| |
During the year, 17 300 314 (2023: 7 985 185) conditional shares were granted to Executive Directors and qualifying
employees (participant). The participant will forfeit the conditional 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 conditional 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. No dividends were declared during the current or prior year. |
| |
The performance conditions for the thirteenth award grant, that vested on 31 August 2023 were as follows: |
| |
| |
|
Group long-term incentive (LTI) metrics* |
| |
|
Threshold |
Target |
Stretch |
Core HEPS (30%) compounded (cumulatively over three years)
Total shareholder return (TSR) (30%)
(performance against JSE Capped All Share Index) |
Group |
CPI + 5% |
CPI + 10% |
CPI + 15% |
| Vesting % |
21.6% |
30.0% |
42.0% |
| Group |
Greater than or equal to JSE Capped
All Share Index |
JSE Capped All Share Index
Return + CPI +5%
(average not compounded over three years) |
JSE Capped All Share Index
Return + CPI +15%
(average not compounded over |
| |
Vesting % |
21.6% |
30.0% |
42.0% |
| Return on capital employed
(ROCE)** (20%)
(compared to weighted average cost of capital(WACC) over the three-yearperiod not compounded) |
Group |
ROCE greater than or equal to WACC over three years |
ROCE greater than or equal to WACC +2.5% over three years |
ROCE greater than or equal to WACC +5% over three years |
| Vesting % |
14.4% |
20.0% |
28.0% |
Environmental, social and
governance (ESG) (20%)
(specific ESG metrics) |
Group |
Specific ESGs selected |
Specific ESGs selected |
Specific ESGs selected |
| Vesting % |
14.4% |
20.0% |
28.0% |
|
| |
| * |
The LTI is calculated per objective. Values awarded will be a weighted average of scores attained versus target and pro-rated as the
case may be. |
| ** |
ROCE is calculated using the following formula:
ROCE = Net operating profit (EBIT)/Capital employed. Capital employed = total assets – current liabilities (excluding
interest-bearing borrowings).
The Remuneration Committee will review any prior year impairments to assess if adverse outcomes have occurred, and if so, make
the necessary adjustments to the capital employed number such that the average performance is a more accurate indication to
shareholders over the measurement period. |
|
| |
The performance conditions as at 31 May 2024 for the fourteenth award grant vesting on 31 August 2024 are
as follows: |
| |
| |
|
Group long-term incentive (LTI) metrics* |
| |
|
Threshold |
Target |
Stretch |
Core HEPS (30%)
compoundedcumulatively over three years)
Total shareholder return (TSR) (30%)
(performance against JSE Capped All Share Index) |
Group |
|
CPI + 2% |
CPI + 4% |
| Vesting % |
|
30.0% |
42.0% |
| Group |
|
JSE Capped All Share Index
Return + CPI +5%
(average not compounded over three years) |
JSE Capped All Share Index
Return + CPI +15%
(average not compounded over |
| |
Vesting % |
|
30.0% |
42.0% |
| Return on capital employed
(ROCE)** (20%)
(compared to weighted average cost of capital
(WACC) over the three-yearperiod not compounded) |
Group |
|
ROCE greater than or equal to WACC +1% over three years |
ROCE greater than or equal to WACC +2% over three years |
| Vesting % |
|
20.0% |
28.0% |
Environmental, social and
governance (ESG) (20%)
(specific ESG metrics)
|
Group
Vesting % |
|
Specific ESGs selected 20.0% |
Specific ESGs selected 28.0% |
| ESG and Individual performance
measures |
Group |
Specific ESGs
selected and KPIs |
|
|
| |
Vesting % |
72.0% |
|
|
|
| |
| * |
Remco may review metrics and targets post-FY2024 for new awards to ensure that they are relevant. The LTIP is calculated per
metric. Values awarded will be a weighted average of scores attained versus target. All metrics will be assessed and vest on a pro rata basis applying linear interpolation basis save for the ESG, strategic and individual metrics which will be assessed on a binary
basis. |
| ** |
ROCE is calculated using the following formula:
ROCE = Net operating profit (EBIT)/Capital employed. Capital employed = total assets – current liabilities (excluding interest-bearing
borrowings).
The Remuneration Committee will review any prior year impairments to assess if adverse outcomes have occurred, and if so, make
the necessary adjustments to the capital employed number such that the average performance is a more accurate indication to
shareholders over the measurement period. |
|
| |
The performance conditions as at 31 May 2024 for the fifteenth award grant vesting on 31 August 2025 are
as follows: |
| |
| |
|
Group long-term incentive (LTI) metrics* |
| |
|
Threshold |
Target |
Stretch |
Core HEPS (30%)
(compounded cumulatively over three years)
|
Group |
|
CPI + 2% |
CPI + 4% |
| Vesting % |
|
30.0% |
42.0% |
Total shareholder return (TSR) (30%)
(performance against long bond compounded over three years plus spread) |
Group |
|
Performance equal to three to five-year SARB nominal long bond rate +7.5%** |
125% of target |
| Vesting % |
|
30.0% |
45.0% |
| Return on capital employed
(ROCE)*** (20%)
(compared to WACC over the three-year period not compounded) |
Group |
|
ROCE greater than or equal to WACC +1% over three years |
ROCE greater than or equal to WACC +2% over three years |
| Vesting % |
|
20.0% |
30.0% |
Environmental, social and
governance (ESG) (20%)
(specific ESG metrics****) |
Group
|
|
Specific |
No stretch |
| Vesting % |
|
20.0% |
20.0% |
| ESG and Individual performance measures |
Group |
Specific ESGs
selected and KPIs |
|
|
| Vesting % |
72.0% |
|
|
|
| |
| * |
Remco may review metrics and targets post-FY2024 for new awards to ensure that they are relevant. The LTIP is calculated per
metric. Values awarded will be a weighted average of scores attained versus target. All metrics will be assessed and vest on a pro
rata basis applying linear interpolation basis, save for the ESG metric which will be assessed on a binary basis. |
| ** |
In setting the TSR target, consideration was given to utilise a risk-free rate that is aligned with a typical vesting and performance
period of the award, consequently a 3-5 SARB nominal long bond rate was applied as the anchor in setting TSR targets, with an
appropriate spread applied to this anchor in order to set realistic but stretching targets. In addition, TSR will be assessed based
on growth in market cap as well as dividends distributed to shareholders over the performance period. |
| *** |
ROCE is calculated using the following formula:
ROCE = Net operating profit (EBIT)/Capital employed. Capital employed = total assets – current liabilities (excluding interest-bearing
borrowings).
The Remuneration Committee will review any prior year impairments to assess if adverse outcomes have occurred, and if so,
make the necessary adjustments to the capital employed number such that the average performance is a more accurate
indication to shareholders over the measurement period. |
| **** |
Remco removed the stretch component of the ESG KPIs in the LTIP as these measures are assessed on a binary basis and only
provide for the achievement of target performance, with threshold performance being assessed on a pro rata basis relative to
target. |
|
| |
The performance conditions as at 31 May 2024 for the sixteenth award grant vesting on 31 August 2026 are
as follows: |
| |
| |
|
Group long-term incentive (LTI) metrics* |
| |
|
Threshold |
Target |
Stretch |
Core HEPS (30%)
(compounded cumulatively over three years) |
Group |
CPI |
CPI + 2% |
CPI + 4% |
| Vesting % |
21.6% |
30.0% |
45.0% |
| Return on capital employed ROCE)** (20%)
(compared to WACC over the three-year period not compounded) |
Group |
ROCE greater than or equal to WACC over three years |
ROCE greater than or equal to WACC +1% over three years |
ROCE greater than or equal to WACC +2% over three years |
| Vesting % |
21.6% |
30.0% |
45.0% |
| Strategic performance scorecard (20%) |
Group |
Linked to strategic milestones |
Linked to strategic milestones |
Linked to strategic milestones |
| Vesting % |
14.4% |
20.0% |
30.0% |
Environmental, social and
governance (ESG) (10%)
(specific ESG metrics***) |
Group |
Pro-rata of target |
Specific |
No stretch |
| Vesting % |
7.2% |
10.0% |
10.0% |
Personal performance (10%)
(specific individual metrics***) |
Group |
Pro-rata of target |
Specific |
No stretch |
| Vesting % |
7.2% |
10.0% |
10.0% |
|
| |
| * |
Remco may review metrics and targets post-FY2024 for new awards to ensure that they are relevant. The LTIP is calculated per
metric. Values awarded will be a weighted average of scores attained versus target. All metrics will be assessed and vest on
a pro rata basis applying linear interpolation basis save for the ESG, strategic and individual metrics which will be assessed on
a binary basis. |
| ** |
ROCE is calculated using the following formula:
ROCE = Net operating profit (EBIT)/Capital employed. Capital employed = total assets – current liabilities (excluding interest-bearing
borrowings).
The Remuneration Committee will review any prior year impairments to assess if adverse outcomes have occurred, and if so, make
the necessary adjustments to the capital employed number such that the average performance is a more accurate indication to
shareholders over the measurement period. |
| *** |
The stretch component of the ESG and Individual KPIs in the LTIP are assessed on a binary basis and only provide for the
achievement of target performance, with threshold performance being assessed on a pro rata basis relative to target. |
|
| |
Critical accounting estimates and assumptions |
| |
In determining the number of conditional shares that will vest due to performance conditions being met,
management assesses the attrition rates of staff based on the grades of staff that have been granted awards as well
as the historic staff turnover. |
| |
Movements in the number of conditional shares outstanding during the year are as follows: |
| |
| |
|
Grant date |
Vesting date |
Number
of shares |
Fair value
of grant
R’000 |
|
| At 1 June 2022 |
|
|
|
36 310 854 |
134 666 |
|
| 12th award |
|
|
|
14 766 777 |
37 656 |
|
| 13th award |
|
|
|
12 826 941 |
41 046 |
|
| 14th award |
|
|
|
8 717 136 |
55 964 |
|
|
|
|
|
|
|
|
| Granted during the year |
|
|
|
7 985 185 |
49 907 |
|
| 15th award |
|
01 September 2022 |
31 August 2025 |
7 985 185 |
49 907 |
|
|
|
|
|
|
|
|
| Awarded during the year – achievement
of stretch targets |
|
|
|
1 997 945 |
5 094 |
|
| 12th award |
|
|
|
1 997 945 |
5 094 |
|
|
|
|
|
|
|
|
| Shares forfeited during the year |
|
|
|
(2 282 379) |
(10 764) |
|
| 12th award |
|
|
|
— |
— |
|
| 13th award |
|
|
|
(1 207 545) |
(3 864) |
|
| 14th award |
|
|
|
(1 074 834) |
(6 900) |
|
| Shares vested during the year |
|
|
|
(16 764 722) |
(42 750) |
|
| 12th award |
|
|
31 August 2022 |
(16 764 722) |
(42 750) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At 31 May 2023 |
|
|
|
27 246 883 |
136 153 |
|
| 13th award |
|
|
|
11 619 396 |
37 182 |
|
| 14th award |
|
|
|
7 642 302 |
49 064 |
|
| 15th award |
|
|
|
7 985 185 |
49 907 |
|
|
|
|
|
|
|
|
| Granted during the year |
|
|
|
17 000 314 |
54 741 |
|
| 16th award |
|
01 November 2023 |
31 August 2026 |
17 000 314 |
54 741 |
|
| Awarded during the year – achievement
of stretch targets |
|
|
|
1 075 066 |
3 440 |
|
| 13th award |
|
|
|
1 075 066 |
3 440 |
|
| Shares forfeited during the year |
|
|
|
(835 508) |
(5 278) |
|
| 13th award |
|
|
|
— |
— |
|
| 14th award |
|
|
|
(328 333) |
(2 108) |
|
| 15th award |
|
|
|
(507 175) |
(3 170) |
|
| Shares vested during the year |
|
|
|
(12 694 462) |
(40 622) |
|
| 13th award |
|
|
31 August 2023 |
(12 694 462) |
(40 622) |
|
| At 31 May 2024 |
|
|
|
31 792 293 |
148 434 |
|
| 14th award |
|
|
|
7 313 969 |
46 956 |
|
| 15th award |
|
|
|
7 478 010 |
46 738 |
|
| 16th award |
|
|
|
17 000 314 |
54 741 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| |
Refer to note 5.2 for the expense recognised in the income statement relating to the equity compensation benefits. |
| |
The fair value of the shares is based on the open market closing price at grant date. |
| |
The total number of conditional shares issued to Executive Directors during the period is 4 596 356
(2023: 2 213 125). |
| |
The share-based payment expense in relation to these Executive Directors is R12.2 million (2023: R12.8 million). |
| |
Refer to note 5.3 for details of awards per Director. |
| |
|
