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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. |
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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:
 |
Growth in distribution per share relative to the peer group (weighting 40%) |
|
Share price performance relative to the peer group (weighting 40%) |
|
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. |
| 26.2.3 |
Reconciliation of shares allocated in terms of the CUP
| |
|
|
|
|
| Unvested at 1 July 2013 |
|
|
|
|
| Granted |
107 563 |
|
46 100 |
|
| Forfeited |
|
|
|
|
| Vested |
|
|
|
|
|
107 563 |
|
46 100 |
|
| Granted |
110 422 |
|
47 324 |
|
| Forfeited |
(3 368) |
|
(1 443) |
|
| Vested |
|
|
|
|
|
214 617 |
|
91 981 |
|
| |
|
|
|
|
| |
|
|
|
| Grant date |
1 January 2014 |
|
1 January 2014 |
|
| Vesting period ends |
31 December 2016 |
|
31 December 2018 |
|
| Fair value of shares at grant date |
R73,17 |
|
R73,17 |
|
| The inputs used in the measurement of the fair value at grant date were as follows: |
|
|
|
|
| Expected life |
3 years |
|
5 years |
|
| Volatility |
20,00% |
|
20,00% |
|
| Interest-free rate after taxation of 28% |
5,83% |
|
5,83% |
|
| Dividend yield |
5,81% |
|
5,81% |
|
| |
|
|
|
| Grant date |
1 July 2014 |
|
1 July 2014 |
|
| Vesting period ends |
30 June 2017 |
|
30 June 2019 |
|
| Fair value of shares at grant date |
78,51 |
|
78,51 |
|
| The inputs used in the measurement of the fair value at grant date were as follows: |
|
|
|
|
| Expected life |
3 years |
|
5 years |
|
| Volatility |
20,00% |
|
20,00% |
|
| Interest-free rate after taxation of 28% |
5,83% |
|
5,83% |
|
| Dividend yield |
6,92% |
|
6,92% |
|
The executive directors were allocated the following percentages of the total shares allocated:
| |
|
|
|
|
| |
|
|
|
| Performance shares |
19% |
|
10% |
|
| Retention shares |
19% |
|
10% |
|
|
|
|
|
|
| Performance shares |
20% |
|
11% |
|
| Retention shares |
20% |
|
11% |
|
The charge to the statement of comprehensive income for the year ended 30 June 2015 amounted to R6,7 million. As
the above are equity-settled shared-based payments, the accounting treatment recognises the share-based payments
in profit and loss on a straight-line basis over the vesting period, with a corresponding credit to equity. |
|