the pay components is associated with the job’s relative worth to the organisation as evaluated by a credible job evaluation system.

Typically, the ratio of basic pay to variable remuneration differs between lower level and higher level jobs. Although within the available remuneration structuring options, employees have flexibility preferences particularly with benefits. Whereas lower level jobs typically receive high fixed pay and lower variable or risk pay, top level jobs tend to place more emphasis on variable remuneration, with a low base salary. The primary basis for this differentiation is with regard to factors that define the job hence require more effort from the job holder as they impact on the organisation.

Base salary

Refers to the fixed amount of money paid to an employee by MTN in return for work performed. Base salary does not include benefits and variable remuneration such as performance bonuses or any other potential compensation from MTN.

The base salary of executive directors is subject to annual review and is set with reference to external market benchmarks, taking individual performance into consideration. Executive directors do not receive payment of director’s fees or committee fees in respect of meetings attended.

Benefit programmes

Benefits are forms of value, other than salary payments, that are provided to employees in return for their contribution to the organisation, that is, for doing their job. They typically include retirement plans, health life insurance, life insurance and disability insurance. Some benefits, such as unemployment and other various forms of leave and worker’s compensation may be statutory requirements and vary from country to country.

Short-term incentives

These include annual incentives, performance bonuses, commissions and the like. The measurement period for short-term incentives is most often quarterly, semi-annually, or annually and can be measured based on the individual’s own performance, team performance or group-wide performance.

Short-term incentives for executive directors are linked to the operational and financial value drivers pertaining to business performance against budget for individual operations and the Group as a whole. These value drivers are determined by the board every year in respect of the next financial year. Each executive director’s performance bonus is conditional upon the achievement of specific value drivers and key performance indicators which are structured to retain a balance between the performance of entities for which the director is directly responsible, and that of the Group. Performance bonuses are determined by the Group R & HR committee and are approved by the board.

Long-term incentives

These include share based and cash-settled schemes such as share options, share rights, notional shares, share appreciation rights and the like. They measure organisation-wide performance, typically over several years of which the intent is to provide incentives for employees to improve the overall performance of the organisation by linking the employees’ long-term rewards to MTN’s long-term results.

Long-term incentives are divided into the South African-based operations scheme and the Non-South African-based operations scheme. The two types of schemes are as follows:

South African-based operations schemes

Key compliance achievements		Eligibility		Date implemented		Options/Shares		Performance conditions		Last vesting period
Share Options Scheme		All employees regardless of level		2001		Options		N/A		2014
Share Appreciation Rights Scheme (SARS)		All employees at management level and above		2006		Share Appreciation Rights		N/A		2016
Share Rights Scheme		All employees at management level and above		2008		Share Appreciation Rights		N/A		2018
Performance Share Plan (PSP)		All employees at management level and above		2010		Rights to shares		Refer to note below		Currently – 2014

Performance Share Plan (PSP) – this is a new employee share incentive plan that was adopted in 2010 and allows qualifying employees to receive shares in settlement of the plan benefits which would be purchased in the market/or cash in lieu of shares (at the discretion of the Group board). The 2011 PSP grant has a three-year vesting period from the grant date except as set out in page 70. As soon as reasonably practicable after the end of the award fulfilment period (period within which the performance conditions of the award are measured), the board of MTN will determine whether and to what extent the award conditions have been fulfilled and accordingly, whether any vested shares have accrued. Therefore, the PSP awards will accrue once, and to the extent, that the board is satisfied that the award conditions have been fulfilled.

Non-South African-based operations’ schemes

It is of prime importance to MTN not only to attract, but also to motivate and retain capable human capital across all its operations. To create a sense of ‘oneness’ with the MTN Group brand, the Company offers eligible mid management and above, for expatriate and local employees’ participation in the Group’s Notional Share Option (NSO) scheme. This scheme enhances MTN’s commitment to the ‘One Group, One MTN’ philosophy. Qualifying employees not only own options, but also participate in the growth of the Group/operations, as applicable. The primary objective of this long-term incentive scheme is to encourage an alignment between the individual interests of senior MTN employees and that of MTN’s long-term success. During 2011, the MTN Group R & HR committee conducted an evaluation of the level of understanding and administration of the NSO Scheme among the operations. It was highlighted that although the scheme was approved for implementation eight years ago, there was a lack of effective administration. This then prompted an online automated system proposal which will be administered centrally by the Group Compensation and Benefits team. The project is currently underway and is expected to be completed before the last quarter of 2012.

General principles for the remuneration of Group directors

The requirements of the King III Code on Corporate Governance have guided executive and non-executive remuneration which are separately distinguished.

Remuneration for senior management

In accordance with the King III requirements, the Company is required to disclose the salaries of the three most highly paid employees who are not directors of the Company. While individual executive and non-executive directors’ pay is disclosed, the Group R & HR committee has determined that disclosing similar information for the top three earning nondirector employees is not prudent. This decision was taken with due consideration to the highly competitive operating environment; the scarcity of certain specialised skills; and quality of living adjustments in some countries.

Non-executive directors (NEDs)

The R & HR committee is responsible for setting the fees and determining the terms of service for the chairman and NEDs of MTN. The fees for non-executive directors are considered annually and are determined in light of market best practice and with reference to the time commitment and responsibilities associated with the roles.

MTN Group’s non-executive directors receive an annual retainer and meeting attendance fees. They do not participate in any type of incentive scheme nor do they receive any medical and pensionrelated benefits. Following the review of the 2010 fees structure and in accordance with the guidelines of King III and other governance requirements, the fee structure for external executives was reviewed during 2011 and presented to the R & HR committee (outlined under the directors’ emoluments) in 2012.

An inflation linked fee increase proposal of 6,1% for local directors’ retainers as well as for attendance of board meetings and an increase of 6,1% for committee members was submitted for approval.

Other remuneration and statutory disclosures

Contracts and severance: MTN’s policies regarding Group executive employment contracts dictate the period of the contract as well as the notice of termination. Presently, MTN does not enter into limited duration contracts for Group executives, with the exception of the Group president and CEO (3 years). The inclusion of a period of restraint in the employment contract is generic and no specific timeframes are indicated. Notice of termination for Group executives is 3 months, unless otherwise specified.

Audited directors’ and prescribed officers, emoluments and related payments: The following audited tables appear on pages 64 to 73.

Directors’ emoluments and related payments
For the year ended 31 December 2011

Director’s emoluments and related payments
For the year ended 31 December 2010

Prescribed officers’ emoluments and related payments
For the year ended 31 December 2011

Equity compensation benefits in respect of share appreciation rights for executive directors, prescribed officers and directors of major subsidiaries

Equity compensation benefits in respect of share appreciation rights for executive directors, prescribed officers and directors of major subsidiaries continued

These share options were not separately disclosed in the 2010 report

Equity compensation benefits in respect of share rights for executive directors, prescribed officers and directors of major subsidiaries

Equity compensation benefits in respect of performance share plan for executive directors, prescribed officers and directors of major subsidiaries

Executive directors’, prescribed officers’ and directors of major subsidiaries’ shareholdings and dealings in ordinary shares

Executive directors’, prescribed officers’ and directors of major subsidiaries’ interests in MTN Group Limited held through acquisition of shares in MTN Zakhele Limited

The following persons, being directors of MTN Group Limited and its major subsidiaries and the MTN company secretary were allocated the following number of MTN Zakhele shares which has a shareholding in MTN Group Limited shares.