Trustee remuneration survey

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Augustus Bailey
6 years ago
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1 Trustee remuneration survey Presenter: Gert Kapp PwC

2 Introduction Recent financial turmoil led many funds to adopt more complex and sophisticated investment strategies. Financial and commercial pressures and also the many initiatives by the Regulator has led to: 1 2 Increased trustee and principal officer workloads Increased level of responsibility to understand the complexities involved 3 The establishment of subcommittees for more active management PricewaterhouseCoopers Slide 2

3 Introduction Drivers of change Increase in responsibilities and workloads of trustees Significant increase in volume of legislation and regulations Member expectations Constraints Skills shortages and lack of experience PricewaterhouseCoopers Slide 3

4 Trustee remuneration survey The Population Our survey covers 243 funds with a total asset base of R308 billion. Large >R500m, Medium >R50m <R500m, Small <R50m Funds can benchmark themselves against our RSA and UK surveys. PricewaterhouseCoopers Slide 4

5 Trustee remuneration survey Averages of Surveyed population PricewaterhouseCoopers Slide 5

6 Trustee remuneration survey Averages of Surveyed population PricewaterhouseCoopers Slide 6

7 Governance Slide 7

8 Key findings Governance PricewaterhouseCoopers Slide 8

9 Key findings Governance Professional trustees ; 50% of the private funds that remunerate trustees, appointed one professional trustee and a 92% of specialist funds that remunerate have two or more professional trustees further 25% appointed two or 1 more ; 2 51% of small funds have at least one professional trustee SA private funds employ professional trustees more often than their UK counterparts 3 4 PricewaterhouseCoopers Slide 9

10 Key findings Governance PricewaterhouseCoopers Slide 10

11 King III: Corporate Governance PricewaterhouseCoopers Slide 11

12 Key findings Governance (Cont.) Trustee meetings and King III Between 20% and 30% of trustees both in SA and the UK are ill-prepared for meetings 1 5 Remunerated trustees come better prepared to meetings 2 87% of boards meet at least four times per year King III principles are important per : 76% of large funds. 61% of medium and % of small funds PricewaterhouseCoopers Slide 12

13 Remuneration Slide 13

14 Trustee remuneration survey Key findings Remuneration (Trustees) PricewaterhouseCoopers Slide 14

15 Key findings Remuneration (Trustees) (Cont.) PricewaterhouseCoopers Slide 15

16 Key findings Remuneration (Trustees) (Cont.) PricewaterhouseCoopers Slide 16

17 Key findings Remuneration (Trustees) (Cont.) ; 45% of SA funds remunerate their trustees, compared to 93% in the UK; Less than 25% of private funds remunerate trustees; 80% of umbrella and preservation funds remunerate trustees; and 64% of retirement annuity funds remunerate trustees 1 2 The main determining factor driving trustee remuneration is: large funds - workload, medium funds experience small funds - value added ; Main reason for not remunerating: duties are perceived to be part of the trustees employee salary trustee time is taken out of normal working hours 3 4 PricewaterhouseCoopers Slide 17

18 Key findings Remuneration (Principal Officer) PricewaterhouseCoopers Slide 18

19 Key findings Remuneration (Principal officer) (Cont.) 47% of funds remunerate their principal officers 5 The majority of principal officers (67%) are paid an annual salary reflecting the professional nature of the position in South Africa PricewaterhouseCoopers Slide 19

20 Key findings Remuneration (General) PricewaterhouseCoopers Slide 20

21 Trustee remuneration survey Key findings Remuneration (General) (Cont.) Average remuneration paid to fund officials Per annum (R) Per meeting (R) Per hour (R) Chairperson of the board 77,381 4,662 1,705 Chairperson of a board sub-committee 62,187 3,334 1,684 Board member empl. representative 87,635 4,123 - Board member mem. representative 47,543 2,792 - Board member pen. representative 19,093 3,750 2,265 Board sub-committee member 73,898 3,881 1,235 Professional trustees 98,265 7,641 1,603 Principal officers 314,214 2, PricewaterhouseCoopers Slide 21

22 Performance and Assessment Slide 22

23 Key findings Performance and Assessment PricewaterhouseCoopers Slide 23

24 Key findings Performance and Assessment Employers recognise their employees trustee responsibilities, but tend to - not assess employee trustees performance in that role and - allow little time off for meeting preparation Objective setting for individual trustees is in place for less than a third of funds compared to over half in the UK 1 2 Trustee remuneration is in general not linked to performance. 3 4 PricewaterhouseCoopers Slide 24

25 Gifts and Service Providers Slide 25

26 Key findings Gifts and Service Providers PricewaterhouseCoopers Slide 26

27 Key findings Gifts and Service Providers (Cont.) PricewaterhouseCoopers Slide 27

28 Key findings Gifts and Service Providers (Cont.) PricewaterhouseCoopers Slide 28

29 Key findings Gifts and Service Providers (Cont.) PricewaterhouseCoopers Slide 29

30 Key findings Gifts and Service Providers (Cont.) ; Special service offerings or arrangements with service providers are rare. Trustee entertainment is limited to one or two sporting or corporate social events per year in the majority of cases 1 2 Only 35% of funds were entertained over the last year 49% of these were large funds ; Main entertainers: - consultants (24%) - asset managers (29%) - benefit administrators (29%) 3 4 PricewaterhouseCoopers Slide 30

31 Trustee remuneration survey Gifts and Service Providers Proportion of funds whose trustees received gifts or entertainment Private funds 36% Specialist funds 32% Limited to one or two sporting or corporate social events per year in the majority of cases. PricewaterhouseCoopers Slide 31

32 Trustee remuneration survey Key findings - The Verdict 85% of respondents said that trustees who are remunerated will: be more responsible provide a higher level of care undertake additional preparation for meetings A minority of 9% felt that it would not add value because: the current board is skilled enough remuneration would not change attitude. PricewaterhouseCoopers Slide 32

33 Increased responsibilities will demand more professionals with relevant skills who will be directly remunerated for their services. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers Inc, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it PricewaterhouseCoopers Inc. All rights reserved. 'PricewaterhouseCoopers' refers to PricewaterhouseCoopers Inc. or, as the context requires, other member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. PwC

com Gert Kapp Retirement Fund Leader Southern Africa PricewaterhouseCoopers Inc.

34 Contacts Tom Winterboer Financial Services Leader Southern Africa and Africa PricewaterhouseCoopers Inc. T (+27) / E tom.winteboer@@za.pwc.com Gert Kapp Retirement Fund Leader Southern Africa PricewaterhouseCoopers Inc. T (+27) E gert.kapp@za.pwc.com Johannes Grove Associate Director PricewaterhouseCoopers Inc. T (+27) E johannes.grove@za.pwc.com Slide 34

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