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BLUE LABEL
INTEGRATED ANNUAL REPORT 2017
Notes
to the Group annual financial statements
continued
For the year ended 31 May 2017
5.
Employees
5.1 Equity compensation benefit
During the year 1 376 257 (2016: 2 591 066) 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 36 cents (2016: 31 cents) per ordinary share was declared on 23 August 2016
(2016: 18 August 2015).
The performance condition of the forfeitable shares for the sixth, seventh and eighth award vesting on 31 August
2016, 31 August 2017 and 31 August 2018 respectively are as follows:
t
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.
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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:
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The 50% for growth in core headline earnings in respect of the seventh and eighth awards has been amended
to include growth in core headline earnings at subsidiary level with regards to qualifying employees.
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.
The performance condition for Executive Directors for the ninth award grant vesting on 31 August 2019 is as follows:
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33.33% for retention (three years from date of award); and
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66.67% financial (33.34% for growth in core headline earnings per share and 33.33% based on shareholder
returns);
The 33.34% for growth in core headline earnings per share is based on the following achievements:
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If growth is 5% above CPI compounded annually over three years, then 20% of the 33.33% will vest.
t
If growth is 10% above CPI compounded annually over three years, then an additional 50% (i.e. a total of 70%)
of the 33.33% 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.
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If growth is 25% above CPI compounded annually over three years, then a further 30% (i.e. a total of 100%) of the
33.33% 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 33.33% 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 performance condition for senior managers for the ninth award grant vesting on 31 August 2019 is as follows:
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The 30% for growth in core headline earnings per share is based on the following achievements:
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If growth is 5% above CPI compounded annually over three years, then 20% of the 30% will vest.
t
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.
t
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 performance criteria for senior managers will be measured at subsidiary level.