| Fri 21 Apr 2006, 7:30 | | Absa Group Limited - Proposed adoption of new long |
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ASA
AMAGB
Absa Group Limited - Proposed adoption of new long-term employee incentive plans
Absa Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1986/003934/06)
JSE code: ASA Issuer code: AMAGB
ISIN: ZAE000067237
("Absa")
PROPOSED ADOPTION OF NEW LONG-TERM EMPLOYEE INCENTIVE PLANS
Introduction
Having conducted a review of long-term incentive plans for employees in Absa and
its subsidiaries ("the Group"), the Remuneration Committee of the board of
directors of Absa ("Remcom"), with the support of the Board, proposes the
adoption of four new long-term incentive plans ("the New Plans") for employees
of the Group in managerial and leadership roles ("Employees"). The New Plans
will have the effect of achieving a greater alignment of incentive arrangements
between Employees and Barclays PLC employees. The New Plans will be called: The
Absa Group Performance Share Plan ("PSP"), The Absa Group Phantom Performance
Share Plan ("Phantom PSP"), The Absa Group Executive Share Award Scheme ("ESAS")
and The Absa Group Phantom Executive Share Award Scheme ("Phantom ESAS").
Number of shares made available under the New Plans
The aggregate number of ordinary shares in the share capital of Absa ("Ordinary
Shares") which may be acquired by an Employee under the New Plans
("Participant"), together with Ordinary Shares which may be acquired by
Participants under any other incentive plans operated by the Group ("Any Other
Plan"), shall not exceed 10% of Absa"s issued Ordinary Share capital from time
to time (presently 66 685 507). The aggregate number of Ordinary Shares which
may be acquired by any one Participant shall not exceed 0,5% of Absa"s issued
Ordinary Share capital from time to time (presently 3 334 275). Ordinary Shares,
upon release to Participants in terms of the New Plans, will rank pari passu in
all respects with existing Ordinary Shares in issue.
Share trusts
A separate share trust will be established to administer each of the PSP and
ESAS. Executive directors of Absa may not be appointed as trustees of the
trusts. The Board shall be entitled to appoint and remove the trustees of these
trusts. The first trustees are to be Mr David Brink, Dr Danie Cronje and Mr
Brian Connellan. The trustees may not participate in the New Plans.
Brief overview of the New Plans
The Absa Group Performance Share Plan (PSP)
The purpose of the PSP is, inter alia, to incentivise Participants to achieve
challenging performance targets and to reward future performance. Remcom will
make an initial allocation of Ordinary Shares or options ("Initial Allocation")
annually to senior managers and executives and set performance conditions
applicable for a three-year period ("Tie-up Period"). The Initial Allocation, in
Rand, is limited to between 10% and 135% of the particular Participant"s cost-to
company remuneration package. This Rand value is converted to an equivalent
number of Ordinary Shares at the time of the Initial Allocation. If the
performance conditions are not met, or if the Participant resigns within three
years of the Initial Allocation, the Initial Allocation will lapse. At the end
of the Tie-up Period, the final award of Ordinary Shares by Remcom may be
between 0% and 300% of the Initial Allocation, depending on the extent to which
the performance conditions have been met. The allocation may take the form of an
Ordinary Share award (at no cost to the Participant) or nil-cost options ("Nil-
cost Options") which can be exercised at a zero strike price between the end of
the Tie-up Period and a further two years. Absa may elect to pay a cash bonus to
the Participant equal to the market value of the Ordinary Shares available for
release to the Participant instead of delivering Ordinary Shares. The pricing
mechanism, namely zero cost to the Participant, will be the same for all
Participants.
The Absa Group Phantom Performance Share Plan (Phantom PSP)
The Phantom PSP has the same aim and works on the same basis as the PSP, except
that the awards will not be in the form of Ordinary Shares or Nil-cost Options,
but rather in the form of a cash payment to the Participant at the end of the
Tie-up Period, the amount of which will depend on the extent to which the
performance conditions have been met. The purpose of having the Phantom PSP in
addition to the PSP is to provide Remcom with some flexibility in the face of a
changing tax and accounting environment. The provisional and final allocation
will be in "phantom shares", based on the market value of Ordinary Shares at the
time of such allocations, which price will be the same for all Participants.
The Absa Group Executive Share Award Scheme (ESAS)
The purpose of the ESAS is, inter alia, to increase employee and shareholder
alignment through Employee share ownership, as well as to retain key talent.
Employees, including executive directors, whose annual bonuses are in excess of
a level specified by Remcom, are eligible to participate in the ESAS. In terms
of the ESAS, 25% of a Participant"s notional bonus will comprise a number of
restricted Nil-cost Options or Ordinary Shares, based on the market value of
Ordinary Shares at the time of the Initial Allocation, which price will be the
same for all Participants. A further 75% of a Participant"s notional bonus can
be allocated, on a voluntary basis, by the Participant to the ESAS. Such an
Initial Allocation is held in trust, or in the name of the Participant, for the
Tie-up Period and, if the Participant so elects, for a further two years
("Further Tie-up Period"). Additional Ordinary Shares can also be awarded,
depending on the Initial Allocation, at the end of the Tie-up Period ("Matched
Shares"). The Matched Shares will be 20% at the end of the Tie-up Period and
another 10% if the bonus award is retained in trust for a further two years
after the Tie-up Period ("Further Tie-up Period"). Generally, no performance
conditions apply to ESAS. However, should Remcom wish to adjust the percentage
of Matched Shares for any particular award, it may consider imposing appropriate
performance conditions. The method used to determine the adjusted percentage of
Matched Shares will be determined by Remcom.
The Absa Group Phantom Executive Share Award Scheme (Phantom ESAS)
The Phantom ESAS has the same aim and works on the same basis as the ESAS,
except that Participants will not participate on the basis that they receive Nil
cost Options or Ordinary Shares, but rather on the basis that they receive cash
payments after the Tie-up Period or the Further Tie-up Period, as the case may
be. The purpose of the Phantom ESAS in addition to the ESAS is to provide Remcom
with some flexibility in the face of the changing tax and accounting
environment. The pricing on both the entry into and exit from the Phantom ESAS
will be the same for all Participants and will match the pricing mechanism under
the ESAS.
General
In the event of any increase or variation of the share capital of Absa by way of
capitalisation, rights issue, sub-division, consolidation or reduction of
capital, such adjustments shall be made to the rights of Participants as may be
determined by the auditors to be fair and reasonable, provided that any
adjustments should, where applicable, give a Participant the entitlement to the
same proportion of the equity capital as the proportion to which he/she was
previously entitled.
The provisions of the New Plans cannot be amended, other than by shareholders in
general meeting insofar as they relate to the category of persons eligible to
participate, the aggregate number of Ordinary Shares and percentage of total
Ordinary Shares in issue, the maximum participation by any one Employee as a
percentage of the entire issued share capital of Absa, the amount payable to
participate and the voting, dividend, transfer and other rights arising
attaching to the awards of Ordinary Shares and options.
A circular, containing full details of the New Plans, will be mailed to
shareholders today ("the circular"). The circular also contains a notice
convening a general meeting of shareholders to be held in the P W Sceales
Auditorium, Ground Floor, Absa Towers, 160 Main Street, Johannesburg on
Wednesday, 10 May 2006 at 10:30 (or so soon thereafter as the annual general
meeting to commence at 10:00 on the same day has been concluded).
Johannesburg
21 April 2006
Lead sponsor
Merrill Lynch
Global Markets & Investment Banking Group
Merrill Lynch South Africa (Pty) Ltd
Registration number 1995/001805/07
Registered Sponsor and Member of the
JSE Securities Exchange South Africa
Co-sponsor
ABSA
Corporate and Merchant Bank
Corporate Finance
ABSA Bank Limited
(Registration number 1986/004794/06)
Attorneys
Werksmans Incorporated
(Registration number 1990/007215/21)
Corporate advisers
KPMG
Date: 21/04/2006 07:30:20 AM Produced by the JSE SENS Department
