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Vodacom Group Limited
Integrated report for the year ended 31 March 2018
Matching arrangement
In addition to the annual award, the CEO is entitled to participate
in a matching arrangement if he meets an annual co-investment
requirement, which is subject to performance conditions. The
additional incentives offered and associated conditions are:
g
g
An additional award of Vodacom performance shares with an
on-target value of 50% of his GP, provided that he invests in
Vodacom shares to the value of 50% of his GP; and
g
g
An additional award of Vodafone performance shares with an
on-target value of 50% of his GP, if he invests in Vodafone
shares to the value of 50% of his GP.
The CEO may only take advantage of the additional Vodafone
share award if he has met the full Vodacom co-investment
requirement. His investment in both Vodacom and Vodafone
shares must be on an ever-increasing basis to qualify for the
additional awards.
Both the Vodacom and Vodafone matching awards can vest in a
range of 0% – 250% of target value.
Shareholder guidelines
The Board wishes to encourage individual shareholding in the
Company by executives, as a tangible demonstration of their
commitment to the Company and to align with shareholders’
interests. As a result, we implemented a shareholding guideline
policy for our executives, which require them to build up minimum
levels of personal shareholding in the Group. Executives, excluding
the CEO are required to hold 1.0 times of GP as a minimum
personal shareholding. The CFO participates in a Vodafone-specific
policy in this regard.
As an incentive to exceed the minimum requirements, additional
awards of FSP performance shares will be made to executives who
exceed the minimum requirements over a three-year vesting cycle
(six years). The participants will be granted a performance share for
every three additional shares held. This award will be capped so
that holdings of no more than double the minimum requirements
will be recognised. The period over which the executives are
permitted to build up this shareholding is based on the vesting of
three cycles of the annual awards under the FSP plan.
The YeboYethu Employee Participation Trust
(the trust)
In July 2008, YeboYethu acquired 3.44% of Vodacom South Africa
in our R7.5 billion BEE transaction. All permanent South African
employees were able to participate in the trust. Of the
1.875 billion units available to the trust, 75% was allocated to
employees on 1 September 2008. The remaining 25% was set
aside for future employees on a sliding scale over the next five
years from the date of inception. The allocation is weighted
70/30 in favour of black employees.
The Vodacom South Africa BEE ownership scheme matures in
October 2018, at which time, the units held by employees will
convert into YeboYethu ordinary shares.
Following the conversion of the units into YeboYethu shares, we
will facilitate a process for employees to trade their shares on the
Johannesburg Stock Exchange (JSE).
Section 2b
Our remuneration philosophy, policy and framework
for FY2019
Following the introduction of a new Vodafone remuneration
policy, the Vodacom RemCo decided to amend the Vodacom
remuneration policy to more closely align the remuneration
of the Vodacom CEO with other individuals on the Vodafone
Executive Committee.
Current policy for Vodacom CEO
As indicated in the previous section outlining the current
remuneration policy, the current structure of the Vodacom CEO
long-term incentive remuneration is as follows:
g
g
A Vodacom base award
– forfeitable Vodacom shares equal to
90% of GP at target level
.
g
g
A Vodacommatch award
– 1 for 1 match of up to
50% of GP
,
based on the number of Vodacom shares co-invested for
three years.
g
g
A Vodafone match award
– 1 for 1 match of up to
50% of GP
,
based on the number of Vodafone shares co-invested for
three years, provided the maximum level of co-investment in
Vodacom shares was made.
The value of shares awarded is therefore
190% of GP
at target
performance.
The long-term incentive remuneration for the Vodacom CEO is
100% performance based, therefore the following applies:
g
g
Vodacom base award
– vesting of up to
2.0 times
the target
award based on Vodacom performance vesting targets being
achieved, up to a maximum of
180% of GP
.
g
g
Vodacommatch award
– vesting of up to
2.5 times
the
target award based on Vodacom performance vesting targets
achieved, being up to a maximum of
125% of GP
.
g
g
Vodafone match award
– vesting of up to
2.5 times
the
target award based on Vodafone performance vesting targets
achieved, being up to a maximum of
125% of GP
.
The value of shares awarded is therefore
430% of GP
at maximum
performance.
Revised policy for Vodacom CEO
The revised LTIP policy for the Vodacom CEO is intended to
simplify the structure through the removal of the matching
arrangement and awards of Vodacom and Vodafone shares only.
Providing the Vodacom CEO has met his share ownership goal, the
annual awards at target would be:
g
g
A
Vodacom award
– equal to
140% of GP
; and
g
g
A
Vodafone award
– equal to
50% of GP
.
The value of shares awarded is therefore
190% of GP
at target
performance.
The vesting conditions of the
Vodacom award
will be 200% of
target and the vesting of the
Vodafone award
would be per the
performance achievement levels approved by the Vodafone
RemCo (currently 250% of target).
Remuneration report
continued