REMUNERATION OLD MUTUAL LIMITED REMUNERATION REPORT 2020 DO GREAT THINGS EVERY DAY ABOUT BACKGROUND POLICY IMPLEMENTATION About our report Approval The Board has considered the integrity of this report and has concluded that it adequately provides material disclosures of the Group's remuneration policy and implementation thereof. The Board INTEGRATED CORPORATE REMUNERATION RESPONSIBLE BUSINESS TAX TRANSPARENCY approved this report on REPORT GOVERNANCE REPORT REPORT IMPACT REPORT REPORT 15 April 2021. Reporting frameworks TM Our stakeholders Six capitals • King IV Report on Corporate Governance for South Africa, 2016 (King IV). Copyright and trade marks are owned by the Institute of Directors in Southern Africa NPC and all of its rights are reserved. • Johannesburg Stock Exchange (JSE) Listings Requirements Financial Natural Communities Regulators Capital Capital • South African Companies Act, 71 of 2008 (as amended) Scope and boundary Social and This report covers the remuneration activities of the Group for the period 1 January 2020 to Human Employees Investors Relationship Capital 31 December 2020. Capital Assurance A review was performed by management to ensure the accuracy of our reporting content, with the Board and Remuneration committee providing oversight. Intellectual Manufactured Intermediaries Customers Capital Capital Abbreviations: TGP Total guaranteed package Feedback STI Short Term Incentive We value stakeholder Investor Relations: Communications: feedback. Please share your LTI Long Term Incentive Sizwe Ndlovu Tabby Tsengiwe experience of reading this NED Non executive director report by contacting us. T: +27 (11) 217 1163 T: +27 (11) 217 1953 M: +27 (83) 500 8019 M: +27 (60) 547 4947 E: [email protected] E: [email protected] OLDMUTUAL Remuneration Report 2020 1 ABOUT BACKGROUND POLICY IMPLEMENTATION A message from our Chairperson In order to ensure minimal disruption to the business in the short term whilst still ensuring long term sustainability, we responded This is our third Remuneration to the crisis with a three phased approach: Report since listing in 2018 Stabilisation of the business during the initial phase of the and we are pleased with the crisis, which focused on the health and wellbeing of our significant increase in support employees and communities, ensuring business continuity from our shareholders as and uninterrupted service to our customers and disciplined cost management. evidenced by the outcome of Transitioning our business out of the crisis, with focus on the AGM vote in 2020. mitigating the impact on earnings through management actions and maintaining a well capitalised balance sheet Remuneration committee through various capital optimisation initiatives, which will composition accelerate the recovery of the Group’s RoNAV. The committee met nine times during We continued to actively seek feedback on our Re-envisioning the future state of our business, through the year. The majority of members, Remuneration policy and the implementation disciplined execution of our refreshed strategy which will including the chair, are independent non thereof through various interactions with place us in a good position to win in the market as the executive directors. shareholders in 2020. Following discussions economy recovers. Itumeleng Kgaboesele (49) with shareholders and management we made enhancements to our variable pay schemes. We BCom, PDip (Acc), Dip (FMI), CA(SA) We revised the 2020 STI scorecard to reflect our response to the believe this aligns remuneration outcomes more Appointed: 2016 crisis, with metrics aligned to financial, operational, strategic and deliberately to business performance, whilst stakeholder deliveries. In terms of the revised STI scheme, the still balancing the need to reward individual Thoko Mokgosi- Mwantembe (59) scorecard outcome tilt only applies if there is sufficient RFO to performance. fund a business performance pool. In 2020 the level of RFO was BSc, MSc, SEP, MCRP COVID-19 had a significant impact on our not sufficient to fund a business performance pool and although Appointed: 2017 business and the communities we serve. We management performed well against the revised scorecard metrics, were saddened by the passing of employees this had no impact on STI outcomes. The 2021 scorecard will revert Matthys (Thys) du Toit (62) and we remain committed to supporting to include more financial metrics and will also include Environment, BSc Agric, MBA customers, intermediaries, employees and their Social and Governance (ESG) metrics, demonstrating the Group’s Appointed: 2017 families through the personal and financial commitment to being a Responsible Business. hardships associated with the pandemic. Our profits were negatively impacted by one off To transition and re-envision the business, we will continue to Sizeka Magwentshu-Rensburg (61) ensure that remuneration is aligned with strategy. The Group items directly related to COVID-19. RFO reduced BA, MBA, DPhil launched a refreshed strategy underpinned by five interconnected by 81% to R1.7 billion whilst AHE reduced by Appointed: 2017 75% to R2.5 billion. When excluding these strategic pillars during the year. The successful execution on direct COVID-19 impacts, RFO decreased by the five pillars will enable the Group to be our customers’ first The Group Chairman, Group CEO, Chief Financial Officer, Human 14% to R7.7 billion. Remuneration outcomes are choice and build the most valuable businesses in the industry, Capital Director and Head of Reward are standing invitees to calculated with reference to reported RFO taking delivering sustainable long term value for shareholders. We remain committee meetings but are not present in discussions regarding into account COVID-19 impacts to align with committed to remunerate employees to ensure balance and their own remuneration. shareholder outcomes. alignment between strategic and shareholder outcomes. OLDMUTUAL Remuneration Report 2020 2 ABOUT BACKGROUND POLICY IMPLEMENTATION A message from our Chairperson Shareholder engagement and voting outcome Shareholder Feedback Response We solicited feedback on the 2019 Remuneration Report during governance roadshows that were held prior to the May 2020 Annual A lack of alignment between business The STI scheme was amended during 2020 to change the primary General Meeting (AGM). Following the failure to achieve the requisite performance and remuneration metric to be reported RFO for the relevant period. This approach 75% approval of the 2019 implementation report, we invited dissenting outcomes and a preference that STI ensures alignment between employee remuneration and shareholders through a SENS announcement to submit concerns and targets are not based on performance shareholder outcomes. recommendations in writing. Shareholder roadshows held in November against business plans. 2020 were used to provide an update on remuneration changes and to engage shareholders on our remuneration response to COVID-19. The withdrawal of the total shareholder The Group believes that the LTI scheme inherently aligns with TSR Policy return (TSR) metric from the LTI and that driving the metrics chosen will lead to an improvement in scorecard was not received favourably share price and dividends. by all shareholders. 2020 92% 8% There was a sentiment that targets are While the individual performance scorecards of executives have 2019 54% 46% not balanced between financial and always contained the relevant non-financial metrics, including ESG non-financial metrics. measures, we have introduced non-financial metrics to both the STI and LTI scorecards. Implementation Policy Remuneration Lack of actuarial Embedded Value (EV) Value of New Business (VNB) has been introduced as a metric in the 2020 74% 26% metrics in STI scorecard. STI scorecard. VNB measures the expected return on new business written in our Life and Savings businesses each year. 2019 31% 69% Insufficient disclosure of enforcement We have improved our disclosures to better explain compliance to mechanisms for minimum the Group’s minimum shareholding requirements and consequence NED Fees shareholding requirements. management. 2020 97% 3% Linkages between performance against We have made significant improvements in the disclosure of how targets and actual executive outcomes individual performance outcomes link to targets. not clear enough. 2019 97% 3% The retrospective amendment to the The committee reserves the right to exercise its discretion in the For Against RFO threshold target in 2019 was not event that remuneration outcomes are considered overly punitive or received favourably. generous in the circumstances. Sufficient disclosure was provided to In the event that 25% or more of the shareholders vote against either explain the rationale for retrospectively reducing the RFO threshold the remuneration policy or the implementation report or both, we will Implementation Report in 2019. include a note in our SENS announcement for the AGM inviting dissenting shareholders to engage with the Group on their reasons for voting against one or both of these resolutions OLDMUTUAL Remuneration Report 2020 3 ABOUT BACKGROUND POLICY IMPLEMENTATION A message from our Chairperson Committee activities Consultants Mandated Matters Our COVID-19 response Vasdex Associates (Pty) Ltd are the appointed independent advisers to the committee. They attended committee meetings and shareholder roadshows, • Approval of the 2019 Remuneration Our response to COVID-19 in terms of relevant reward provided