| Fri 25 Feb 2005, 17:01 | | Director dealings |
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Network Healthcare Holdings Limited - Director dealings
NETWORK HEALTHCARE HOLDINGS LIMITED
Registration number 1996/008242/06
Incorporated in the Republic of South Africa
JSE share code: NTC
ISIN code: ZAE000011953
Network Healthcare Holdings Limited its subsidiaries and associate companies
(`Netcare`) recognise that talented executives are readily mobile with ever-
increasing competitiveness and skills shortages in the market. These executives
are key to the future growth of Netcare and need to be retained and rewarded for
innovation and value creation. Netcare accordingly developed a leveraged bonus
scheme (`the Scheme`) with the objective of offering the Scheme to the
executives of Netcare (`the executives/participants`). Through the participation
by the executives in the Scheme, Netcare aims to create future value for its
operations, its employees and its shareholders, align the interests of the
executives with those of shareholders, increase retention of the executives, and
to promote superior performance. The Scheme is designed with these objectives in
mind, as all these factors are critical to the future profitability and success
of Netcare.
The Scheme consists of three elements. The first element of the Scheme
comprises the participation in a cash settled phantom share (`the bonus phantom
shares`) in terms of which the company agrees to pay a participating executive a
bonus equal to the amount determined by multiplying the number of agreed bonus
phantom shares by the increase in the 10 day Volume Weighted Average Price
(VWAP) of the Netcare share over a minimum future Netcare share price (`the
strike price`). The strike price takes into account a minimum return over and
above inflation and accordingly includes a suitable `stretch` for executives.
The amount is paid at an agreed future date (`the vesting date`) and will be
subject to the condition that the executive is in the employment of Netcare (or
any of its subsidiary or associated companies) on that date or, if no longer
employed, at the sole discretion of the directors of Netcare (e.g. in cases of
disability, retrenchment etc.).
The second element of the Scheme makes provision for executives to purchase
additional call options (`the call options/options`) on Netcare shares from an
approved and registered financial institution in its independent capacity. The
call options will be priced and offered to the executives on market related
terms. These options would have vesting periods similar to the vesting periods
envisaged by the overall Scheme and will be based on the same strike prices.
The third element of the Scheme comprises a mechanism in terms of which Netcare
will allocate additional cash settled phantom shares (`matching phantom shares`)
to an executive, if the executive purchases the options described above. The
bonus amount on the matching phantom shares will be the amount determined by
multiplying the number of matching phantom shares by the increase over the
strike price as set out above. The amount to be paid in terms of the matching
phantom shares will be paid at an agreed future date and will be subject to the
condition that the executive is in the employ of Netcare (or any of its
subsidiary or associated companies) on that date or, if no longer employed, at
the sole discretion of the directors of Netcare (e.g. in cases of disability,
retrenchment, etc). This `leverage` facility is offered on the basis that
Netcare believes it beneficial for executives to have, and to demonstrate, a
long-term commitment to the company.
Bonus phantom shares and matching phantom shares do not carry any rights to
dividends or capital distributions. In no instance will the application of the
requirements of the above elements, require the issue of new ordinary shares by
Netcare.
Bonus obligations in terms of the bonus phantom shares and the matching phantom
shares have been hedged with / ceded to a financial institution and accordingly
the bonus liability has effectively been settled at a cost of R3,477,500.
Therefore no further liability falls on Netcare. These include obligations to
certain executive directors who have indirectly acquired European styled call
options to acquire Netcare shares as follows:
DIRECTOR 30 31 May 30 31 May Total
November 2006 November 2007 number
2005 (Strike 2006 (Strike of
(Strike price (Strike price R options
price R5.92) price 6.44)
R5.67) R6.18)
Shevel J 264,746 226,925 134,780 123,549 750,000
Bush RH 264,746 226,925 134,780 123,549 750,000
Davis I M 264,746 226,925 134,780 123,549 750,000
Friedland 264,746 226,925 134,780 123,549 750,000
RH
Kadish I 264,746 226,925 134,780 123,549 750,000
Lindeque P 176,497 151,284 89,854 82,365 500,000
J
Litlhakanya 211,797 181,540 107,824 98,839 600,000
ne VL
Nelson P G 264,746 226,925 134,780 123,549 750,000
Weltman N 264,746 226,925 134,780 123,549 750000
2,241,516 1,921,29 1,141,138 1,046,047 6,350,00
9 0
On 24 February 2005, the undermentioned directors purchased European styled call
options to acquire Netcare shares in their personal capacities at a total cost
of R629,800:
DIRECTOR 30 31 May 30 31 May Total
November 2006 November 2007 number of
2005 (Strike 2006 (Strike options
(Strike price (Strike price R
price R5.92) price 6.44)
R5.67) R6.18)
Shevel J 52,949 45,385 26,956 24,710 150 000
Bush RH 52,949 45,385 26,956 24,710 150 000
Davis I M 52,949 45,385 26,956 24,710 150 000
Friedland 52,949 45,385 26,956 24,710 150 000
RH
Kadish I 52,949 45,385 26,956 24,710 150 000
Lindeque 35,299 30,257 17,971 16,473 100 000
P J
Nelson P 52,949 45,385 26,956 24,710 150 000
G
Weltman N 52,949 45,385 26,956 24,710 150 000
405,942 347,952 206,663 189,443 1,150,000
In all instances the costs of the various options were as follows:
30 November 2005 : Strike price R5.67: Option price R0.47 per option
31 May 2006 : Strike price R5.92: Option price R0.54 per option
30 November 2006 : Strike price R6.18: Option price R0.61 per option
31 May 2007 : Strike price R6.44: Option price R0.66 per option
Prior written approval in terms of paragraph 3.66 of the JSE Securities Exchange
South Africa Listings Requirements has been obtained.
Sandton
25 February 2005
Sponsor
Merrill Lynch SA (Pty) Ltd
