K. REMUNERATION
K1 DIRECTORS' REMUNERATION
K1.1

Remuneration

30 June 2019 Fees
R000
Basic
salary
R000
Pension
fund
contributions
R000
Performance
bonus
R000
Share  
incentive  
scheme(4)
R000  
Other
benefits
R000
Total
R000
 
Independent non-executive directors                
   Gavin Tipper (chairman) 807 807  
   Lindie Engelbrecht(3) 230 230  
   Zuleka Jasper 479 479  
   Mike Lewin 421 421  
   Nonyameko Mandindi 383 383  
   Thabo Mokgatlha 567 567  
   Stewart Shaw-Taylor

637 637397  
Non-executive directors                
   Kevin Ellerine 397 397  
   Louis Norval
397 397  
Executive directors                
   Morné Wilken (CEO) 2 087 162 492 2 741  
   Wilhelm Nauta (CIO) 2 432 280 2 186 77 4 975  
   Brett Till (CFO) 1 719 295 33 2 047  
   Pieter Prinsloo (former CEO)(1) 2 493 118 3 708 1 751 447 8 517  
   Laurence Cohen (former CFO)(2) 202 35 66 303  
Total 4 318 8 933 890 5 894 1 751 1 115 22 901  

(1) Resigned with effect from 31 January 2019
(2) Resigned with effect from 31 July 2018
(3) Resigned with effect from 30 November 2018
(4) Market value of shares on vesting date

30 June 2018 Fees
R000
Basic
salary
R000
Pension
fund
contributions
R000
Performance
bonus
R000
Share
incentive
scheme
R000
Other
benefits
R000
Total
R000
 
Independent non-executive directors                
   Gavin Tipper (chairman) 688 688  
   Lindie Engelbrecht 543 543  
   Mike Lewin 392 392  
   Nonyameko Mandindi 325 325  
   Thabo Mokgatlha 462 462  
   Stewart Shaw-Taylor 551 551  
Non-executive directors                
   Kevin Ellerine 343 343  
   Louis Norval 343 343  
Executive directors                
   Pieter Prinsloo (former CEO) 4 153 196 3 498 2 069 115 10 031  
   Laurence Cohen (former CFO) 2 362 410 1 759 1 115 83 5 729  
Total 3 647 6 515 606 5 257 3 184 198 19 407  
K1.2

Reconciliation of number of shares outstanding under the CUP for executive directors

  GROUP AND COMPANY  
30 June 2019 Outstanding at
the beginning
of the year
R000
Issued
R000
Forfeited 
R000 
Vested 
R000 
Outstanding at
the end of
the year
R000
Market value
of shares
outstanding at
30 June 2019
R000
 
Morné Wilken (CEO) 37 190 –  –  37 190 2 598  
Pieter Prinsloo (former CEO) 88 045 29 715 (109 123) (8 637)  
Brett Till (CFO) 18 927 –  –  18 927 1 322  
Wilhelm Nauta(1) 16 742 10 012 –  –  26 754 1 869  
Laurence Cohen (former CFO) 47 541 (47 541) –   
Total 152 328 95 844 (156 664) (8 637) 82 871 5 789  

(1) The unvested shares shown for Mr Nauta include all share allocations granted during his tenure, including prior to becoming an executive director on 5 July 2018

  GROUP AND COMPANY  
30 June 2018 Outstanding at
the beginning
of the year
R000
Issued
R000
Forfeited 
R000 
Vested 
R000 
Outstanding at
the end of
the year
R000
Market value
of shares
outstanding at
30 June 2019
R000
 
Pieter Prinsloo (former CEO) 105 627 24 416 (2 316) (39 682) 88 045 9 011  
Laurence Cohen (former CFO) 57 261 13 154 (1 248) (21 626) 47 541 4 865  
Total 162 888 37 570 (3 564) (61 308) 135 586 13 876  
K2 SHARE-BASED PAYMENTS
K2.1

Accounting policy

Long-term benefits – share-based payments

The company operates equity-settled share-based conditional share plans (CUP) for its employees.

The grant date fair value of equity-settled share-based payment arrangements granted to employees is recognised as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

All share-based remuneration is ultimately recognised as an expense in profit or loss, with a corresponding increase in equity. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of shares expected to vest.

The CUP consists of two components – performance shares and retention shares, both of which are settled by the issue of Hyprop shares. The allocation between performance and retention shares is 70%:30% for all participants. Awards under the CUP are made on an annual basis.

Performance shares

The performance conditions for the shares allocated as performance shares are as follows:

40% Growth in distribution per share relative to the peer group
40% Share price performance relative to the peer group
20% A strategic component, which is determined by the remuneration committee in line with the prevailing circumstances and projects at the time of the award

Each of the performance conditions is measured over a three-year performance period. Participants must be employed until the end of the vesting period to be eligible for the award.

Retention shares

Retention shares vest after five years, provided the participant is still employed by the group.

K2.2

Reconciliation of number of shares outstanding under the CUP

  GROUP AND COMPANY     GROUP AND COMPANY  
  Performance 
shares 
30 June 2019 
Retention 
shares 
30 June 2018 
    Performance 
shares 
30 June 2019 
Retention 
shares 
30 June 2018 
 
Outstanding at the beginning of the year 235 815  181 820      260 811  153 606   
New awards granted 135 583  58 116      84 840  35 114   
Vested and settled by the issue of Hyprop ordinary shares (49 336) (37 465)     (94 390) (1 312)  
Forfeited (111 515) (60 958)     (15 446) (5 588)  
Outstanding at the end of the year 210 547  141 513      235 815  181 820   
Weighted average remaining vesting period (years) 1,5  2,4      1,1  2,0   
K2.3

Balances and movements

  GROUP AND COMPANY  
  30 June 2019 
R000 
30 June 2018 
R000 
 
Share-based payment reserve      
Opening balance at 1 July 27 443  23 901   
Release of reserve on vesting of shares (8 513) (7 632)  
Share-based payment expense 10 365  11 174   
Forfeitures (9 009) –   
Closing balance at 30 June 20 286  27 443   
K2.4

Valuation methodology

The day-one fair value of the awards granted under the CUP is determined based on the 30-day VWAP of Hyprop shares ending on the grant date, as specified in the CUP rules. The fair value of each outstanding tranche of share awards are detailed below:

RETENTION SHARES TRANCHE 4 TRANCHE 5 TRANCHE 6 TRANCHE 7 TRANCHE 8  
Number of awards granted 80 979 5 982 84 840 96 302 39 281  
Share price at grant date (R) 129,89 117,31 116,76 102,34 81,50  
Grant date 1 Jul 16 1 Jan 17 1 Jul 17 1 Jul 18 1 Jan 19  
Vesting period ends 30 Jun 19 31 Dec 19 30 Jun 20 30 Jun 21 31 Dec 21  
Black Scholes valuation            
   Fair value of shares at grant date (R) 112,56 100,11 97,66 81,99 61,69  
   Expected life (years) 3 3 3 3 3  
   Volatility (%) 20,0 20,0 20,0 20,0 20,0  
   Risk-free rate after taxation of 28% (%) 6,3 6,4 6,4 6,4 6,4  
   Dividend yield (%) 4,8 5,3 6,0 7,4 9,3  
   % allocated to executive directors on grant date (%) 30,7 0,0 31,0 28,9 100,0  

Tranche 3 of the performance shares vested during the year at a fair value of R88,00 per share.

PERFORMANCE TRANCHE 2 TRANCHE 3 TRANCHE 4 TRANCHE 5 TRANCHE 6 TRANCHE 7 TRANCHE 8  
Number of awards granted 47 324 33 549 33 499 2 564 35 114 41 281 16 835  
Share price at grant date (R) 79,51 121,00 129,89 117,31 116,76 102,34 81,50  
Grant date (R) 1 Jul 14 1 Jul 15 1 Jul 16 1 Jan 17 1 Jul 17 1 Jul 18 1 Jan 19  
Vesting period ends 30 Jun 19 30 Jun 20 30 Jun 21 31 Dec 21 30 Jun 22 30 Jun 23 31 Dec 23  
Black Scholes valuation                
   Fair value of shares at grant date (R) 59,08 96,68 102,32 90,07 86,70 70,72 51,24  
   Expected life (years) 5 5 5 5 5 5 5  
   Volatility (%) 20,0 20,0 20,0 20,0 20,0 20,0 20,0  
   Risk-free rate after taxation of 28% (%) 5,9 6,0 6,3 6,4 6,4 6,4 6,4  
   Dividend yield (%) 5,9 4,5 4,8 5,3 6,0 7,4 9,3  
   % allocated to executive directors on grant date (%) 30,4 31,0 31,8 0,0 32,1 28,9 100,0  

Tranche 1 of the retention shares vested during the year at a fair value of R105,99 per share.

K3 RETIREMENT BENEFITS
K3.1

Accounting policy

Post-employment benefits – defined contribution plan

A defined contribution plan is a post-employment benefit plan under which the company pays contributions to a separate entity. The company has no legal or constructive obligation to pay further amounts if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Company contributions to defined contribution plans are recognised as an employee benefit expense when the related services have been rendered.

K3.2

Profile

All permanent employees must be members of the Unicover Pension Fund (an umbrella defined contribution fund) (the fund), except those who elect not to be members in terms of section 197 of the Labour Relations Act 66 of 1995 (LRA).

In addition to the post-retirement benefits, the fund provides comprehensive death, disability, funeral and universal education cover for all members.

K3.3

Retirement benefits – expense

  GROUP AND COMPANY  
  30 June 2019
R000
30 June 2018
R000
 
Defined contribution fund contributions 12 587 11 508