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26. Employee remuneration
26.1 Phantom share scheme
The Hyprop board recognises that a key factor in the success of the group is the retention and incentivisation of management
and staff. Accordingly, a scheme was formulated to reward employees who make a meaningful and sustainable contribution
to the financial performance of Hyprop by providing them with the opportunity to participate in its future growth. Senior
management and staff were offered this incentive.
The incentive is directly linked to the performance of Hyprop’s shares. Employees were granted “phantom” Hyprop shares at
a notional strike price (the initial price (IP)). Employees receive an award equivalent to the increase in the market value of the
Hyprop share over the initial price. This award is paid in four payments within 30 days after the date on which the relevant
payment is calculated.
The payment is calculated as follows:
Cash bonus = 1/4 AS x (P - IP) - relevant taxes
AS = allocated “phantom” shares
P = volume weighted average traded price of Hyprop shares for the 30 JSE trading days prior to the calculation date
IP = initial price
If the market price of the Hyprop share on the relevant calculation date is not greater than the initial price, no payment is made.
The award is only applicable if the employee is in the employ of Hyprop on the payment date. A total of 222 222 “phantom”
Hyprop shares were in issue at 30 June 2015 (2014: 473 979). The scheme will expire in 2016.
The liability for the “phantom” scheme is measured at fair value at each reporting date. Refer to note 21.
26.2 Equity-settled share-based employee remuneration
On 1 January 2014, the group implemented a long-term employee incentive scheme (the conditional unit plan (CUP)), which
consists of two components – performance shares and the retention shares. Both the performance and the retention
components of the scheme will be settled with Hyprop shares.
The terms and conditions of the long-term employee incentive scheme were approved at the Hyprop annual general meeting
on 5 December 2013.
26.2.1 Performance shares
In terms of the CUP, fully paid awards are made on an annual basis, comprising performance shares and retention shares.
The split between performance shares and retention shares is 70%:30% for all participants.
The performance conditions for the shares allocated as performance shares are as follows:
Q
Growth in distribution per share relative to the peer group (weighting 40%)
Q
Share price performance relative to the peer group (weighting 40%)
Q
Strategic component, which will be determined by the remuneration committee in line with the prevailing
circumstance and projects at the time of the award (weighting 20%).
Each of the performance conditions will be measured over a three-year performance period. Participants must be
employed until the end of the vesting period to be eligible for the award.
26.2.2 Retention shares
Retention shares vest after five years, provided the participant is still employed by the group.
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Hyprop Investments Limited
Integrated Report 2015