| Equity compensation benefit
Forfeitable shares
During the year, 3 496 103 (2012: 4 828 644) 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. |
| • |
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. |
| • |
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. |
| • |
50% of shares constituting the allocation will vest if the Group’s core HEPS are 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). |
| • |
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 of
shares |
|
Fair value
of grant
R’000 |
|
|
| At 31 May 2011 |
|
|
|
|
8 677 979 |
|
44 910 |
|
|
| Second award |
|
|
|
|
3 540 559 |
|
20 648 |
|
|
| Third award |
|
|
|
|
4 750 020 |
|
22 325 |
|
|
| Retention award |
|
|
|
|
387 400 |
|
1 937 |
|
|
| Granted during
the year |
|
|
|
|
4 828 644 |
|
21 729 |
|
|
| Fourth award |
1 October 2011 |
31 August 2014 |
|
|
4 828 644 |
|
21 729 |
|
|
| Shares forfeited during the year |
|
|
|
|
(1 067 904) |
|
(5 503) |
|
|
| Second award |
|
|
|
|
(456 755) |
|
(2 608) |
|
|
| Third award |
|
|
|
|
(535 386) |
|
(2 516) |
|
|
| Retention award |
|
|
|
|
(75 763) |
|
(379) |
|
|
| Shares vested during the year |
|
|
|
|
(311 637) |
|
(1 558) |
|
|
| Retention award |
|
30 April 2012 |
|
|
(311 637) |
|
(1 558) |
|
|
| At 31 May 2012 |
|
|
|
|
12 127 082 |
|
59 578 |
|
|
| Second award |
|
|
|
|
3 083 804 |
|
18 040 |
|
|
| Third award |
|
|
|
|
4 214 634 |
|
19 809 |
|
|
| Fourth award |
|
|
|
|
4 828 644 |
|
21 729 |
|
|
| Granted during the year |
|
|
|
|
3 496 103 |
|
23 459 |
|
|
| Fifth award |
3 September 2012 |
31 August 2015 |
|
|
3 496 103 |
|
23 459 |
|
|
| Shares forfeited during the year |
|
|
|
|
(1 285 962) |
|
(6 382) |
|
|
| Second award |
|
|
|
|
(383 291) |
|
(2 242) |
|
|
| Third award |
|
|
|
|
(389 810) |
|
(1 832) |
|
|
| Fourth award |
|
|
|
|
(512 861) |
|
(2 308) |
|
|
| Shares vested during the year |
|
|
|
|
(2 700 513) |
|
(15 798) |
|
|
| Second award |
|
1 September 2012 |
|
|
(2 700 513) |
|
(15 798) |
|
|
| At 31 May 2013 |
|
|
|
|
11 636 710 |
|
60 857 |
|
|
| Third award |
|
|
|
|
3 824 824 |
|
17 977 |
|
|
| Fourth award |
|
|
|
|
4 315 783 |
|
19 421 |
|
|
| Fifth award |
|
|
|
|
3 496 103 |
|
23 459 |
|
|
 |
|
|
|
|
|
|
|
|
|
Refer to note 20 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 executive directors is R6.3 million (2012: R7.3 million).
Refer to note 31 for details per director.
|