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BLUE LABEL INTEGRATED ANNUAL REPORT 2016
56
Remuneration report
continued
The vesting criteria for the forfeitable
shares allocated in September 2016 to
Senior Management are as follows:
•
40% for retention (three years from
date of award); and
•
60% financial (30% for growth in
core headline earnings per share
and 30% based on shareholder
returns).
•
The 30% for growth in core
headline earnings per share is based
on the following achievements:
– If growth is 5% above CPI
compounded annually over three
years, then 20% of the 30% will
vest.
– If growth is 10% above CPI
compounded annually over three
years, then an additional 50%
(i.e. a total of 70%) of the 30%
would vest. If growth is between
5% and 10% above CPI over the
three years then the additional
50% will be reduced on a
pro-rata basis.
– If growth is 25% above CPI
compounded annually over three
years, then a further 30% (i.e. a
total of 100%) of the 30% will
vest. If growth is between 10%
and 25% above CPI over the
three years then the additional
30% will be reduced on a
pro-rata basis.
•
The 30% for shareholder return is
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 plus dividends over
the three-year period against the
weighted average share price for
the month during which the vesting
takes place.
The measurement period is from
1 June 2016 to 31 May 2019.
Outperformance bonus
This bonus, awarded in shares, is
earmarked for members of the
Executive Committee and will be
based on the growth in the share
price as follows:
•
Should the share price increase by
20% or more, the bonus will
equate to 50% of the employee’s
annual cost-to-company
remuneration.
•
Should the share price increase
from between 15% and 20%, the
employee will be entitled to a
pro-rata share of this bonus.
•
No outperformance bonus will be
awarded if the growth in the share
price is less than 15%.
The quantum of shares to be awarded
will be calculated on an annual basis
at the end of each financial year and
at the ruling share price at that date.
50% of the award will vest one year
later and a further 50% one year
thereafter, on the proviso that the
recipients remain in the employ of the
Company throughout the relative
vesting periods.
The Remuneration Committee has the
right to exercise its discretion from
time to time in the awarding of all of
the above incentive bonuses as well
as the awarding and vesting of shares
pertaining to the forfeitable share
scheme. The exercising of this right
only occurs in exceptional
circumstances in which the committee
believes that a change in policy is
merited.
Executive Directors’
service contracts
The three-year service contracts of the
Executive Directors expire as follows:
•
Messrs BM Levy and MS Levy, Joint
CEOs – 14 November 2017.
•
Mr DA Suntup, FD – 14 November
2017.
Each contract includes a restraint of
trade undertaking applicable for a
period of 12 months from the date
from which the Executive leaves
the employment from the Company
on his own accord. The restraint of
trade is not enforceable in the event
that the employment contract is
not renewed by the Company, or if
the Executive’s employment is
illegitimately terminated by the
Company.
Non-executive remuneration
Non-Executive Directors receive fees
for their services on the Board and
Board Committees, dependent on
their attendance at meetings.
Non-Executive Directors do not receive
short-term incentives, nor do they
participate in the forfeitable share
plan or outperformance bonus of the
Company. The fees payable to the
Chairman and Non-Executive
Directors are recommended by the
RNC to the Board which, in turn,
proposes the fees for approval by the
shareholders at the AGM.
Non-Executive Directors may be
contracted to render services to the
Group in addition to the aforegoing
services from time to time. There were
no services contracted with Non-
Executive Directors during the year, as
is reflected on pages 136 and 137 of
the integrated annual report.
The Board resolved at its meeting held
on 28 June 2016 that Non-Executive
Directors’ remuneration be increased
for the 2017 financial year by 6.5%,
subject to the approval of
shareholders.