FirstRand cuts executive bonuses as UK motor commission provision weighs on earnings

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FirstRand cuts executive bonuses

Highlights

FirstRand reduced executive directors' short-term incentives following the Financial Conduct Authority's April ruling on UK motor commission redress affecting MotoNovo.
CEO Mary Vilakazi’s incentive was cut by R1.3 million to R25.3 million, CFO Markos Davias’s by R828,000 to R19.8 million, and former FNB chief Harry Kellan’s by R400,000 to R23 million.
New Companies Amendment Act disclosure shows FirstRand's top 5% average remuneration at R5.3 million, bottom 5% at R287,438, reflecting an 18.5x pay ratio.

Bonus reductions linked to UK redress costs

As reported by Moneyweb, FirstRand lowered short-term incentives for executive directors after the Financial Conduct Authority in April set out final details of the UK motor commission redress scheme, exposing a bigger-than-expected hit to MotoNovo within Aldermore.

Chief executive Mary Vilakazi’s short-term incentive was cut by R1.3 million from an initial R25.3 million. Chief financial officer Markos Davias’s award was reduced by R828,000 to R19.8 million, while former FNB chief executive Harry Kellan’s incentive was lowered by R400,000 to R23 million; Kellan is due to retire in December.

The group’s remuneration committee says it spent significant time considering how the UK motor commission provision should affect both short and long-term incentive outcomes. It says the approach seeks to reflect the negative effect on shareholders while also balancing the company’s longer-term sustainability and recognition for employees who delivered positive outcomes.

Pay disclosure adds focus on remuneration gap

Under new disclosure rules in the Companies Amendment Act, FirstRand also disclosed pay levels across its workforce. The average total remuneration of the top 5% highest-paid employees stands at R5.3 million, compared with R287,438 for the bottom 5%, producing a ratio of 18.5 times.

The disclosure adds a broader governance dimension to the group’s remuneration update, as investors assess how boards link executive pay to operational setbacks and shareholder value. For FirstRand, the UK issue remains a material factor in compensation decisions as the bank manages the financial and strategic impact on its international business.

Our earlier coverage of executive pay trends at JSE Top 200 companies showed incentive awards rising far faster than fixed pay, with both short-term and long-term payouts surging for CEOs and CFOs in the latest reporting period. We also noted that the Companies Act changes now require disclosure of top-vs-bottom pay ratios and introduce a binding shareholder vote on remuneration, intensifying governance pressure on boards.

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