Liberty said in its annual report the role of variable remuneration was to promote "outperformance" and retain key employees.
It was also aimed at rewarding performance above the level expected in respect of guaranteed remuneration and includes short-and long-term incentives.
Listed financial companies are taking a harder line towards nonperformance in response to the local and global clamour for executives to be paid based on performance.
The insurer, which is controlled by Standard Bank , said the remuneration committee had judged that Mr Hemphill's personal performance criteria amounted to a 90% grading, and combined with the group's financial performance, decided he should be awarded a variable bonus of R10 million.
The group's finance director, Casper Troskie, was assessed to have achieved 95% of his personal key performance criteria and, combined with the group's financial performance, this amounted to R5,2m (or 175,27% of his guaranteed package) of which R1,26m had been deferred, Liberty said.
It said for the 2011 bonuses to be paid this year, amounts awarded in excess of R500 000 would be deferred at 20% up to R2m, and 30% thereafter.
Liberty reported a 9% increase in attributable earnings and headline earnings to R2,6 billion in the year to December.
The group has recovered from its poor performance in the first half of 2009 and is expanding its insurance business in SA, in addition to growing in Africa in partnership with Standard.
Liberty said Mr Hemphill's total package last year, including the performance bonus, was R20,7 million, up from R16,5 million, while that of Mr Troskie was R13,4 million, up from R3,1 million.
He was appointed financial director on October 12 2010, hence the significant jump in his remuneration.
Liberty said Mr Hemphill's key performance indicators were measured against the remuneration committee's personal targets.
These included attracting and retaining key skills, strengthening the commercial arrangement with Standard through bancassurance, achieving transformation targets, delivering "substantial" progress to achieving business case in growth operations, delivering the new Stanlib operating model, ensuring Liberty becomes more customer-centric and enhancing innovation and awareness of product offerings.
Mr Troskie was expected to ensure efficient management of the group's capital base and central treasury, improve investor relations and enhance integrated reporting, among other things.
Source: Business Day
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