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The process of determining the incentive award pools from which performance bonuses are paid is
illustrated below:
Description of performance criteria
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The financial performance targets of the company are determined in accordance with the
strategic themes at the beginning of the year.
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A factual findings engagement is performed on these results by an independent body.
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The percentage performance achievement against target is translated into a nominal
performance-linked scale, adjusted to allow for maximum earning potential.
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For the 2017 financial period, the group attributable earnings are used at group level and
EBITDA, core revenue, new revenue, ROACE and cash flow are used at operational level to
measure company performance.
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The strategic themes are translated into priorities to be executed at executive member levels.
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Depending on the size of the function, and where applicable, team performance scorecards
are further cascaded to below executive levels.
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Achievement of each KPI is proportionate and weighted; however, cumulatively they add up
to 100%.
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At the beginning of each financial period, every employee enters into a contractual performance
agreement.
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The performance agreement stipulates the performance expectations to be measured at
year-end.
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Performance agreements ensure alignment between company, team and individual levels.
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This is not applicable to executives.
Upon assessment of company performance by
the board, a bonus is either declared or not.
If declared:
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•
Step 1:
The weighting of each element (a) is
multiplied by the achieved nominal (b) and the
results of the three added together.
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Step 2:
Then the sum of the three is multiplied
by the on-target % (c) to derive the bonus
percentage.
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Step 3:
As a validation, a check is done against
the maximum % for each job. If the calculated
amount does not exceed the maximum, the
final bonus percentage is multiplied by the
annual incentive salary to arrive at the final
bonus payment.
(CP + TP + EP) x on-target percentage
= bonus percentage
The bonus percentage (validated against
the minimum and maximum) x annual salary
= total bonus payable
How a bonus is calculated
1. Three elements are used as inputs to a bonus
calculation, namely company performance
(CP), team performance (TP) and employee
performance (EP). Each element has a
weighting (a), with all elements adding up
to 100%.
2. Targets for each element are set at the
beginning of the performance cycle and
measured at the end of the performance
cycle where a corresponding ‘nominal % (b)’
is determined from a standard translation
table.
3. Company performance as a ‘qualifier’ for
bonus declaration is first assessed for each
operation.
4. For each weighted element, there is a job
level related on-target (c) and maximum (d)
earning potential.
MTN Group Limited
Integrated Report 2017
87
Governance, people
and remuneration