UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report (Date of earliest event reported): November 12,
2010 (November 5, 2010)
NET 1 UEPS TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Florida
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000-31203
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98-0171860
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(State or other jurisdiction
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(Commission
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(IRS Employer
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of incorporation)
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File Number)
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Identification No.)
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President Place, 4
th
Floor, Cnr. Jan
Smuts Avenue and Bolton Road
Rosebank, Johannesburg, South Africa
(Address of principal executive
offices)
(ZIP Code)
Registrants telephone number, including area code:
011-27-11-343-2000
Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12
under the Exchange Act (17 CFR 240.14a -12)
[ ] Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))
[ ] Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))
Item 5.02 Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
On November 5, 2010, the Board of Directors (the
Board
) of Net 1 UEPS Technologies, Inc. (the
Company
), upon
recommendation of the Remuneration Committee, adopted a cash incentive award
plan for fiscal 2011 for Dr. Serge Belamant, the Companys chairman and chief
executive officer and Herman Kotze, the Companys chief financial officer. In
addition, as part of the annual grant cycle for equity awards under the
Companys Amended and Restated Stock Incentive Plan, the Board, upon
recommendation of the Remuneration Committee, agreed to award (i) restricted
stock to Dr. Belamant and Mr. Kotze and (ii) stock options to various employees,
including each of the Companys executive officers. The grant date of these
equity awards was November 10, 2010.
Cash Incentive Award Plan for Fiscal 2011
Under the cash incentive award plan, each of Dr. Belamant and
Mr. Kotze will be eligible to earn a cash incentive award based on the Companys
fiscal 2011 financial performance and [his individual contribution toward] the
achievement of certain objectives described under Qualitative Portion of the
Cash Incentive Award Plan below. The terms of the cash incentive award plan are
not contained in a formal written document, but are summarized below.
The cash incentive award plan provides for a target level cash
incentive award of 100% of the executives annual base salary for fiscal 2011,
75% of which will be based on the quantitative factors described below and 25%
of which will be based on the qualitative factors described below. The
quantitative portion of the award provides for threshold, target and maximum
amounts of 50%, 100% and 150%, respectively, of the executives base salary
multiplied by 0.75 (to reflect that 75% of the target award is based on the
quantitative factors) while the qualitative portion of the award is limited to
100% of the executives base salary multiplied by 0.25 (to reflect that 25% of
the target award is based on qualitative factors).
Quantitative Portion of the Cash Incentive Award Plan
Each of Dr. Belamant and Mr. Kotze will be entitled to receive
75% (at target levels) of his annual base salary based on three quantitative
metrics, with each metric to be measured and awarded separately:
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30% of this portion is based on specified percentage
increases in earnings before interest and taxes, in Korean won, of KSNET
(
KSNET EBIT
) for the fiscal year ending June 30, 2011 as compared
to fiscal 2010. The following increases in KSNET EBIT will entitle the
executive to receive the following percentages of this portion of the
award:
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>>
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Less than 10% increase--0%
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>>
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10% increase (threshold)--50%
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>>
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15% increase (target)--100%
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>>
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25% increase (maximum)--150%
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>>
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Increases above 10% and below 25% will be interpolated on
a linear basis and rounded to the nearest
percentage.
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20% of this portion is based on specified percentage
increases in revenue of the Company as a whole, excluding Cash Paymaster
Services (the Companys pension and welfare business) and KSNET (
Net1
Revenue (ex CPS/KSNET))
for the fiscal year ending June 30, 2011 as
compared to fiscal 2010. For this purpose, all revenue will be denominated
in ZAR but any portion of such revenue attributable to Net1 UETS, Net1 UTA
and Prism that is earned in other currencies will be converted to ZAR
using the same exchange rates that prevailed in fiscal 2010. The following
increases in Net1 Revenue (ex CPS/KSNET) will entitle the executive to
receive the following percentages of this portion of the award:
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>>
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Less than 15% increase--0%
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>>
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15% increase (threshold)50%
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>>
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20% increase (target)100%
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>>
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30% increase (maximum)150%
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>>
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Increases above 15% and below 30% will be interpolated on
a linear basis and rounded to the nearest percentage.
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50% of this portion is based on the achievement of
specified levels of fundamental diluted earnings per share of the Company
(
Fundamental EPS
) for the fiscal year ending June 30, 2011.
Fundamental EPS will be measured in U.S. dollars as the Companys earnings
per share determined in accordance with U.S. generally accepted accounting
principles, as adjusted to exclude the effects related to (i) the
amortization of intangible assets and acquisition-related costs; (ii)
stock-based compensation charges; (iii) foreign exchange gains and losses
arising from foreign currency hedging transactions and (iv) other items
that the Remuneration Committee may determine in its discretion to be
appropriate (for example, accounting changes and one-time or unusual
items). Further, the calculation of Fundamental EPS will assume no change
in the Companys effective tax rate from fiscal 2010. The following levels
of Fundamental EPS will entitle the executive to receive the following
percentages of this portion of the award:
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Below $1.440%
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>>
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$1.44 (threshold)50%
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>>
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$1.60 (target)100%
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>>
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$1.75 (maximum)150%
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>>
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Fundamental EPS above $1.44 and below $1.75 will be
interpolated on a linear basis and rounded to the nearest
percentage.
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Depending on the outcome of the quantitative metrics, as well
as the level of satisfaction of the qualitative factors discussed below, the
quantitative portion of any actual award may be more or less than 75% of the
executives annual base salary.
Qualitative Portion of the Cash Incentive Award Plan
Each of Dr. Belamant and Mr. Kotze is entitled to receive up to
25% of his annual base salary based on his individual contribution toward the
achievement of the following Company-wide objectives no later than August 2011
(which is the scheduled time during the year that the Remuneration Committee
reviews performance against the qualitative metrics of the Companys cash
incentive award plan) :
-
submission to the Board of a new strategic plan, together with a revised
organizational structure to support such plan;
-
approval of such plan and structure by the Board; and
-
successful recruitment of new management employees to fill the positions
identified in the strategic plan and organizational structure.
The Remuneration Committee may award between 0% and 100% of 25%
of the executives annual base salary, based on its assessment of progress
against these objectives.
Tables Illustrating Potential Payments Under Cash Incentive
Award Plan
Based on Dr. Belamants current annual base salary of $850,000,
the table below illustrates the potential amounts that could be payable to him
under the cash incentive award plan. The table assumes that each of the
quantitative metrics under the Quantitative Portion column are satisfied and
that they are satisfied at the same level (i.e., each at either threshold,
target and maximum) and that he is entitled to receive the full amount of the
amount under the Qualitative Portion column. If some of the quantitative
metrics are not satisfied, or satisfied at different levels, or if less than the
entire amount of the Qualitative Portion is awarded, then the amounts under the
Total column could be greater or less, but in any event may not exceed
$1,168,750.
Quantitative Portion
|
Qualitative
Portion
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Total
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KSNET EBIT
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Net1 Revenue (ex
CPS/KSNET)
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2011
Fundamental
EPS
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|
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Percentage
Increase
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Amount
Payable
($)
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Percentage
Increase
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Amount
Payable
($)
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$
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Amount
Payable
($)
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$
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$
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Threshold
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10%
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95,625
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15%
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63,750
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1.44
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159,375
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212,500
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531,250
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Target
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15%
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191,250
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20%
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127,500
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1.60
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318,750
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212,500
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850,000
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Maximum
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25%
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286,875
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30%
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191,250
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1.75
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478,125
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212,500
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1,168,750
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Based on Mr. Kotzes current annual base salary of $450,000,
the table below illustrates the potential amounts that could be payable to him
under the cash incentive award plan. The table assumes that each of the
quantitative metrics under the Quantitative Portion column are satisfied and
that they are satisfied at the same level (i.e., each at either minimum, target
and maximum) and that he is entitled to receive the full amount of the amount
under the Qualitative Portion column If some of the quantitative metrics are
not satisfied, or satisfied at different levels, or if less than the entire
amount of the Qualitative Portion is awarded, then the amounts under the Total
column could be greater or less, but in any event, may not exceed $618,750.
Quantitative Portion
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Qualitative
Portion
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Total
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KSNET EBIT
|
Net1 Revenue(ex
CPS/KSNET)
|
2011
Fundamental
EPS
|
|
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Percentage
Increase
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Amount
Payable
($)
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Percentage
Increase
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Amount
Payable
($)
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$
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Amount
Payable
($)
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$
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$
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Threshold
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10%
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50,625
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15%
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33,750
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1.44
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84,375
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112,500
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281,250
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Target
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15%
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101,250
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20%
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67,500
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1.60
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168,750
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112,500
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450,000
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Maximum
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25%
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151,875
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30%
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101,250
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1.75
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253,125
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112,500
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618,750
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Equity Awards
Dr. Belamant, Mr. Kotze and Nitin Soma, the Companys Vice
PresidentInformation Technology, were awarded options to purchase 100,000,
67,000 and 35,000 shares of common stock, respectively. The options are
exercisable at a price of $10.59 per share, which was the closing price of the
Companys common stock on the Nasdaq Stock Market on November 10, 2010.
One-third of the options vest on each of the first, second and third
anniversaries of the grant date and expire ten years after the grant date,
conditioned on the continuous service of the recipient through the applicable
vesting date.
Dr. Belamant and Mr. Kotze were awarded 50,000 and 33,000
shares of restricted stock, respectively. One-third of the award shares vest on
the first, second and third anniversaries of the grant date, conditioned on the
continuous service of the recipient through the applicable vesting date and the
Company achieving the specified financial performance target for the fiscal year
immediately preceding that vesting date (i.e., each of the 2011, 2012 and 2013
fiscal years). For this purpose, the financial performance targets are specified
Fundamental EPS targets. The Fundamental EPS targets for the 2011, 2012 and 2013
fiscal years are $1.44, $1.66 and $1.90, respectively. If Fundamental EPS for
the specified fiscal year does not equal or exceed the Fundamental EPS target
for such fiscal year, no award shares will become vested or non-forfeitable on
the corresponding vesting date but are available to become vested and
non-forfeitable as of a subsequent vesting date if the Fundamental EPS target
for a subsequent fiscal year is met, provided that the recipients service
continues through such subsequent vesting date Any outstanding award shares that
have not become vested and non-forfeitable as of the last vesting date will be
forfeited by the recipient on that date for no consideration.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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NET 1 UEPS TECHNOLOGIES, INC.
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Date: November 12, 2010
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By:
/s/ Serge C.P. Belamant
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Dr. Serge C.P.
Belamant
|
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Chief Executive
Officer and Chairman of the Board
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