Mr Price’s CEO gets a whopping big pay boost from long and short-term incentives

Mr Price Sport store at Canal Walk, Century City. Photo: IAN LANDSBERG Independent Newspapers.

Mr Price Sport store at Canal Walk, Century City. Photo: IAN LANDSBERG Independent Newspapers.

Published Jul 8, 2024


Mr Price Group CEO Mark Blair’s remuneration increased markedly, by more than 300%, to R45.91 million in the year to March 31, from R10.67m the year before, after he benefited mainly from significantly higher long-term and short-term incentive share awards.

Executive remuneration is closely watched by shareholders because it has an impact on the performance of the company, the direction that the company is going, if the pay is in line with the company’s peers, how the executive performed according to targets and it can also indicate how much the company is willing to spend to attract the right talent to a company.

In the past year, Blair’s guaranteed pay increased by only 3% to R9.26m from R8.99m, but he received a R9.59m short-term incentive award versus nil the year before, while the share options for his long-term incentive awards were worth R25.79m, compared with nil the year before.

The big increase in total remuneration was even though the remuneration report noted about his performance against targets, that include headline earnings growth and return on equity goals, stakeholder engagement, leadership and strategic enablement: “The final outcome of 116.5% of ABS (annual basic salary) is lower than the target of 123% of ABS, due to the financial performance target not being met.”

The remuneration committee explained the payout of short-term incentives to executives, even though not all their targets were not met, was “due to the achievement of some of the performance metrics”.

“This was warranted by the above-outlined performance, as positive earnings were recorded, notably at double digit levels in the second half of the year. The committee is satisfied with this outcome having considered all stakeholders.”

On the long-term incentive awards to executives, there were two incentives, the FSP (forfeitable share plan) performance awards, first granted in November 2019, and a new long-term incentive award structure from April 2021. Both awards had a performance period ending to March 28, 2024.

Due to the non-fulfilment of the performance conditions, none of the FSP performance awards and share option awards to March 31 vested. However, the new LTI performance condition had been achieved, and 100% of the share appreciation rights would vest – the shares have a two-year exercise period.

“The vesting of these awards is, to a large degree, a result of the target setting process being robust and fair, supporting the pay for performance principle,” the remuneration committee said.

In the past financial year Mr Price’s headline earnings per share increased 6.7% to 1286.2 cents, while the final dividend was up 17.8% to 526.8 cents per share.

Benchmarking of the executive director’s remuneration was performed in April 2024 by auditing firm PwC and involved comparison with 12 companies in the sector peer group, including AVI, RCL Foods, Clicks Group and Truworths International.

“The CEO’s TGP (total guaranteed pay) is below the 25th percentile of the comparator group, while the CFO’s TGP is between the 50th and 75th percentile of the comparator group. When the once-off share award is included, the CEO’s TGP is in line with the market. On a total remuneration basis , the actual pay of the CEO is positioned below the 50th percentile,” the remuneration committee said.

At its last annual meeting, the shareholder vote in favour of the remuneration policy was 79.2% and there had been “rigorous shareholder engagement regarding its implementation”. The next annual meeting of the group is on August 29.