Equity compensation benefit
Forfeitable shares
During the year, 1 551 702 (2012: 2 100 259) forfeitable shares were granted to
executive directors and qualifying employees (“participant”). The participant will forfeit the
forfeitable shares if he/she ceases to be an employee of an employer company before the
vesting date or if the specified performance conditions have not been met, unless otherwise
specified by the rules or determined by the board. In the event that the participant is not in
the employ of the Group, or the performance conditions are not met, then the shares
allocated to the participant will be forfeited and will either be sold on the open market by the
escrow agent and the proceeds will be returned to the participating employer, or may be
retained by the Group for future awards.
Dividends declared in respect of these forfeitable shares are held in escrow until such
time as the performance conditions are met and the shares have vested. Shares forfeited
during the vesting period will forfeit any dividends pertaining to such shares. A dividend
of 23 cents (2012: 14 cents) per ordinary share was declared on 20 August 2012
(2012: 23 August 2011).
The performance conditions for the second award grant of forfeitable shares vesting on
1 September 2012 are as follows:
| • |
25% of the shares constituting the allocation are awarded for retention purposes
and shall vest if the employee is still employed in the Group at the vesting date
(1 September 2012); |
| • |
25% of the shares constituting the allocation will vest on the achievement by individual
employees of their individual key performance indicators; and |
| • |
50% of shares constituting the allocation will vest if the Group’s core HEPS is equal to or
exceeds the core HEPS per ordinary share at the beginning of the performance period
(1 June 2009), by the percentage change in the CPI over the performance period, plus
15%. There is no linear vesting to this portion of the allocation. |
The second award has now vested.
The performance condition for the third award grant of forfeitable shares vesting on
31 August 2013 are as follows:
| • |
25% of the shares constituting the allocation are awarded for retention purposes
and shall vest if the employee is still employed in the Group at the vesting date
(31 August 2013); |
| • |
25% of the shares constituting the allocation will vest on the achievement by individual
employees of their individual key performance indicators; and |
| • |
50% of shares constituting the allocation will vest if the Group’s core HEPS is equal to or
exceeds the core HEPS per ordinary share at the beginning of the performance period
1 June 2010, by the percentage change in the CPI over the performance period, plus
15%. There is no linear vesting to this portion of the allocation. |
The performance condition for the retention award grant vesting in three equal tranches on
30 September 2010, 30 April 2011 and 30 April 2012 are as follows:
| • |
100% of the shares constituting the allocation are awarded for retention purposes and
shall vest if the employee is still employed in the Group at the vesting dates. |
The performance condition for the fourth award grant of forfeitable shares vesting on
31 August 2014 are as follows:
| • |
25% of the shares constituting the allocation are awarded for retention purposes
and shall vest if the employee is still employed in the Group at the vesting date
(31 August 2014); |
| • |
25% of the shares constituting the allocation will vest on the achievement by individual
employees of their individual key performance indicators; and |
| • |
50% of shares constituting the allocation will vest if the Group’s core HEPS is equal to or
exceeds the core HEPS per ordinary share at the beginning of the performance period
1 June 2011, by the percentage change in the CPI over the performance period, plus
15%. There is no linear vesting to this portion of the allocation. |
The performance condition for the fifth award grant vesting at 31 August 2015 of forfeitable
shares are as follows:
| • |
40% of the awards are allocated towards retention. In order to receive this portion of the
allocation the employee is required to be employed within the Group at the vesting date
(31 August 2015); and |
| • |
60% of the awards are allocated on the basis of 50% for Growth in Core Headline
earnings per share and 10% for shareholder returns. |
The 50% for growth in core headline earnings will be based on the following achievements:
| – |
If growth is 5% above CPI over three years, then 20% of the 50% will vest; |
| – |
If growth is 10% above CPI over three years, then an additional 50% (i.e. a total of 70%)
of the 50% will vest; and |
| – |
If growth is 25% above CPI over three years, then a further 30% (i.e. a total of 100%) of
the 50% will vest. |
The 10% for shareholder return will be based on a 10% compounded growth in the share
price over the three-year vesting period measured with reference to the weighted average
price per share during the month of the commencement of the allocation and the weighted
average share price for the month during which the vesting takes place, plus dividends over
the three-year period of no less than three times dividend cover on a grossed up basis.
Movements in the number of forfeitable shares outstanding during the year are as follows:
| |
Grant
date |
|
Vesting
date |
|
|
|
Number
of shares |
|
Fair value
of grant
R’000
|
|
|
| At 31 May 2011 |
|
|
|
|
|
|
3 501 571 |
|
18 150 |
|
|
| Second award |
|
|
|
|
|
|
1 443 809 |
|
8 446 |
|
|
| Third award |
|
|
|
|
|
|
1 947 535 |
|
9 153 |
|
|
| Retention award |
|
|
|
|
|
|
110 227 |
|
551 |
|
|
| Granted during the year |
|
|
|
|
|
|
2 100 259 |
|
9 451 |
|
|
| Fourth award |
1 October 2011 |
|
31 August 2014 |
|
|
|
2 100 259 |
|
9 451 |
|
|
| Shares forfeited during the year |
|
|
|
|
|
|
(99 032) |
|
(532) |
|
|
| Second award |
|
|
|
|
|
|
(52 800) |
|
(309) |
|
|
| Third award |
|
|
|
|
|
|
(27 512) |
|
(129) |
|
|
| Retention award |
|
|
|
|
|
|
(18 720) |
|
(94) |
|
|
| Shares vested during the year |
|
|
|
|
|
|
(91 507) |
|
(457) |
|
|
| Retention award |
|
|
30 April 2011 |
|
|
|
(91 507) |
|
(457) |
|
|
| At 31 May 2012 |
|
|
|
|
|
|
5 411 291 |
|
26 612 |
|
|
| Second award |
|
|
|
|
|
|
1 391 009 |
|
8 137 |
|
|
| Third award |
|
|
|
|
|
|
1 920 023 |
|
9 024 |
|
|
| Fourth award |
|
|
|
|
|
|
2 100 259 |
|
9 451 |
|
|
| Granted during the year |
|
|
|
|
|
|
1 451 573 |
|
9 740 |
|
|
| Fifth award |
3 September 2012 |
|
31 August 2015 |
|
|
|
1 451 573 |
|
9 740 |
|
|
| Shares forfeited
during the year |
|
|
|
|
|
|
(251 503) |
|
(1 353) |
|
|
| Second award |
|
|
|
|
|
|
(158 978) |
|
(930) |
|
|
| Third award |
|
|
|
|
|
|
(31 856) |
|
(150) |
|
|
| Fourth award |
|
|
|
|
|
|
(60 669) |
|
(273) |
|
|
| Shares vested during the year |
|
|
|
|
|
|
(1 232 031) |
|
(7 207) |
|
|
| Second award |
|
|
1 September 2012 |
|
|
|
(1 232 031) |
|
(7 207) |
|
|
| At 31 May 2013 |
|
|
|
|
|
|
5 379 330 |
|
27 792 |
|
|
| Third award |
|
|
|
|
|
|
1 888 167 |
|
8 874 |
|
|
| Fourth award |
|
|
|
|
|
|
2 039 590 |
|
9 178 |
|
|
| Fifth award |
|
|
|
|
|
|
1 451 573 |
|
9 740 |
|
|
Refer to note 14 for the expense recognised in the statement of comprehensive income
relating to the equity compensation benefits.
The fair value of the shares is based on the value paid for the shares on the open market
at grant date.
The total number of forfeitable shares issued to executive directors during the period is
1 096 759 (2012: 1 542 820).
The share-based payment expense in relation to these directors is R6.3 million
(2012: R7.3 million).
Refer to note 31 of the Group annual financial statements for details per director. |