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CORPORATE GOVERNANCE
REMUNERATION REPORT
Philosophy
Hyprop is an internally managed REIT, making employee skills essential
to our sustainability. Our remuneration philosophy therefore supports
our strategic objectives and encourages individual performance. It
emphasises the contribution of our employees to building long-term
value through fair and balanced remuneration.
The policy is based on several key principles:
Q
Hyprop’s success depends on attracting talented, experienced and
motivated individuals who can execute our business strategy to
achieve our vision and mission. We use both short and long-term
incentives to support this goal
Q
Target-based short-term incentives (STIs) are strong drivers of
performance. A significant portion of senior management reward
is therefore variable, based on realistic performance targets, and
individual contributions to the growth of their division and the
wider company. We also reward employees who deliver superior
performance in line with our strategic goals. Special bonuses may
be considered as additional awards in exceptional circumstances
Q
Long-term incentives (LTIs) are aligned to Hyprop’s strategic
objectives and the investment interests of shareholders.
Policy
The remuneration and nomination committee is responsible for
implementing the remuneration policy to ensure:
Q
Salary structures and policies motivate superior performance,
and are linked to realistic performance objectives that support
sustainable growth
Q
Stakeholders are able to make informed assessments of reward
practices and governance processes
Q
Compliance with all applicable laws and regulatory codes.
Non-executive directors
Our policy is to remunerate non-executive directors competitively for
their service while understanding the required time commitment. Fees
are benchmarked against a peer group of JSE-listed companies, and
there are no contractual arrangements to compensate for loss of office.
The remuneration and nomination committee reviews these fees
annually and makes its recommendations to the board which, in turn,
proposes fees for approval by shareholders at the annual general
meeting.
Non-executive directors do not receive STIs nor do they participate in
any LTI schemes except if they previously held executive office and are
entitled to unvested benefits from this period. Hyprop pays no pension
contributions for non-executive directors.
Executive directors and senior executive remuneration
Our executive directors are permanent employees and their
employment agreements include a notice period, but no restraints of
trade. Hyprop aims to be an employer of choice: to attract and retain
individuals of high calibre, we offer competitive remuneration packages
and review these annually.
Our remuneration structure includes:
Q
Base salary
All basic salaries are market-related, benchmarked against industry
norms and adjusted for an employee’s experience, qualifications,
responsibilities and nature of work. These are reviewed annually.
Q
STIs
An annual performance bonus aligns short-term rewards with
annual performance and supports retention. Performance reviews
are weighted significantly to output. The executive committee
sets key performance deliverables (KPDs) annually at property and
company levels. These are formally measured and include:
– Net income growth
– Performance against budget
– Increase in trading densities
– New/renewed leasing rental values achieved relative to budget
– New/renewed leasing escalations achieved
– Tenant arrear collections and management
– Tenant deposit and bank guarantee management
– Documentation administration.
Exceptional performance is rewarded with higher incentives, after
considering recommendations from general managers, regional
executives and executive directors.
The maximum bonus for senior management is six months’ salary,
at the committee’s discretion. Bonuses for executive directors
are aligned with strategic objectives and are at the committee’s
discretion.
Q
LTIs
These reward long-term decisions supporting dividend and capital
growth. They are also designed to align employee behaviour with
shareholders’ interests and to ensure long-term retention of staff.
The LTI comprises a performance and a retention component. The
split between performance shares and retention shares is 70% : 30%
for all participants.
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Hyprop Investments Limited
Integrated Report 2015