The salient features of the proposed Plan are set out below. The Plan will be available for inspection at the office of AfroCentric,
whose address is set out in the corporate information section of the integrated report, during normal business hours from the date
of this notice of annual general meeting until the conclusion of the annual general meeting convened in terms hereof, at the
registered office of the Company and at the offices of Sasfin Capital at 29 Scott Street, Waverley, Johannesburg, 2090.
1. |
OBJECTIVE AND PURPOSE OF THE PLAN
The purpose of the Plan is to retain, motivate and reward eligible employees who are able to influence the performance and
growth strategies of the Company, on a basis which aligns their interests with those of the Company’s shareholders.
The objective is to share ownership of the Company’s wealth with employees that contribute to the growth and wealth
generated by the Company, and hence to place a value instrument in the employees’ hands.
The Plan will provide selected employees within the Group the opportunity of receiving shares in the Company through a
Share Award, subject to the Board and Remuneration Committee’s approval. |
2. |
SHARES AVAILABLE FOR THE PLAN
| 2.1 |
The maximum number of shares that can be issued under the Plan is 27 718 866 (twenty-seven million, seven hundred
and eighteen thousand and eight hundred and sixty-six) shares constituting a total of 5% (five percent) of the Company’s
issued ordinary shares as of the date of approval of the Plan by the Board and shareholders of the Company (“maximum
dilution limit”). |
| 2.2 |
The maximum number of shares that may be allocated in relation to the Company’s issued share capital, a maximum
annual allocation of 5 543 773 (five million, five hundred and forty-three thousand and seven hundred and seventy-three)
shares in the form of Share Awards under the Plan ("maximum annual allocation"), subject to the maximum
dilution limit. |
| 2.3 |
The maximum number of shares that may be allocated to any one participant is 500 000 (five hundred thousand)
shares in the form of Share Awards under the Plan subject to the maximum dilution limit and maximum annual
allocation. |
| 2.4 |
Subject to prior approval from the JSE, if required, the prior authority of the shareholders of the Company in general
meeting shall be required if the aggregate number of shares which may be allocated to participants under the Plan is
to exceed 27 718 866 (twenty-seven million, seven hundred and eighteen thousand, eight hundred and sixty-six)
shares. |
| 2.5 |
Subject to prior approval from the JSE, if required, the prior authority of the shareholders of the Company in general
meeting shall be required if the aggregate number of shares that may be allocated to any one participant in terms of
the Plan is to exceed 500 000 (five hundred thousand) shares. |
|
3. |
PLAN DESCRIPTION
3.1 |
ELIGIBILITY AND PARTICIPATION
| 3.1.1 |
Eligibility for participation in the Plan will be considered on an annual basis. |
| 3.1.2 |
Participants will be identified from employees employed in the following levels of employment within the Group:
| 3.1.2.1 |
Senior executive levels – employees at B1M2 and B1M1 (as nominated and selected by the Board
and Remuneration Committee) that participate at an Executive Committee level as the highest
governing body where decisions are made in the Company |
| 3.1.2.2 |
Governance Committee levels and managers (as nominated and selected by the Executive
Committee) – employees that have the responsibility and accountability to manage large operating
units or divisions in the Company and that would have a significant strategic impact or operational
impact on the Company’s growth strategies and results on an annual basis as well as future
outcomes |
| 3.1.2.3 |
Any other employment level in the Company deemed of strategic importance by the Board and
Remuneration Committee |
|
| 3.1.3 |
Shares are only to be awarded to employees that are working towards the Group’s overall goals and allocation
and participation in the scheme will only be permitted to those employees who have no shareholding in any of
the Company’s subsidiaries. |
| 3.1.4 |
The Remuneration Committee may, in its discretion, call upon any company as part of the Group to make
recommendations as to which of its respective employees it wishes to incentivise, retain the services of or
attract the services of, by making a Share Award to such employee. Non-executive directors are not eligible
for participation. |
| 3.1.5 |
To identify eligible participants from the employment category levels mentioned above, the Board and
Remuneration Committee will consider a range of criteria aligned to achieve a combination of the following
outcomes to attract, motivate, engage and retain a group of participants that will fall within the ambit of the
following sub-categories (which is solely subject to the Board and Remuneration Committee’s discretion):
| 3.1.5.1 |
talented employees; |
| 3.1.5.2 |
performing employees; |
| 3.1.5.3 |
professionals with critical, core and scarce skills; |
| 3.1.5.4 |
professionals identified as succession candidates for leadership roles; and |
| 3.1.5.5 |
designated groups in the context of employment equity standards. |
|
|
3.2 |
AWARDS
| 3.2.1 |
Shares will be awarded in the form of Share Awards (which may include bonus shares solely within the Board and Remuneration Committee’s discretion). |
| 3.2.2 |
Share Awards are subject to continued employment over the retention period. |
|
3.3 |
SHARE AWARDS
| 3.3.1 |
The number of Share Awards to be allocated to an eligible employee will primarily be based on the identified
employee’s annual salary, grade, performance, retention and attraction requirements and market benchmarks. |
| 3.3.2 |
The number of Share Awards will be recommended by the Remuneration Committee at the time that Share
Awards are granted per an award letter. The Remuneration Committee will take into account the particular
circumstances at that time. Annual Share Awards will be benchmarked and set to a market-related level of
remuneration, while considering the overall affordability thereof to the Company. |
| 3.3.3 |
Once selected and approved by the Board, eligible employees will be notified in writing (per award letter) of
their selection to the Plan. Continued participation is, however, not guaranteed. |
| 3.3.4 |
An award letter will be remitted by the Board to the identified eligible employees. |
| 3.3.5 |
The Share Awards for different eligible categories of employees will be aligned to the respective reward
strategy per category of employment and as determined by the Board and recommended by Remuneration
Committee from time to time. However, for purpose of nominating and selecting eligible employees and
determining his/her performance and leadership skills, it should be noted that the approaches, criteria,
assessments, performance data and key performance indicators considered will be within the Remuneration
Committee’s and Board’s discretion and are therefore not elaborated on, as different strategies and approaches
would be followed for the different categories of employees. |
| 3.3.6 |
The Company recognises the importance of potential as a core essential to identify talent of individual
employees, and should be seen in the context of the individual employee’s ability to:
| 3.3.6.1 |
operate at a higher or complex level; |
| 3.3.6.2 |
have the right attitude; and |
| 3.3.6.3 |
aspire to achieve at a higher level. |
|
| 3.3.7 |
Eligible employees will be evaluated and categorised into different levels of potential:
| 3.3.7.1 |
high potentials; |
| 3.3.7.2 |
medium potential; and |
| 3.3.7.3 |
low potential. |
|
| 3.3.8 |
Following the application of the various approaches, criteria, assessments, performance data and key
performance indicators of employees and other information, subject and as per the Board’s and
Remuneration Committee’s discretion, the final number of eligible employees will be identified by the Board
and Remuneration Committee. |
| 3.3.9 |
The percentage and ratio of employees identified from the various employment levels and elected to participate
in the Plan will determine the number of Share Awards to be earmarked for the Plan on an annual basis, and
the quantum of Share Awards to be awarded to a specific participant. |
| 3.3.10 |
The Board and Remuneration Committee may provide recommendations on the maximum number of
participants to be elected from different employment levels in the Group. |
|
3.4 |
PROCESS OF ELECTING PARTICIPANTS
| 3.4.1 |
The process for identifying and electing eligible employees on an annual basis to participate in the Plan will be as follows:
| 3.4.1.1 |
Eligible employees are to be nominated by the Board, Remuneration Committee and the Chief
Executive Officer of the Company as and when decided by the Board (and which employees within
the Group may be elected upon recommendation from the boards of other entities in the Group). |
| 3.4.1.2 |
The Remuneration Committee and Board will shortlist the nominated employees and recommend a
number of the identified employees as participants to the Plan, subject to and following the
application of the election criteria and the approaches, criteria, assessments, performance data and
targets of employees and other information within the Board’s and Remuneration Committee’s
discretion and by way of majority vote. |
| 3.4.1.3 |
The Remuneration Committee will issue award letters (i.e. the award date). |
|
| 3.4.2 |
Share Awards will always be subject to the review of Remuneration Committee and the final approval by
the Board. |
| 3.4.3 |
On an annual basis, the total Share Awards will not exceed the maximum annual allocation. Should the total
annual Share Awards exceed the maximum annual allocation, a proportional reduction will be applied (subject
to Board’s approval) to ensure that the maximum annual allocation is not exceeded. |
| 3.4.4 |
Election and participation by a participant, following his/her acceptance of an award letter in 1 (one) year will
not necessarily imply or guarantee participation in Share Awards in any of the subsequent years of the Plan’s
duration. Also, for avoidance of doubt, the granting of a certain quantum of Share Awards or at a specific level
of employment in a specific 1 (one) year, will not necessarily imply any Share Awards at the same level of
employment or quantum of Share Awards in succeeding years for the duration of the Plan. |
|
3.5 |
RIGHTS OF PARTICIPANTS
In terms of the Plan, the conditional shares (awarded as Share Awards) will only vest in the participant’s name on the
vesting date. Hence, the participant cannot dispose, pledge, cede and/or assign or in any way encumber its rights to
take ownership of the Share Awards prior to the vesting date and will be subject to restrictions until the vesting date. |
3.6 |
AWARD LETTERS
| 3.6.1 |
Following an award date, the Remuneration Committee shall, as soon reasonably practicable, inform elected eligible employees of their election to participate in the Plan via written award letters. |
| 3.6.2 |
The award letter shall be in the form as prescribed by Remuneration Committee, from time to time, and shall at least specify:
| 3.6.2.1 |
the maximum number of Share Awards conditionally awarded to the eligible employee or the formula
by which such maximum number of Share Awards was determined; |
| 3.6.2.2 |
a description of the type of shares and rights inherent to the Share Awards; |
| 3.6.2.3 |
the award date; |
| 3.6.2.4 |
the vesting date; |
| 3.6.2.5 |
a description and explanation of employment conditions to be fulfilled by the eligible employee prior to the vesting date; |
| 3.6.2.6 |
the provision 6 [Reacquisition] and 4.1.6 and 4.1.7 [Tax Liabilities]; |
| 3.6.2.7 |
a stipulation that the Share Award is subject to the provisions of this Plan; |
| 3.6.2.8 |
an indication on where a copy of the Plan can be obtained for perusal by the eligible employee; and |
| 3.6.2.9 |
information relating to the Company, including its latest annual financial statements, the general nature of its business and its profit history over the last three years. |
|
| 3.6.3 |
The award letter should make provision for signed acceptance by the eligible employee. |
| 3.6.4 |
Participants must accept Share Awards in writing and confirm acceptance of the award letter and terms and conditions pertaining to participation in the Plan within 7 (seven) business days following receipt of the award letter. |
| 3.6.5 |
An Award Letter which is not accepted by an eligible employee as aforesaid, shall automatically be deemed to revert back to the Plan for utilisation. |
|
|
4. |
TERMS AND PROVISIONS OF SHARE AWARDS
4.1 |
GENERAL
| 4.1.1 |
A Share Award (and participant shares) is personal to a participant and shall not be capable of being ceded, assigned, transferred or otherwise disposed of or encumbered by a participant in any way or manner. |
| 4.1.2 |
There shall be no consideration payable for a Share Award upon written acceptance by the participant. |
| 4.1.3 |
Upon acceptance, the participant will not become entitled to any rights or benefits (any dividends, or other distributions made, or right to vote in shareholders’ meetings) associated with the Share Awards prior to the expiry of the retention period and subject to fulfilment of predetermined employment conditions. |
| 4.1.4 |
Shares awarded in terms of the Plan and which are not subsequently issued to the identified participants, following the retention period, will remain available within the Plan to be awarded to other identified employees. |
|
4.2 |
VESTING AND EXERCISE
| 4.2.1 |
The vesting of Share Awards following the retention period will occur by means of staggered vesting. As example:
| 4.2.1.1 |
Staggered vesting will result in the vesting of the Share Awards following the retention period in 3 (three) equal tranches released at a predetermined pattern, spanning over a 3 (three) year period (alternatively the tranches and percentages may be altered subject to the Board’s approval) i.e:
| 4.2.1.1.1 |
One third of Share Awards after the expiry of retention period (i.e. in year 3 (three) after award date); and |
| 4.2.1.1.2 |
One third of Share Awards after 2 (two) years from the expiry date of the retention period (i.e. in year 4 (four) after award date); and |
| 4.2.1.1.3 |
One third of Share Awards after 3 (three) years from the expiry date of the retention period (i.e. in year 5 (five) after award date). |
|
| 4.2.1.2 |
Refer attached hereto as Appendix a simulated example to test the impact and advantages and disadvantages of staggered vesting at the individual employee levels, pending various scenarios. |
| 4.2.1.3 |
The vesting of Share Awards will occur at the vesting date or such a later period as determined by the Remuneration Committee and the Board at award date. |
| 4.2.1.4 |
For the sake of clarity and the avoidance of any doubt, it is recorded that until the vesting date, the participant shall not have any ownership interest in; or receive any dividends and/or exercise any voting rights at shareholder’s meetings attached to any Share Awards. |
| 4.2.1.5 |
Should the Company decide on a sub-division or consolidation of its securities, the Board and Remuneration Committee will make an adjustment to the number of shares (subject to the Listings Requirements, and JSE and shareholders’ approval, where necessary) utilised for purposes of the Plan. Such adjustment must entitle a participant to the same proportion of the equity capital as that to which he/she was previously entitled. |
|
| 4.2.2 |
Valuation methodologies and value of Share Award guidelines:
| 4.2.2.1 |
It is solely within the Board’s and Remuneration Committee’s discretion to decide on the number of
Grants allocated per annum, per participant, and the basis for the value of a Share. The following
guidelines may be followed, but is not obligatory for the Board and Remuneration Committee to take
into consideration any other criteria as the Board and Remuneration Committee deems fit, may
by applied:
| 4.2.2.1.1 |
A 30 (thirty) day VWAP as per the Johannesburg Stock Exchange index prior to the
award date may be used to determine the number of Share Awards per annum. |
| 4.2.2.1.2 |
The value of Share Awards may be calculated using the cost to Company (CTC) per
category of employee level, multiplied by the individual eligible employee’s CTC. Thereafter
the number of Share Awards to be awarded to an individual eligible employee may
be calculated by dividing the value of Share Awards by the 30 (thirty) day VWAP (as at
award date). |
|
|
|
|
5. |
GENERAL
| 5.1 |
The rights and obligations of any participant under the terms of his/her office or employment with the Company shall not be affected by his/her participation in the Plan or any right which he/she may have to participate in it. |
| 5.2 |
The Plan shall not entitle a participant to any right to continued employment or any additional right to compensation consequential to the termination of his/her employment. |
| 5.3 |
If the Company is placed in final liquidation, all Share Awards which have not been allocated, shall immediately lapse. |
| 5.4 |
Notwithstanding anything to the contrary contained herein but subject to 5.4, if the Company makes a special distribution and/or if the Company restructures its capital in that it:
| 5.4.1 |
undertakes a rights offer; or |
| 5.4.2 |
is placed in liquidation for purposes of reorganisation; or |
| 5.4.3 |
is party to a scheme of arrangement affecting the structuring of its share capital; |
| 5.4.4 |
undertakes a conversion, redemption, subdivision or consolidation of its ordinary share capital; or |
| 5.4.5 |
undertakes a bonus or capitalisation issue; and |
such adjustments shall be made to the rights of participants as may be determined to be fair and reasonable by the
Board, provided that any adjustments pursuant to this paragraph 5.4 shall be confirmed by the auditors to the JSE, in
writing, and must provide a participant the entitlement to the same proportion of the equity capital as he/she was
previously entitled. The written confirmation to the JSE must be provided once such adjustment is finalised. |
| 5.5 |
Should any participant be aggrieved, he/she is entitled to exploit the dispute resolution procedures set out in
clause 12.2 of the Plan. |
| 5.6 |
No adjustments shall be required in terms of this paragraph 5.4 if the provisions of paragraph 5.7 are applicable or in
the event of an issue by the Company of any securities or securities convertible into shares as consideration for an
acquisition. |
| 5.7 |
For the purposes of paragraph 5.4, the Company shall be deemed to make a special distribution if it distributes shares
or any other asset (including cash) to its shareholders:
| 5.7.1 |
in the course of, and as part of any unbundling, reorganisation, rationalisation, compromise, arrangement or reconstruction (including the amalgamation of two or more companies or entities); |
| 5.7.2 |
in the course of, or as part of, a reduction of capital (including a share repurchase); |
| 5.7.3 |
as a special dividend or other payment in terms of section 90 of the Act; and/or |
| 5.7.4 |
in the course or in anticipation of the deregistration or liquidation of the Company for any of the above purposes; |
provided that, this paragraph 5.7 shall not apply to normal annual interim and final cash or scrip dividends declared by
the Company. |
| 5.8 |
No adjustments shall be required in terms of paragraph 5.4 in the event of the issue of equity securities as consideration
for an acquisition in terms of paragraph 5.7, the issue of securities for cash and the issue of equity securities for a
vendor consideration placing. |
| 5.9 |
Any adjustment made in accordance with paragraph 5.4 above must be reported in the Company’s annual financial statements in the year during which the adjustment is made. |
| 5.10 |
If the Company undergoes a change of control after awarding a Share Award, but prior to the exercise thereof, then
the rights of participants under the Plan will, to the extent necessary, be accommodated on a basis which shall be
determined by the Board to be fair and reasonable. |
|
6. |
AMENDMENT OF THE PLAN
These rules of the Plan shall be approved in accordance with paragraphs 14.1, 14.6 and 14.7 of Schedule 14 of the JSE
Listings Requirements. Subject to approval by shareholders in general meeting to the extent (if any) required in terms of any
statute, regulation, rules or JSE Listings Requirements from time to time, and/or compliance with any applicable statute,
regulation, rules or the JSE Listings Requirements from time to time, these rules may be amended in writing by the Board
from time to time. |
