Transnet Online Integrated Report 2017
Market Demand Strategy (MDS) themes
  • Financial sustainability
  • Capacity creation and maintenance
  • Market segment competitiveness
  • Operational excellence
  • Human capital
  • Organisational readiness
  • Sound governance and ethics
  • Constructive stakeholder relations
  • Sustainable developmental outcomes
Sustainable Developmental Outcomes (SDOs)
  • Employment
  • Skills development
  • Industrial capability building
  • Investment leveraged
  • Regional integration
  • Transformation
  • Health and safety
  • Community development
  • Environmental stewardship
The Capitals
  • Financial Capital
  • Manufactured Capital
  • Intellectual Capital
  • Human Capital
  • Social and Relationship Capital

Abridged Governance

Board composition

The Company´s current Memorandum of Incorporation provides that there shall not be less than 10 and not more than 14 directors, of whom not less than eight shall be non-executive directors and two executive directors. As at 31 March 2017, the Board of Directors comprises 10 directors, of whom the majority, eight in total, are independent non-executive, including the Chairperson. The Board of Directors currently has four vacancies, due to the passing of Mr Peter Williams on 15 March 2017. The Chairperson continues to engage the Shareholder Minister on the matter.

Governance instruments

The Company´s governance instruments include:

Memorandum of Incorporation

The Company has a Memorandum of Incorporation in place which was lodged with the Companies and Intellectual Property Commission (CIPC).

Delegation of Authority Framework

The Company´s Delegation of Authority Framework is reviewed annually for adequacy and completeness. The existing Delegation of Authority Framework was approved by the Board of Directors on 31 August 2016, and came into effect on 1 September 2016. All the Operating Divisions and Specialist Units cascaded the latest edition of the Delegation of Authority Framework timeously.

The respective governance structures will commence with the review of the proposed Delegation of Authority Framework in
May 2017.

Matters reserved for decision by the Board of Directors

Certain aspects relating to approvals and recommendations of financial, statutory and administrative matters, and matters relating to regulatory, human resources, policies and procedures, and Board and Board committee mandates are specifically reserved for decisions by the Board of Directors. This Board-level decision-making function is subject to the Memorandum of Incorporation of the Company, the PFMA and such other applicable legislation, on the basis of any recommendation as may be made from time to time by the Group Chief Executive.

Independent performance evaluation of the Board of Directors, its committees and directors

The Board of Directors ensures the evaluation of its own performance and that of its committees. An annual independent evaluation is conducted to assess the effectiveness of the Board of Directors, its committees, the Chairperson and the individual contributions of the directors. The process is managed by an independent service provider.

2017 Board evaluation

The 2017 Board evaluation was conducted by an external service provider, appointed in October 2015. Areas for improvement included:

  • Requirement for engineering skills, with construction expertise and industry-specific experience, namely, transport and logistics; and accounting and/or economic skills, for example, a Chartered Accountant (SA) and/or an economist or entrepreneur; and
  • The non-alignment of the remuneration of non-executive directors and related Company activities.

Action plans are being developed to address the gaps, while the Shareholder Minister will be engaged on filling of vacancies, taking cognisance of the skills requirements for the Company´s activities. The Board Evaluation Report is tabled for noting at the Annual General Meeting.

Directors´ induction and continuous development

As part of enhancing the directors´ skills, the Group Company Secretary develops an Annual Board Training Plan. The Board Training Plan identifies training requirements for the Board of Directors and its committees. Individual directors are encouraged to identify any training events they may wish to attend through recognised training institutes. In the year under review, the following training activities were conducted by external training service providers:

Directors´ training for the year ended 31 March 2017

Training provided Date Attendees
Remuneration, Social and Ethics Committee
Value Creation and Executive Pay 17 May 2016 Mr VM Nkonyane Ms Y Forbes Mr ZA Nagdee
Social and Ethics Committee responsibilities 6 October 2016 Mr VM Nkonyane
Mr SD Shane
Ms Y Forbes Mr ZA Nagdee
Risk Committee
Effective Enterprise Risk Management:
Role of the Board of Directors
4 August 2016 Mr PG Williams1
Mr GJ Pita
Mr GJ Mahlalela Mr BG Stagman
Role of the Risk Committee vis-à-vis other committees of the Board of Directors 2 February 2017 Mr GJ Mahlalela
Mr BG Stagman
Ms Y Forbes
Mr SI Gama
Mr GJ Pita
Ms PEB Mathekga
Audit Committee
Fraud-related matters2 23 August 2016 Mr BG Stagman
Ms PEB Mathekga
Ms Y Forbes
Mr GJ Mahlalela
Mr SI Gama
Mr PG Williams1
Mr GJ Pita
Board: Strategy Workshop
National Railway Safety Regulator Act, 2000 Overview of the Procurement Procedure Manual 29 – 30 August 2016 Ms LC Mabaso
Mr GJ Mahlalela
Mr VM Nkonyane
Mr BG Stagman
Ms Y Forbes
Ms PEB Mathekga
Mr GJ Pita
Mr PG Williams1
Mr SI Gama
Mr ZA Nagdee
Mr SD Shane
Corporate Governance and Nominations Committee
Corporate Governance in the Public Sector 10 October 2016 Ms LC Mabaso
Ms Y Forbes
Ms PEB Mathekga Mr VM Nkonyane
1 Mr PG Williams passed away on 15 March 2017.
2 Global Trends, National Trends, Fraud Risk Management, Ethics, the role of the Audit Committee and what to expect from Transnet Internal Audit.

Directors´ balance of skills and expertise

The graphic below reflects the skills and expertise which are balanced to ensure effective discussions in fulfilling the Board of Directors´ mandate:

Directors' strengths

Director's Strengths

Read more
Details on the individual directors’ skills and expertise


Board independence

The Board of Directors comprises an appropriate balance of knowledge, skills, experience, diversity and independence, enabling the objective and effective discharge of its duties. Directors´ independence is determined according to the definition in the King III Code, which includes the number of years a director has served on the Board of Directors. A review, as provided for in the King III Code, is conducted to ascertain the independence of long-serving directors. None of the current independent non-executive directors have served in that capacity for more than nine years.


Core responsibilities of the Board of Directors

The Board of Directors serves as the focal point and custodian of corporate governance in the Company. The protocol for exercise of its leadership role is outlined in the approved mandates of the Board of Directors and committees. The mandates clearly define the procedures for the Boardof Directors and committees to obtain professional advice, and the procedures for submission of documentation from management for the Board to make informed decisions.

The Board is satisfied that it has discharged its responsibilities in relation to its mandate.

Board and committee meetings

The graph below indicates the number of scheduled and ad hoc meetings held during the period under review:

Status of meetings convened in the 2017 financial year

Material clusters

Build social trust through ethical leadership and corporate citizenship

Unlock organisational value by attracting talent, fostering innovation and building unity

Ensure long-term financial stability in a tough economy

Ensure customer-centricity and build partnerships for sustainable growth

Promote transformation and growth in the wider South African economy


Summary of critical issues during the year

Board of Directors1
Chairperson Members  
Ms LC Mabaso Ms Y Forbes Mr GJ Pita
(Independent Mr SI Gama2 Mr SR Seleke
non-executive Mr GJ Mahlalela Mr SD Shane
director) Ms PEB Mathekga Mr BG Stagman
  Mr ZA Nagdee Mr PG Williams3
  Mr VM Nkonyane  
Main undertakings and considerations Leadership response
  • Diversification of revenue sources and the implementation of the Africa Strategy.
  • The status of the Company´s credit rating and the impact on its funding initiatives.
  • Management is currently developing a diversification strategy and will establish Transnet International Holdings, a special-purpose vehicle, to execute the Africa Strategy.
  • Credit rating agencies were engaged on the Company´s plans to increase revenue and to reduce operational expenditure.
1 A summary table of key activities and outputs for the 2017 financial year is contained in Annexure A.
2 Mr Gama was appointed as a member of the:
– Acquisitions and Disposals Committee, effective from 31 August 2016; and
– Corporate Governance and Nominations Committee and the Risk Committee, effective from 31 August 2016.
3 Mr PG WIlliams passed away on 15 March 2017.

Chairperson and Group Chief Executive

The roles of the Chairperson and the Group Chief Executive are separate, with their individual responsibilities clearly defined. The Chairperson is an independent non-executive director and is responsible for leading the Board of Directors and ensuring its effectiveness. The Group Chief Executive is responsible for the execution of the Company´s strategy, and the day-to-day business of the Company. He is supported by the GLT of which he is the Chairperson. The Board of Directors is satisfied that the Delegation of Authority Framework clearly records the nature and extent of the authorities delegated by the Board of Directors to the Group Chief Executive and specified governance structures,
and/or, in turn, by the Group Chief Executive to the members of the GLT, in order to implement certain actions by or on behalf of the Company.

Succession planning

Non-executive directors are appointed to the Board of Directors by the Shareholder Minister, on a three-year term, renewable annually. The Chairperson of the Board of Directors engages continuously with the Shareholder Minister, who is the final arbiter on the Board of Directors´ succession plans and approval of transaction applications in accordance with the provisions of section 54 of the PFMA.

Declaration of interest

The Companies Act codified the fiduciary duties of directors and prohibits the use of position, privileges or confidential information for personal gain, or to improperly benefit another person. In instances where an independent non-executive director or a prescribed officer has any direct or indirect personal or private business interest in a matter, that independent non-executive director or prescribed officer must be recused from the proceedings when the matter is considered, unless the Board of Directors, committee or Group Leadership Team (GLT) decides that the member´s interest in the matter is trivial or irrelevant.

For all formal meetings, registers for Declarations of Interest and Related Party Disclosures are completed by the independent non-executive directors, attendees at meetings of the Board of Directors, and members of the GLT and its attendees. These registers are maintained by the Group Company Secretary. Declarations of Interest and Related Party Disclosures are signed by committee members participating in meetings of the various governance structures, in relation to the contents of the meeting packs. Further, independent non-executive directors, Group Leadership and Extended Leadership Team members are required to complete an annual Declarations of Interest form declaring their financial and contractual interests, and to file it with the Group Company Secretary prior to 1 April each year. Should the interest change during the year, revised Declarations of Interest forms are filed and formally noted within various governance structures.

The Board of Directors and the GLT note their respective annual Declarations of Interest and Related Party Disclosures Registers. For adequacy and proper monitoring, the Corporate Governance and Nominations Committee, as well as the Remuneration, Social and Ethics Committee perform annual reviews of the filed Declaration of Interest forms for the Board of Directors and GLT members. Quarterly reports are drawn from the electronic Declarations of Interest and Related Party Disclosure, and the Electronic Gifts and Hospitality Registry Systems, and tabled at the Remuneration, Social and Ethics Committee meetings for information purposes. In addition, the Company requires all employees to sign confidentiality and Declaration of Interest forms when adjudicating on procurement contracts. The Declaration of Interest and Related Party Disclosure Policies for directors and employees respectively, are revised every five years or as required.

Independent non-executive directors

The independent non-executive directors have diverse skills, experience and backgrounds. They are principally free from any business relationship that could hamper their objectivity or judgement in terms of the business and activities of the Company. All the non-executive directors have unrestricted access to the Company´s information, documents, records and property in the interest of fulfilling their fiduciary duties and responsibilities.

The non-executive directors have direct, unfettered access to the Company´s employees, external auditors, professional advisers and internal auditors. The non-executive directors continue to act in the best interest of the Company at all times .

Group Company Secretariat function

The Board of Directors adheres to the requirement of the Companies Act and has appointed a competent and qualified Group Company Secretary. The Group Company Secretary is responsible for developing systems and processes to enable the Board of Directors to discharge its functions efficiently and effectively. The Group Company Secretary prepares Annual Work Plans for the Board of Directors as informed by the strategic direction of the Company. These Annual Work Plans are approved by the respective governance structures for implementation and are continually tracked to assess progress. The Group Company Secretary advises the Board of Directors on corporate governance issues, the requirements of the Companies Act and other relevant legislation. The Board of Directors has unfettered access to the services and advice of the Group Company Secretary.

The Group Company Secretary is qualified to perform duties in accordance with applicable legislation, and is considered by the Board of Directors to be fit and proper for the position. The Group Company Secretary does not fulfil an executive management function and is not a director. Therefore, the Board of Directors is satisfied that the Group Company Secretary maintains an arm´s length relationship with the Executive Management Team, the Board of Directors and the individual non-executive directors.

Ms Ayanda Ceba resigned from the role of Group Company Secretary with effect from 31 August 2016. The Board of Directors, at its meeting held on 31 August 2016, appointed Ms Nokuthula Khumalo, formerly Deputy Group Company Secretary, as the Group Company Secretary with effect from 1 September 2016.

Benchmarking

The Group Company Secretariat has shared the knowledge it has gained in the corporate governance sphere with other SOCs, with the objective of uniformity, standardisation and alignment of best practice across the SOCs.

Directors´ active memberships of other boards

1. Ms Linda Mabaso
Chairperson

Membership/Directorship

Mabaso Attorneys

The Ark Foundation

Trustee of the Transnet Retirement Fund

2. Mr Siyabonga Gama
Group Chief Executive

Directorship

Maputo Corridor Logistics Initiative

Italtile Limited

Mafumbuka Investment Holdings (Pty) Ltd

Pony Lane Country Estate Homeowners Association

Chairperson

Selope Thema Foundation

Trustee

Phithikeza Trust (Property owning family Trust)

Italtile Foundation Trust

Shareholder

Various JSE Entities

3. Mr Garry Pita
Chief Financial Officer

Directorship

SASDC

Shareholder

OPP Investments CC

4. Mr Brett Stagman

Directorship

Bluchip Retail Solutions (Pty) Ltd

Blu´s Brothers (Pty) Ltd

Shareholder

Mobifin Nigeria Ltd

5. Ms Potso Mathekga

Directorship

Lizbridge Trading Enterprise

Kgari Trading Solutions (Pty) Ltd

Lisaphase (Pty) Ltd

Mmule Julia Kgari Foundation NPC

Shareholder

Grapeseed Trading CC

6. Mr Gideon Mahlalela

Directorship

African Alliance Securities (Pty) Ltd

African Alliance Swaziland Ltd

Orchard Insurance Ltd

Commonwealth Mastership for Technology Management

Union Consultants (Pty) Ltd

7. Mr Vusi Nkonyane

Directorship

Prime Portfolio Investment A

Prime Portfolio Investment B

Mphephethe Projects

Circle Seven Trading 533

Nkonyane Minerals and Energy

Black Aurum Commodities

Empumelelo Investment and Management Services

Yakani Black Aurum Commodities

Platinum Hospitality Holdings

Kerastyle

Extriforce Investments

Vexiscore

Lanzidex

8. Mr Stanley Shane

Directorship/Trustee

Integrated Capital SA (Pty) Ltd

Integrated Capital Management (Pty) Ltd

Aquiprox (Pty) Ltd

Integrated Capital Investments (Pty) Ltd

Integrated Investments (SICAV – SIF)

Integrated Strategic Fund Limited

Integrated Multi-Strategy Fund Limited

Integrated Alternative Investments Limited

Cross Point Trading 109 (Pty) Ltd

Aerton Investments (Pty) Ltd

Aerton Properties (Pty) Ltd

Waleston II Investments (Pty) Ltd

Newshelf 172 CC

Indenture Requirements (Pty) Ltd

Amalgamated Electronic Corporation Ltd

New Wheels Underwriting Agency (Pty) Ltd

Biggest SA Trading (Pty) Ltd

Glenhazel Community Security Initiative NPC (Non-profit)

Bnei Akiva Bayit (Pty) Ltd

United Mizrachi Organisation of South Africa (Non-profit)

Transnet Sub-fund of the Transport Pension Fund

Transnet Second Defined Benefit Fund

9. Mr Zainul Nagdee

Directorship

Lechabile Technology KZN

Digital Energy Solutions

Shareholder

Hadzambe

10. Ms Yasmina Forbes

Directorship/Trustee

University of the Western Cape

RESAF Nutrition (Pty) Ltd

YF & Associates

Pegasus Trust

Transnet Second Defined Benefit Fund


Board committees

In line with the requirements of the Companies Act, and to ensure that delegation within the Board of Directors´ own structures promotes independent judgement and assists with the balance of power and effective discharge of its duties, the Board of Directors established the Audit Committee and the Remuneration, Social and Ethics Committee as statutory committees. The Audit Committee´s constitution, functioning and reporting adhere strictly to the PFMA requirements. In addition to the statutory committees, the following committees have been constituted to assist in the achievement of the Company´s objectives:

  • Acquisitions and Disposals Committee;
  • Risk Committee; and
  • Corporate Governance and Nominations Committee.
Audit Committee

During the year, the Company continued to comply with the Companies Act and PFMA requirements for the functioning and reporting of the Audit Committee.

The Audit Committee comprises independent non-executive directors who are duly elected by the Shareholder Minister at the Annual General Meeting in line with legislative requirements. A total of four meetings were held during the year and all quorum requirements were met accordingly. The Audit Committee provides the following support activities to the Board of Directors:

  • Assists the Board of Directors in discharging its duties relating to the safeguarding of assets and the evaluation of internal control frameworks within the Company;
  • Reviews and assesses the integrity and effectiveness of the accounting, financial, compliance and other control systems;
  • Considers the internal and external audit processes and the accounting principles and policies;
  • Strengthens the independence of the internal and external audit functions to ensure their effectiveness;
  • Ensures effective communication between the internal auditors, the external auditors, the Board of Directors, management and regulators;
  • Ensures compliance with and adherence to applicable legal, regulatory and accounting requirements; and
  • Contributes to a climate of discipline and control which will reduce the opportunity for fraud.
Summary of the main undertakings and considerations during the year
Audit Committee1  
Chairperson Members
Mr BG Stagman Mr GJ Mahlalela (Independent non-executive director)
(Independent non-executive director) Ms PEB Mathekga (Independent non-executive director)
  Mr PG Williams2 (Independent non-executive director)
  No external advisers attended committee meetings during the year.
Main undertakings and considerations Leadership response
  • The requirement of an additional Board member with a Chartered Accounting qualification to enhance the Committee.
  • One of the vacancies on the Board of Directors should be filled by a Chartered Accountant. The Shareholder is being engaged accordingly.
1 A summary table of key activities and outputs for the 2017 financial year is contained in Annexure A.
2 Mr PG WIlliams passed away on 15 March 2017.
The Acquisitions and Disposals Committee

The Acquisitions and Disposals Committee provides the following support activities to the Board of Directors:

  • Advances and maintains the Company´s acquisition and disposal policies;
  • Approves procurement transactions within the committee´s delegated authority;
  • Monitors trends in supplier development spend and progress on plan;
  • Considers strategic acquisitions and disposals and makes recommendations to the Board of Directors;
  • Considers, for recommendation to the Board of Directors, potential private-sector participation models;
  • Reviews quarterly capital expenditure reports, and monitors the execution of approved projects;
  • Monitors the implementation of strategic acquisitions against the approved plans; and
  • Approves procurement strategies for proposed acquisitions and disposals to the Board of Directors in line with the Delegation of Authority Framework.
Summary of the main undertakings and considerations during the year
The Acquisitions and Disposals Committee1
Chairperson Members
Mr SD Shane Mr SI Gama2 (Executive director)
(Independent non-executive director) Ms LC Mabaso (Independent non-executive director)
  Mr ZA Nagdee (Independent non-executive director)
  No external advisers attended committee meetings during the year.
Main undertakings and considerations Leadership response
  • Continuously striving to attain targets for black youth-owned businesses, black women-owned businesses and people with disabilities.
  • The Company has introduced B-BBEE improvement plans as part of the requirements in the assessment criteria. Furthermore, the Company has established Enterprise Development hubs in various provinces to strengthen its Supplier Development component.
1 A summary table of key activities and outputs for the 2017 financial year is contained in Annexure A.
2 Member since 31 August 2016.
Corporate Governance and Nominations Committee

The Corporate Governance and Nominations Committee provides the following support activities to the Board of Directors:

  • Ensures that the Board of Directors´ composition and structure enables it to fulfil the obligations of the Board mandate and advance and maintain the Company´s corporate governance policies and the Corporate Governance Framework.
  • Sets criteria for the nomination of directors to be recommended to the Board for appointment to the committees of the Board, other than the Audit Committee.
  • Nominates potential Audit Committee members for appointment by the Shareholder Minister.
  • Nominates potential Remuneration, Social and Ethics member for approval by the Board of Directors and confirmation by the Shareholder Minister at the Annual General Meeting or through
    a written resolution.
  • Ensures that best- practice succession planning policies are implemented in respect of executive directors and
    non-executive directors.
  • Administers and manages the selection process of the Company´s Group Chief Executive on behalf of the Board of Directors, and makes recommendations on the top-three candidates – in order of priority – to the Board of Directors by complying with the Guidelines for the appointment of a Group Chief Executive for a State-owned Enterprise.
Summary of the main undertakings and considerations during the year
Corporate Governance and Nominations Committee1
Chairperson Members
Ms LC Mabaso Ms Y Forbes (Independent non-executive director)
(Independent non-executive director) Mr SI Gama2 (Executive director)
  Ms PEB Mathekga (Independent non-executive director)
  Mr VM Nkonyane (Independent non-executive director)
  No external advisers attended committee meetings during the year.
Main undertakings and considerations Leadership response
  • The Shareholder´s Compact targets were adversely impacted by the economic downturn and the decline in volumes.
  • The adequacy of the skills mix at Board level due to directors´ resignations.
  • The committee recommended that the target-setting process should be realistic and reflective of the prevailing economic circumstances as well as Transnet´s strategic trajectory towards a more diversified business.
  • The Company continues to engage the Shareholder Minister on the preferred skills when filling the vacancies.
1 A summary table of key activities and outputs for the 2017 financial year is contained in Annexure A.
2 Member since 31 August 2016.
Risk Committee

The Risk Committee provides the following support activities to the Board of Directors:

  • Reviews and assesses the integrity of the risk control processes and systems;
  • Ensures that the risk policies are managed effectively and in accordance with the Enterprise Risk Management Framework approved by the Board of Directors from time to time;
  • Ensures effective communication with the internal and external auditors, the Audit Committee, the Board of Directors, management and regulators on risk management;
  • Contributes to a climate of discipline and control which will reduce the opportunity for fraud and other operational losses; and
  • Assesses any significant risk control failings or weaknesses identified and their potential impact, and confirms that appropriate action has been or is being taken.
Summary of the main undertakings and considerations during the year
Risk Committee1  
Chairperson Members
Mr PG Williams2: Acting during 2017 Ms Y Forbes3 (Independent non-executive director)
(Independent non-executive director) Mr SI Gama4 (Executive director)
  Mr GJ Mahlalela (Independent non-executive director)
  Mr BG Stagman (Independent non-executive director)
  No external advisers attended committee meetings during the year.
Main undertakings and considerations Leadership response
  • Increasing trend in employee fatalities and derailments.
  • Group Leadership Team (GLT) has introduced safety awareness roadshows to engage employees on safety governance and practices.
  • ‘Visible leadership´ strategies have been implemented, which include individual GLT members being allocated specific operations work areas, which they visit regularly to engage employees on different matters, including safety.
1 A summary table of key activities and outputs for the 2017 financial year is contained in Annexure A.
2 Mr PG Williams passed away on 15 March 2017.
3 Member of the Risk Committee effective 22 January 2017.
4 Member since 31 August 2016.
Remuneration, Social and Ethics Committee

The Board of Directors has established the Remuneration, Social and Ethics Committee (REMSEC) to assist in discharging its responsibilities, consistent with King III and general corporate governance best practice. The mandate outlining the authority delegated to it by the Board of Directors includes the purpose of the Remuneration Committee, composition, reporting responsibilities, terms of reference and the right of any member to seek and be provided with independent advice at the Company´s expense, if such member considers that necessary for the effective execution of his/her fiduciary duties to the Company.

The committee has an independent role, operating as an overseer and a maker of recommendations to the Board of Directors for its consideration and final approval. The committee does not assume the functions of management, which remain the responsibility of the executive directors, officers and other members of senior management.

Summary of the main undertakings and considerations during the year
Remuneration, Social and Ethics Committee1  
Chairperson Members
Mr VM Nkonyane Ms Y Forbes2 (Independent non-executive director)
(Independent non-executive director) Mr ZA Nagdee (Independent non-executive director)
  Mr SD Shane (Independent non-executive director)
  No external advisers attended committee meetings during the year.
Main undertakings and considerations Leadership response
  • Alignment of remuneration policies to the proposed DPE Remuneration Standards and Incentive Guidelines.
  • Numerous engagements with DPE were convened to ensure that the DPE´s-proposed remuneration model is adequate for the Company´s changing environment.
1 A summary table of key activities and outputs for the 2017 Financial Year is contained in Annexure A.
2 Member of REMSEC until 21 January 2017.

Remuneration philosophy

Transnet´s reward philosophy provides a framework for a fair and transparent reward dispensation that:

  • Supports MDS objectives;
  • Ensures long-term business sustainability;
  • Ensures fair and competitive salaries for all employees;
  • Attracts and retains critical skills; and
  • Rewards high performance.

The remuneration philosophy considers three different employment levels informed by complexity, decision-making responsibility and judgement (based on a wide range of competencies, i.e. skills-sets, experience, qualifications, sector-expertise, etc.):

1 Executive management.

2 First-line managers, specialists and technicians (grade level G) form part of the bargaining unit

3 Junior employees (grade levels H to L) form part of the bargaining unit

Transnet´s Remuneration Strategy follows an integrated approach to Group-wide remuneration management to attract, motivate, engage and retain the talent required to achieve business objectives. Remuneration practices are aligned with Transnet´s business strategy, thereby ensuring that the remuneration practices support the business objectives.

The graph below depicts the increases differentiated between executive management and the bargaining unit compared to CPI for the past three years:

Annual increase vs CPI

Performance Management for Group Leadership Team (GLT)

The individual performance targets for the members of the GLT are cascaded from the Corporate Plan and the Shareholder Compact. Quarterly performance assessments ensure that progress against targets is monitored and managed.

The graph below depicts the performance ratings of the members of the GLT over the past three financial periods compared to the overall performance rating of the Company:

Performance ratings for Group Leadership Team

Remuneration for Group Leadership Team (GLT)

Transnet designed and implemented a new operating model during the reporting period with significant changes to the executive leadership team. The previous executive committee was restructured and reduced from 20 members to the newly constituted GLT, consisting of nine members.

Transnet strives to remunerate the members of its executive teams at the market median. Annual guaranteed pay increases for the members of the Transnet executive teams are largely informed by market benchmarks.

Transnet conducts an annual executive remuneration benchmark exercise to compare the remuneration of the executive teams with the external market. Transnet utilises the Deloitte “SA Guide to Executive Remuneration and Reward”, a national remuneration survey published annually by Deloitte Consulting.

In addition to the annual increases for the Group Executive members, a remuneration adjustment was effected for specific members of the GLT whose remuneration was substantially below the comparable market.

The graph below depicts the actual guaranteed remuneration of the GLT against the market median. The graph reflects that the remuneration of the GLT is lagging the market median. Transnet
is following a phased approach to ensure that the guaranteed remuneration will align with the market median in time.

Executive remuneration – variable

The members of the GLT are eligible for payments in respect of the Short-term Incentive (STI) Scheme provided that the strategic objectives, as agreed with the Shareholder Representative, have been achieved. Individual bonus percentages are further modified with individual performance assessment ratings.

Short-term Incentive (STI) and Long-term Incentive (LTI) payments

The STI payment for the 2017 financial year was based on the actual achievement of the annual EBITDA, as well as the productivity and safety modifiers at Group and Operating Division levels.

The 2014 conditional award in respect of the Transnet LTI scheme vested at the end of the 2017 financial period. The value of the LTI payment is impacted by the level of achievement of specific Company and individual performance objectives.

The members of the GLT were eligible for payment in respect of the LTI scheme based on the ground rules of the scheme. The payment of the vested LTI amounts took place at the end of April 2017.

Remuneration structure for non-executive directors

Non-executive directors are appointed by the Shareholder Representative for a three-year term. The Memorandum of Incorporation of the Company, however, requires that the non-executive directors be submitted for re-election for each of the three years at the Company´s AGM.

Among the issues considered by the Shareholder Representative prior to re-election is the individual non-executive director´s performance. The Shareholder Representative approves, in advance, the fees payable to non-executive directors. The non-executive directors are paid an annual retainer as well as an additional retainer fee for committee membership.

Fees paid to non-executive directors are differentiated based on their appointments to the various committees of the Board of Directors.

Market median vs actual guaranteed remuneration

Read more
Transnet’s full Remuneration Report is contained in Annexure B.