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2018-11-13 05:20:00 PM
|AIP: ADCOCK INGRAM HOLDINGS LIMITED - Additional disclosure - Remuneration and Implementation Reports and Special Resolution 3 (proposed PBLTIS)|
AIP: ADCOCK INGRAM HOLDINGS LIMITED - Additional disclosure - Remuneration and Implementation Reports and Special Resolution 3 (proposed PBLTIS) Additional disclosure - Remuneration and Implementation Reports and Special Resolution 3 (proposed PBLTIS) Adcock Ingram Holdings Limited Incorporated in the Republic of South Africa (Registration number 2007/016236/06) Share code: AIP ISIN: ZAE000123436 ("Adcock Ingram" or "the Company" or "the Group") Additional disclosure in relation to Remuneration and Implementation Reports as well as Special Resolution 3 relating to the proposed Performance Based Long-Term Incentive Scheme (PBLTIS) In response to an engagement with a shareholder ahead of the CompanyÂ´s Annual General Meeting to be held at 1 New road, Midrand, Gauteng, on Thursday, 22 November 2018 at 09h00, additional information with regard to the CompanyÂ´s Remuneration and Implementation Reports as well as the proposed PBLTIS, specifically in relation to performance hurdles and vesting conditions of incentives for Executive Directors, is hereby disclosed. Remuneration and Implementation Reports 1. Short-Term Incentive (STI) The STI forms part of the CompanyÂ´s variable compensation and is used to attract, retain, inspire and reward key talent. The STI scheme focuses on sustaining or improving organisational performance and supports the overall objectives of instilling a performance culture within Adcock Ingram. STIs are paid out annually on the achievement of pre-determined financial and non-financial targets, set at the beginning of the financial year, for that specific year. i) Performance metrics for the 2018 financial year The STI for the Executive Directors for the 2018 financial year was subject to the following performance metrics which were approved by the Board at the beginning of the financial year: a) Achievement of Trading Profit target/stretch target (60% weighting). The target and stretch target reflected growth of 14% and 17% respectively over the Trading Profit achieved in the 2017 financial year; b) Achievement of an internally defined Return on Funds Employed (ROFE) target (30% weighting), subject to the Trading Profit target being achieved; and c) Additional targets (10% weighting) relating to the achievement of a predetermined headline earnings per share (HEPS) target/stretch target for the CEO and CFO and the achievement of transformation targets for the Executive Director: Human Capital and Transformation (ED). The approved STIs were as follows: Executive Target incentive Stretch incentive Director Â´000 Â´000 CEO R3 000 R3 500 CFO R2 000 R2 500 ED R1 352 R1 750 ii) STI payments for the 2018 financial year Following the achievement of the stretch targets set, the Executive Directors qualified for the following STIs: CEO CFO ED STI Pay-out (RÂ´000) 3 500 2 500 1 750 STI Pay-out (% of TGP (1) 68% 74% 57% (1) Total Guaranteed Pay as at 1 July 2018 iii) Performance metrics for the 2019 financial year The proposed STI for the Executive Directors for the 2019 financial year is subject to the following performance metrics which were approved by the Board at the beginning of the financial year: a) Achievement of Trading Profit target/stretch target (65% weighting); b) Achievement of an internally defined Return on Funds Employed (ROFE) target (15% weighting), subject to the Trading Profit target being achieved; and c) Additional non-financial targets, including Transformation and progress on certain other strategic imperatives (20% weighting). The approved STIs are as follows: Target incentive Stretch incentive Executive Director Â´000 Â´000 CEO R4 070 R5 970 CFO R2 210 R2 720 ED R1 370 R1 920 2. Proposed Performance Based Long-Term Incentive Scheme (PBLTIS) The Company currently utilises two LTI schemes to incentivise key employees through the allocation of share options (equity settled and cash settled). Neither scheme contains performance conditions. Some shareholders have previously expressed concerns with the fact that Adcock IngramÂ´s existing LTI schemes are not performance based. The CompanyÂ´s introduction of the proposed PBLTIS is intended to address those concerns. Under the PBLTIS, participants will be awarded a conditional right to receive a share subject to a performance period and applicable performance conditions, to ensure support of the GroupÂ´s strategy. Award levels will be set according to national market remuneration data, industry benchmarks and best practice. The objective of the proposed PBLTIS is to attract, retain, motivate and reward selected employees who are able to contribute to and influence the performance of the Group and its strategy in a manner which aligns their interest with those of the CompanyÂ´s shareholders. The rationale for the introduction of the proposed PBLTIS is to support the business strategy with regards to business growth, profitability, sustainability, and to meet shareholdersÂ´ expectations and it is aimed at achieving the following: - better aligning the CompanyÂ´s Remuneration Policy with shareholdersÂ´ expectations; - incentivising and retaining Executive Directors and key senior executives; and - increasing management equity participation, thereby better aligning managementÂ´s behaviour with shareholdersÂ´ interests. Executive Directors and key senior executives will be eligible to be granted awards. Awards will be granted after the Board has determined those who are eligible and the performance conditions. The following indicative performance metrics, targets, weighting and performance periods will be applicable to the awards to be granted during the 2020 financial year and are to be measured over a continuous three-year period commencing on 1 July 2019. Minimum threshold Target (30% vesting of (60% vesting of Stretch Performance metrics Weighting award) award) 100% (vesting of award) Three-year compound HEPS growth 50% Inflation growth 3% real growth 5% real growth Three-year average ROFE (2) 25% 30% 31% 32% Level 4, as Level 3, as certified at the end certified at the end Level 3, with a minimum of 91 of the three-year of the three-year points, as certified at the end of B-BBEE Level 25% period period the three-year period (2) Return on Funds Employed (ROFE) calculated as Trading profit adjusted for amortisation, for the financial year, as a percentage of average (opening and closing) Funds Employed. Funds Employed is calculated as assets (excluding goodwill, other intangibles, other financial assets, investment in joint ventures and associate, deferred tax asset, cash and cash equivalents, taxation receivable) less liabilities (excluding deferred tax liability, taxation payable, long-and-short term borrowings, bank overdraft, share-based expense accruals, tax accrual included in other payables). 75% of the awards, subject to the achievement of the abovementioned performance metrics, will vest after the three-year period while the remaining 25% will vest one year later. The awards will be equity settled. The proposed PBLTIS regulates the maximum number of shares that can be allocated to an individual during each financial year. The proposed PBLTIS rules can be accessed at: http://www.adcock.co.za/Content/pdf/Performance_Based_Long-Term_Incentive_Scheme.pdf Johannesburg 13 November 2018 Sponsor RAND MERCHANT BANK (A division of FirstRand Bank Limited) Date: 13/11/2018 05:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
|2018-11-13 17:20:00 Source: JSE News Service (SENS)|