'Excellent performance' warranted the R177m Capitec executive pay bill, says committee

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Capitec's remuneration committee says it considered "excellent performance of the strong leadership team" in the past two years and during Covid-19 period to determine 2022 executive pay.
Capitec's remuneration committee says it considered "excellent performance of the strong leadership team" in the past two years and during Covid-19 period to determine 2022 executive pay.
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Capitec's remuneration committee (Remco) says excellent performance and strong leadership before and during the "Covid-19 year" informed its decision to reward its three top executives with R177 million.

Commenting on the proposed changes to the implementation of the remuneration policy, which investors, holding 47.5% of its shares, shot down at this year's annual general meeting (AGM), the Remco said it extensively evaluated how it could sustain the principle of "fair and responsible rewards" to retain key management.

READ | Many Capitec shareholders vote against R177m exec pay package

It also said that it proactively engaged with investors on this matter, even though more than 25% of shareholders voted against it.

"Despite the Covid-19 year, the bank's headline earnings recovered; it had the ability to pay dividends; it continued to protect the livelihoods during the pandemic; and the share price recovered," said Remco in a statement.

The committee added that even if the "Covid-19 year" - the 2021 financial year - was included in its calculations to determine 2022 executive remuneration, Capitec would have still hit the target for both headline earnings per share (HEPS) and return on equity (ROE).

Although Capitec's headline earnings tanked 27% in 2021, the bank delivered a 17% ROE for the 2021 financial, which started in March 2020 and ended on 28 February 2021.

Its headline earnings spiked 84% to R8.4 billion at the end of the 2022 financial year, surpassing the R6.28 billion the company reported before the pandemic in February 2020.

The Remco added that its new calculation methodology also prevents executives from receiving future windfall gains. 

"The committee believes this is a fair approach as executive directors are measured against realistic growth targets and remain open to engaging with all investors on this matter," it said. 

The Remco emphasised that it consists of a majority of independent non-executive directors who aims to ensure an appropriate reward policy to attract and motivate executives to achieve the long-term interests of shareholders.

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