Remuneration policy


This document sets out the Aveng Group’s remuneration policy. Due to remuneration governance standards, the bulk of this policy addresses the remuneration of senior management. The application of the Group’s remuneration policy is summarised in the remuneration report and where remuneration and nomination committee discretion is exercised in implementing this policy, this is highlighted in the remuneration report.

Remuneration philosophy statement

The Aveng Group is a multidisciplinary construction and engineering group, anchored in South Africa, with expertise in a number of geographies and market sectors, namely power, mining, infrastructure, commercial, industrial, and oil and gas. The Group has a broad footprint in all these market sectors and one of the core principles of its business strategy is diversification to ensure sustained growth notwithstanding the industry cycles. The industry is known to be a tough and volatile one with many challenges in delivering value to shareholders. A key component of success within the industry lies in aligning the Group’s business strategy with its people strategy. Aveng recognises the importance of investing in its people and strives to ensure that the Group remains competitive in the market and retains and incentivises the key people required to deliver its business strategy. Therefore, the Group is committed to developing and implementing effective remuneration strategies and practices to attract, retain and reward employees commensurate to performance deliverables. The strategic outcomes sought to be achieved through the remuneration philosophy and remuneration policy includes rewarding superior performance and penalising poor performance, as well as aligning management’s total remuneration with increased shareholder value.

Remuneration strategy   Remuneration design offering  
The Aveng Group’s pay strategy is based on the following core principles:
  • A robust and universal job grading system, which renders accurate job grading results for benchmarking purposes.
  • Regular remuneration benchmarking for all grades against the general market and the construction, engineering and mining industries using independent salary surveys. Development of market-related pay scales by grade.
  • The existence of a comprehensive performance management system and a coaching for performance culture, including performance contracts and regular performance assessments.
  • Compliance with all remuneration governance regulations and applicable legislation.
  • A clear remuneration structure, comprising guaranteed pay, short, medium and long term incentive plans.
  • Incentive pools shaped by Group and operating segment profitability with no excessive risk taking and an approach of sustainable future profitability.
  • Transparency to enable shareholders and other stakeholders to make reasonable assessments of remuneration practices of the Group and underlying governance processes.
In this regard, the Aveng Group’s remuneration offering is designed to:
  • provide an appropriate mix of guaranteed pay and short, medium and long term incentives to attract, retain and incentivise employees;
  • ensure that the pay mix supports the Group’s business strategy of striving for outperformance and that on-target earning potentials are directly linked to performance and designed to promote the development of a high performance culture;
  • be consistent with and is aligned to the vision, mission, values and business objectives (both short term and long term) of the Group;
  • pursue the best interests of the Group, its shareholders, and its broad internal and external stakeholder base;
  • achieve the motivational impact required to deliver the Group’s business strategy and growth targets and promote the desired behaviour, without encouraging excessive risk taking by management;
  • be fair, equitable, market-related and affordable;
  • recognise and reward exceptional performance while penalising mediocre or poor performance; and
  • articulate an attractive and compelling value proposition for current and prospective employees.

Remuneration practices and remuneration governance

The remuneration and nomination committee (the committee) has been established by the board of directors of Aveng in accordance with the company’s memorandum of incorporation.

Remit of the committee     To assist the Board with the adoption of remuneration policies and practices which are aligned to the Group’s business strategy so as to create sustainable value and growth over the long term for shareholders and other stakeholders.  
Terms of reference     The committee is governed by a formal charter which is aligned to the principles of King III and the Companies Act 71 of 2008, and provides for the following:
  • ensures that the remuneration policy promotes the achievement of the Group’s strategic objectives and encourages individual performance;
  • assists the Board to ensure that executive directors, senior executives and prescribed officers of the Group are remunerated on a fair, responsible and competitive basis and in line with approved performance targets;
  • ensures that an adequate performance management system is operational throughout the Group, which aligns with the objectives of the short, medium and long term incentive schemes based on the Group’s approved business strategy;
  • ensures that all forms of remuneration and incentivisation across the Group are performance related;
  • ensures that an adequate, formal succession plan exists throughout the Group;
  • approves senior executive appointments and commensurate remuneration; and
  • reviews the structure, size and composition of the Board annually to ensure that the Board is able to execute its duties effectively and conduct an evaluation of the performance of the Board, chairman and various board committees.
Guiding principles     The committee has determined that the following core principles underpin the Group’s remuneration philosophy and are essential in order for the Group to deliver its business strategy:
  • The existence of a reputable, robust job grading system, with appropriate governance principles.
  • A market-related reward strategy and principles supporting this cascaded down to operational cluster level.
  • The provision of an appropriate total cost-to-company package for employees which includes fringe benefits, retirement plans, and medical and risk benefits.
  • Appropriate incentive schemes, that are now standardised across the Group, which encourage value creation for shareholders, but do not encourage excessive risk taking by executives and prescribed officers.
  • The existence of a performance culture, and a performance management process across the Group, where individual goals congruent with the Group strategy are established, and performance is evaluated and linked to annual pay increase and incentive bonus awards.
  • A rigorous Group-wide succession review process on all critical positions in the top three levels of the organisation takes place each year.
Internal input     The meetings of the committee are attended by the chief executive officer and the group executive director on an ex-officio basis. Executives are not present when their remuneration is considered by the committee. The chairman of the committee provides the Board with a verbal report of the committee’s activities at each board meeting.  


Aveng’s approach to remuneration is primarily geared towards ensuring continuous and consistent alignment of employee behaviour with stakeholder value creation. It therefore provides the committee with a reasonable degree of flexibility to review the Group’s remuneration policy in light of changes in the Group’s business strategy, trading conditions and economic climate, to ensure that such policy achieves value creation for shareholders and other stakeholders.

Therefore, the Group’s remuneration policy and incentive schemes are subject to annual review by the committee. The committee monitors the governance of all incentive schemes. Any variance or deviation from this policy can only be approved by the committee.

The committee has discretion, when warranted by exceptional circumstances and / or where considerable value has been created for shareholders and other stakeholders of Aveng by specific key senior executives, to award special bonuses or ex-gratia payments to such individuals. In exercising this discretion, the committee members must satisfy themselves that such payments are fair and reasonable, and are disclosed to shareholders as required by remuneration governance principles.

Succession review

The Group conducts a thorough group-wide succession review in February / March each year. This review includes:

Remuneration structure

Aveng’s remuneration structure provides for guaranteed and variable remuneration components. The guaranteed component comprises employees’ total cost of employment (TCOE) or guaranteed pay. The variable pay portion is driven by both company and individual performance and the quantum varies year to year. The different components are summarised below.

Guaranteed remuneration

Instrument     Cash plus benefits  
Philosophy and business objective     The Group’s guaranteed pay philosophy is to pay at the median of the market for full competency and expected performance, while allowing for performance-based differentiation, and is designed to attract and retain employees in line with the scope, nature and skills requirements of the role. The Group’s pay philosophy is also designed to reward superior performance through short, medium and long term incentive schemes at a higher percentile than the median.  

As a general rule guaranteed pay is benchmarked to the 50th percentile to the market, relative to skill, experience and performance.

When setting and reviewing the guaranteed pay policy, various factors, including the following, are taken into account:
  • Market pay trends, including benchmarking against the specific industries within which the Group operates.
  • Macro-economic factors such as inflation, market increase projections and salary movement within the market.
  • Movement in costs of particular benefits.
  • Group performance and affordability.
  • The need to ensure that executive pay is performance-based and is aligned to company financial performance as well as the individual’s performance relative to his / her performance objectives.
Annual remuneration review process    

Guaranteed pay is reviewed annually in January. A pay increase mandate supported by salary surveys, projected salary movements, inflation, company performance and affordability, is reviewed by the committee and recommended to the Board for approval. The approved mandate is communicated and implemented by management.

Individual performance as per the employee’s performance contract is assessed and rated, and this together with the employee’s compa-ratio to the relevant market median, informs a salary increase recommendation. This process ensures internal and external parity.

Following the implementation of the annual salary review, the committee reviews the implementation to establish:
  • whether the overall increases implemented remained within the approved mandate;
  • the overall increase in the cost of labour as a result of this adjustment; and
  • that there was a sufficient link to performance in the manner in which the increases have been implemented.
Medical aid cover    

The Group facilitates the provision of medical aid for employees and their families, and salaried employees are required to be members of the company-nominated medical schemes.

Contributions are funded from the employees’ total guaranteed pay (TGP).  
Retirement contributions     These contributions ensure that employees have appropriate savings for their retirement.  

Provident fund contribution percentage options are 6%, 7,5%, 9%, 10,5% or 12%.

This is an employer contribution and funded from the employees’ TGP earnings.  

Pension fund contribution percentage options are either 6% or 7,5%.

This is an employee contribution and funded as a deduction from take-home pay.  
Group life and insured benefits     These benefits provide insurance for employees and their dependants in the event of disability, death, critical illness, etc.  

Performance link to pay

The Group’s annual business plan is based on and informed by the Group’s business and growth strategy. This plan informs the budget from which the key performance indicators (KPIs) (financial and non-financial) are derived. These KPIs are incorporated into the annual performance contract of the chief executive officer, who in turn cascades these KPIs into the performance contracts of the individual executive directors and managing directors. Performance against KPIs in performance contracts is assessed at least bi-annually, but in most cases quarterly, and the internal management reporting system is designed to clearly identify progress and achievement on a quarterly basis.

The Group’s performance management measurement system determines the performance rating for both businesses and individuals. The individual’s performance rating is used in determining both annual salary increases and the level of short, medium and long term incentives awarded. Capable and skilled employees who demonstrate performance at a competent level are remunerated around the market median for their role. Poor performers (with a performance rating of 1) do not receive any incentives or annual increases.

KPI assessment rating  
Definition   Performance  
Exceeded all expectations   5  
Above average – met all and exceeded some expectations   4  
On target – met all expectations   3  
Below average – met some but not all performance expectations  
Needs improvement
Poor performance – failed to meet performance expectations   1