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Hyprop Investments Limited
Integrated annual report 2016
Long-term incentives (LTI)
Current plan: Conditional Unit Plan (CUP)
These reward long-term decisions supporting dividend and capital growth. They are also designed to align employee behaviour with shareholders’
interests and retain staff. The LTI comprises a performance and retention component. The split between performance shares and retention shares is
70%:30% for all participants.
Conditions for the performance component of the LTI are shown below:
Performance condition Detail
Weighting
%
Threshold
%
On-target
%
Stretch
%
Growth in distribution/
dividend per share relative
to peer group*
Growth in distribution per share at the end of performance
period compared to prior nancial year.
40
95
102,5
110
Share price performance
relative to peer group*
Growth in share price from start to end of performance period.
40
95
105
120
Strategic component
Determined by remuneration committee in line with
circumstances and projects at the time of the award. It is
measured over the performance period of three years, and may
include project-related or general business activity. Where
considered appropriate, the committee has the discretion not to
apply the strategic component, in which case this 20% weighting
will be split equally between the other two performance
conditions. Achieving each of the performance conditions and
consequent vesting of performance units occurs severally.
20
* The peer group comprises the five largest South African REITs by market capitalisation listed on the JSE
Awards are offered to executives, senior managers, operational and nancial managers and staff with speci c core, critical or strategic skills and
allocations are approved by the remuneration committee. Performance shares vest three years after initial allocation, provided the relevant
performance conditions have been met.
Date of issue Offered to
Number of
employees
participating
% of staff
complement
First reward issue
1 January 2014 Executives, senior managers, operational and financial managers
and staff with specific core, critical skills
27
13
Second reward issue 1 July 2014
As above
26
13
Third reward issue 1 July 2015
As above
26
13
Retention scheme terms
Retention shares vest five years after initial allocation, subject to
continuous employment over the vesting period.
Participants do not pay for the shares, and will only be eligible to
receive dividends after shares have vested.
Terms of service
Minimum terms and conditions for employing executive directors
are governed by South African legislation. If an executive director’s
services are terminated, the committee oversees the settlement of
terms, assisted by labour law advisers.
Short-term incentives (STI)
An annual performance bonus aligns short-term rewards with annual
performance and supports retention. Performance reviews are
weighted significantly to output. The remuneration committee sets
key performance deliverables (KPDs) annually at property and
company levels, including deliverables for executive directors. These
are formally measured and include:
•
•
Net income growth
•
•
Performance against budget
•
•
Increase in trading densities
•
•
New/renewed leasing rental values achieved relative to budget
•
•
New/renewed leasing escalations achieved
•
•
Tenant arrears collections and management
•
•
Tenant deposit and bank guarantee management
•
•
Documentation administration.
•
•
Environmental impact targets
•
•
BBBEE implementation targets.
Exceptional performance is rewarded with higher incentives, after
considering recommendations from general managers, regional
executives and executive directors.
The maximum potential bonus for senior management is six months’
salary, at the committee’s discretion. Bonuses for executive directors
are aligned with strategic objectives and are at the remuneration
committee’s discretion.
Short-term incentive outcomes (STI)
Individual performance reviews are conducted annually, with biannual
company key performance deliverable reviews measured against
targets. Employees are rewarded on the outcome of these reviews.
Bonuses and salary increases are approved by the remuneration
committee. Bonuses are payable in December and salary increases
implemented from January each year.
Individual performance reviews are completed on the company’s
employee self-service system after performance discussions with
the employee’s line manager.