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EQUITY COMPENSATION BENEFIT
Forfeitable shares
During the year, 1 140 180 (2013: 1 451 573) 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, 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 25 cents (2013: 23 cents) per ordinary share was declared on 18 August 2013 (2013: 20 August 2012).
The performance condition for the third award grant of forfeitable shares vested on 31 August 2013 is as follows:
| • |
25% of the shares constituting the allocation were awarded for retention purposes and vested if the employee was still employed within the Group at the vesting date (31 August 2013). |
| • |
25% of the shares constituting the allocation vested on the achievement by individual employees of their individual key performance indicators. |
| • |
50% of shares constituting the allocation vested as the Group’s core HEPS are equal to or exceed 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 was no linear vesting to this portion of the allocation. |
The performance condition for the fourth award grant of forfeitable shares vesting on 31 August 2014 was as follows:
| • |
25% of the shares constituting the allocation are awarded for retention purposes and shall vest if the employee is still employed within 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. |
| • |
50% of shares constituting the allocation will vest if the Group’s core HEPS are equal to or exceed 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 on 31 August 2015 of forfeitable shares is 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). |
| • |
60% of the awards are allocated on the basis of 50% for growth in core headline earnings per share and 10% for shareholder returns. |
| • |
50% of shares constituting the allocation will vest if the Group’s core HEPS are equal to or exceed 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 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. |
| • |
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.
The performance condition for the sixth award grant vesting on 31 August 2016 of forfeitable shares is 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 2016). |
| • |
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. |
| • |
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
shares |
|
|
Fair value
of grant
R’000 |
|
| 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 |
|
| Granted during the year |
|
|
|
|
1 140 180 |
|
|
9 977 |
|
| Sixth award |
2 September 2013 |
31 August 2016 |
|
|
1 140 180 |
|
|
9 977 |
|
| Shares forfeited during the year |
|
|
|
|
(461 206) |
|
|
(2 449) |
|
| Third award |
|
|
|
|
(70 875) |
|
|
(333) |
|
| Fourth award |
|
|
|
|
(227 595) |
|
|
(1 024) |
|
| Fifth award |
|
|
|
|
(162 737) |
|
|
(1 092) |
|
| Shares vested during the year |
|
|
|
|
(1 817 292) |
|
|
(8 541) |
|
| Third award |
|
31 August 2013 |
|
|
(1 817 292) |
|
|
(8 541) |
|
| At 31 May 2014 |
|
|
|
|
4 241 011 |
|
|
26 779 |
|
| Fourth award |
|
|
|
|
1 811 995 |
|
|
8 154 |
|
| Fifth award |
|
|
|
|
1 288 836 |
|
|
8 648 |
|
| Sixth award |
|
|
|
|
1 140 180 |
|
|
9 977 |
|
|
|
|
|
|
|
|
|
|
|
Refer to 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 1 010 060 (2013: 1 096 759).
The share-based payment expense in relation to these executive directors is R5.6 million (2013: R6.3 million). Included in this is R659,000 (2013: R nil) paid by subsidiaries.
Refer to of the Group annual financial statements for details per director. |