Governance, risk and compliance, and remuneration reports
LEGACY SCHEME SARs ISSUES
Salient features of the Initial Allocation
Clover's MPCRE, as approved by shareholders on 31 May 2010, changed the nature of Clover's preference shares from profit-sharing instruments to pure debt instruments carrying rights to a guaranteed dividend only. This impacted on the value of the preference shares by eliminating any value upside. Consequently, an award of preference shares to Clover's employees in terms of its preference share incentive scheme no longer incentivised employees or aligned their interests with those of ordinary shareholders. As a result, shareholders approved the adoption of the Clover Share Appreciation Rights Plan (2010) (SAR Scheme) on 31 May 2010. The SAR Scheme was subsequently amended on 4 November 2010 and 10 November 2011.
All SARs allocated as part of the MPCRE have now vested and the major portion thereof have been exercised. For more detail refer to note 32.2 in the financial statements section.
Loans to executives
As part of the MPCRE Clover's shareholders approved the allotment and issue of 9 350 000 (on 31 May 2010) and 250 000 (on 4 November 2010 with regard to Dr JHF Botes) ordinary shares at a subscription price of R9,34 per share, for subscription by Clover's executives. A portion of the subscription price was lent to the executives. However, the aforementioned allotment and issue sets out the position prior to the subdivision of shares approved on 4 November 2010. Full details relating to the MPCRE are available on
www.clover.co.za.
The salient features of the loan and cession agreements entered into between Clover and its executives are set out below:
- as security for the indebtedness, the executives ceded to Clover the rights (defined as being all rights, title and interest in and to the proceeds) in respect of the ordinary shares (issued to them as referred to above) and the preference shares acquired through the Clover preference shares scheme in respect of the proceeds thereof (defined as being dividends, special distributions, redemption proceeds and any proceeds as a result of a disposal or sale of either the ordinary and/or preference shares referred to above, or any part thereof)
- interest shall accrue on the outstanding balance of the loan amount at an interest rate equal to 90% of the prevailing prime interest rate charged by Absa Bank Limited
- if an executive leaves the employ of Clover for any reason whatsoever, he/she shall be obliged to repay the loan amount and interest or the balance thereof, within two months after the employment terminated
- if an executive dies, the loan amount and interest or the balance thereof, shall be repaid to Clover within six months after the death.
It should be noted that the aforementioned loan agreements have been amended to provide for final loan repayment dates based on the normal retirement date for each executive.
| 30 June 2011 |
30 June 2012 |
30 June 2013 |
30 June 2014 |
30 June 2015 |
30 June 2016 |
|
|---|---|---|---|---|---|---|
| Other Executives | ||||||
| JHF Botes | 2 411 574 | 2 452 661 | 2 536 148 | 2 572 487 | 2 625 130 | 2 612 441 |
| Total | 2 411 574 | 2 452 661 | 2 536 148 | 2 572 487 | 2 625 130 | 2 612 441 |
The value of the ordinary shares forming the basis of the loan and cession agreements of Dr JHF Botes referred to previously, are approximately R20 million.
Vesting of 5th allocation
Individual Performance
After due consideration of the recommendations from the Chief Executive, the Remuneration Committee confirmed the achievement of 95% of the individual performance targets for each participant. Subsequently, full vesting of the individual performance portion of the 5th allocation of SARs has been achieved.
Financial Performance
Following confirmation by Ernst & Young Incorporated on the achievement of the financial performance conditions in respect of the 5th allocation of SARs, the Remuneration Committee is satisfied that the financial performance conditions were achieved and subsequently vests in full.
Dr Steve Booysen
Chairman: Remuneration Committee
12 September 2016
