Nedbank bosses also in R400m payday

Nedbank CEO Mike Brown, who will be leaving the position at the end of May, was paid a total of R92.5 million last year, a 176.4% increase on the year before.

Practically half of this was from the combination of his guaranteed package (R10.1 million), his total short-term incentive (bonuses) at R18.275 million, and his long-term incentive award at a face value of R18 million; in total, these amounted to R46.4 million.

The various machinations of share price movements for its long-term incentive schemes, plus dividends, mean Brown was paid a so-called ‘single-figure’ remuneration of R92.5 million.

Nedbank says the following caused the sizeable increase in pay: “the share price appreciation of 67% from the award in 2021 to the end of 2023, an overall vesting outcome on the 2021 LTI [long-term incentive] award of 124,8%, compared with 0% in 2022; and a 100% MSS [matched share scheme] match, compared with 0% in 2022.”

In aggregate, the top seven execs – as per Nedbank’s disclosure – were paid a total of R396.8 million in 2023.

On average, that is 146% higher than the amount they were paid in 2022. With the traditional top three – CEO, CFO and COO – the average increase was around 180%, nearly triple what they earned in 2022 … practically all driven by the performance of the share price in 2023.

However, this is not the share price over a single year. Rather, it is the “variance of the share price at award over the share price at vesting and is valued on the actual number of shares vested”.

Nedbank says the total single-figure remuneration is “the sum of guaranteed pay, total short-term incentives, single-figure long-term incentives, single-figure match and dividends”.

This remuneration follows the awarding of R400 million of pay to Standard Bank’s top brass for 2023.

Nedbank notes that it received a “pleasing shareholder remuneration voting outcome” last year, with 90.4% in favour of the implementation report and 74.8% in favour of the policy.

Nedbank says Brown, the “outgoing CEO, will remain employed with the bank in an advisory role until 31 August 2024, when he retires”.

“This will allow for an orderly transition period for Jason Quinn, who joins Nedbank on 22 May 2024. Mike’s annual GP [guaranteed package] will accordingly be reduced by 25% from 31 May 2024.”

It says he “will be eligible for a pro-rated STI [short-term incentive] award in March 2025, considering the partial period of employment in the 2024 financial year”.

“He will not be eligible for an LTI award in March 2025. Mike will be eligible for good-leaver status in respect of previously awarded, but unvested, LTI and STI awards that will continue to vest over their remaining life. Mike has agreed to sign a restraint of trade agreement, which will be effective until 31 May 2026, in return for which an LTI award at 50% of his 2024 March annual award will be made in August 2024.”

Quinn’s remuneration

As is the precedent in the market, Quinn will be commensurately remunerated for the value of Absa shares he forfeited following his departure from that bank. He will be Nedbank’s CEO from 1 June 2024.

The bank says: “Jason’s remuneration package was informed by market benchmarks, after also considering Mike Brown’s remuneration. In August 2024 an on-appointment DSTI [deferred short-term incentive] and an LTI award will be provided for in respect of the value he forfeited on his resignation from his previous employer.”

“The corporate performance targets on his LTI award are the same as those in the 2024 awards for Group Exco. Jason’s notice period, on-target and maximum STI and LTI awards, and minimum shareholding requirements are in line with the remuneration policy. A restraint of trade agreement has also been agreed with Jason.”

Listen to this RSG Geldsake podcast (in English), where Tinus de Jager chats with Nedbank CEO Mike Brown about how the current economic environment has impacted the bank (or read the transcript):