Vodacom Integrated Report 2018

75 / 98

71
Our business Our performance Our governance Administration
Determination of annual STIP award
The formula for determining the CEO’s cash bonus is:
(Target
incentive)
(Business
performance)
GTCE X 100% X 0% – 200%
The formula for determining cash bonus for the CFO is:
(Target
incentive)
(Business
performance)
(Performance
multiplier)
GTCE X 60% X 0% – 200% X 0% – 150%
Long-term incentives (LTIP)
These incentive plans aim to retain key skills and motivate
executives over the long term, which is essential to sustainable
performance. The awards are made using a combination of
Vodacom and Vodafone awards. Each of Vodacom and Vodafone
awards may be made in performance vesting (performance
vesting conditions in addition to time-based vesting) and
retention shares (only time-based vesting).
The Vodacom awards are forfeitable shares (FSP) where the
maximum number of shares is in issue at the time of award.
Dividends are received on the maximum potential vested shares
from the time of award. Vesting conditions will determine how
many of the original awards are to be forfeited upon final vesting.
The Vodafone awards are in the form of conditional shares (CSP),
where shares are only settled at the time of vesting and dividends,
only accrue from that point onwards.
Vodacom performance FSP shares
Vodacom performance FSP shares vest in a range of 0% to 100%
of number of shares awarded, where 50% is the target/anticipated
vesting level.
Vodacom retention FSP shares
Vodacom operates in highly competitive markets where
competitors are local and international, as well as spanning
industries other than telecommunications. An element of the LTIP
award, for employees other than the CEO, are retention awards and
therefore only have time-based performance vesting conditions.
Vodafone retention and performance CSP awards
Details regarding performance conditions and vesting period for
the Vodafone awards can be found in the 2018 Vodafone
Remuneration report.
Further details of the 2018 Vodafone Remuneration report
go to
On-target and maximum LTIP
The on-target and maximum LTIP percentages are set out in the
table below:
Role
On-target
% of GP
Maximum
% of GP
CEO 90% 180%
CFO 70% 280%
The maximum % of GP represents the face value of awards on the
date of the award. For executives other than the CEO, the
maximum includes the effect of a maximum personal multiplier
of 2.0 times at allocation and the business achievement at a
potential maximum of 2.0 times at vesting.
Split of awards
Annual LTIP awards are split between Vodacom FSP (forfeitable
shares) and Vodafone CSP (conditional shares) awards, as well as
between retention and performance awards as follows:
Scheme CEO CFO
Vodacom FSP retention – –
Vodacom FSP performance 100% –
Vodafone CSP retention – 33%
Vodafone CSP performance – 67%
The CEO does not receive Vodacom FSP retention awards and
Vodafone CSP awards. This is due to the co-investment
arrangement, which is described later.
The CFO is seconded from Vodafone and thus receives only
Vodafone CSP awards. Although the CFO receives no Vodacom FSP
awards, 33% of the vesting of the Vodafone CSP performance
awards is linked to the Vodacom performance conditions.
Performance conditions for LTIP
Metric
Weighting
Award 2018
Vesting 2021
Weighting
Award 2017
Vesting 2020
Operating free cash flow 70% 70%
TSR relative to peer group 30% 30%
The targets for operating free cash flow is determined according
to the achievement of the three-year budget plan. TSR
achievement is calculated based on the position within the
selected TSR peer group.
The vesting of Vodacom performance FSP shares is based on the
following scale:
Scheme
Operating
free cash flow
TSR relative to
peer group
Min 0% <-15% of OFCF
below 50th percentile
of the index
Threshold 20%
Between -15%
and target
at 50th percentile
of the index
Target 50% three-year plan
between 50th and 75th
percentile of the index
Maximum 100%
three-year plan
+ 15%
75th percentile
of the index
Personal multiplier
The personal multiplier ranges from 0% – 200%. The personal
performance multipliers are based on the talent rating of the
executive following the internal talent review process.
The CEO does not have a personal performance multiplier.