UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14A-12
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NET 1 UEPS TECHNOLOGIES, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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NET 1 UEPS TECHNOLOGIES, INC.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on November 11, 2015
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To the Shareholders of Net 1 UEPS Technologies, Inc.:
NOTICE IS HEREBY GIVEN that the
2015 Annual Meeting of Shareholders of Net 1 UEPS Technologies, Inc. will be
held at our principal executive offices located at President Place, 6th Floor,
Cnr. Jan Smuts Avenue and Bolton Road, Rosebank, Johannesburg, South Africa on
November 11, 2015 at 16h00, local time (09h00 Eastern Time), for the following
purposes:
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To elect five directors to serve until the next Annual
Meeting of Shareholders and until their successors are duly elected and
qualified. |
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To ratify the selection of Deloitte & Touche (South
Africa) as our independent registered public accounting firm for the
fiscal year ending June 30, 2016. |
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To hold an advisory vote to approve executive
compensation. |
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To approve the amendment and restatement of our current
Amended and Restated Stock Incentive Plan to, among other things, (i)
increase the number of shares of our common stock authorized for issuance
by 2,500,000, (ii) approve the award limits and other terms applicable to
awards intended to qualify as performance-based compensation for
purposes of Section 162(m) of the Internal Revenue Code of 1986, as
amended, and (iii) extend the duration of the plan to 2025. |
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To transact such other business and act upon any other
matter which may properly come before the annual meeting or any
adjournment or postponement of the meeting. |
Our Board of Directors has fixed
the close of business on September 25, 2015, as the record date for determining
shareholders entitled to notice of and to vote at the meeting. A list of the
shareholders as of the record date will be available for inspection by
shareholders at our principal executive offices during business hours for a
period of ten days prior to the meeting.
Your attention is directed to our
annual report for the fiscal year ended June 30, 2015, which is enclosed with
this proxy statement.
The Board of Directors, |
![](def14ax2x1.jpg) |
Dr. Serge C. P. Belamant |
Chairman and Chief Executive Officer
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Johannesburg, South Africa
October 2, 2015
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 11, 2015. A
complete set of proxy materials relating to our annual meeting is available on
the internet. These materials, consisting of the Notice of Annual Meeting of
Shareholders and Proxy Statement, including proxy card, and annual report, may
be viewed and downloaded at https://materials.proxyvote.com/Approved/64107N.
You are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, please complete, date, sign and
return the proxy accompanying this notice as promptly as possible in order to
ensure your representation at the meeting. A return envelope (which is postage
prepaid if mailed in the United States) is enclosed for your convenience. Even
if you have voted by proxy, you may still vote in person if you attend the
meeting. Please note, however, that if your shares are held of record by a
broker, bank or other agent and you wish to vote at the meeting, you must
request and obtain a proxy issued in your name from that record holder. You may
also submit your proxy via the internet as specified in the accompanying
internet voting instructions. Shareholders registered on our South African
Branch Register (South African Shareholders) are referred to the special
instructions contained on page 4 of this proxy statement.
TABLE OF CONTENTS
1
NET 1 UEPS TECHNOLOGIES, INC.
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PROXY STATEMENT
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We are furnishing this proxy
statement in connection with the solicitation by our Board of Directors
(Board) of proxies for use at the annual meeting of shareholders to be held at
President Place, 6th Floor, Cnr. Jan Smuts Avenue and Bolton Road, Rosebank,
Johannesburg, South Africa on November 11, 2015 at 16h00, local time (09h00
Eastern Time). Our annual report on Form 10-K and our proxy materials were first
mailed on or about October 2, 2015.
VOTING RIGHTS AND PROCEDURES
Shareholders who owned our common
stock at the close of business on September 25, 2015, the record date, may
attend and vote at the annual meeting. Each share is entitled to one vote. There
were 47,322,702 shares of common stock outstanding on the record date.
A majority of the total number of
outstanding shares of common stock, present either in person or by proxy, will
constitute a quorum for the transaction of business at the annual meeting.
Shareholders who are present at the annual meeting in person or by proxy and who
abstain, and proxies relating to shares held by a bank or broker on your behalf
(that is, in street name), that are not voted (referred to as broker
non-votes) will be treated as present for purposes of determining whether a
quorum is present. In the event that there are not sufficient votes to approve
any proposal at the annual meeting, the annual meeting may be adjourned in order
to permit the further solicitation of proxies. The inspector of election
appointed for the annual meeting will tabulate all votes and will separately
tabulate affirmative and negative votes, abstentions and broker non-votes.
The following describes how you
may vote on each proposal and the votes required for approval of each proposal:
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Proposal No 1Our five director nominees
will be elected by a plurality of votes. You may vote for each director
nominee or withhold your vote from one or more of the nominees.
Withholding a vote as to any director nominee is the equivalent of
abstaining. In an uncontested election such as this, abstentions and
broker non-votes have no effect, since approval by a specific percentage
of the shares present or outstanding is not required. |
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Proposal No. 2The ratification of the
selection of Deloitte & Touche (South Africa) (Deloitte) to act as
our independent registered public accounting firm will be approved if the
votes cast in favor of the proposal exceed the number of votes cast
against the proposal. You may vote for or against the proposal or you may
abstain from voting. Abstentions and broker non-votes will not affect the
outcome of the vote. |
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Proposal No. 3 The advisory vote to
approve executive compensation will be approved if the votes cast in favor
of the proposal exceed the number of votes cast against the proposal. You
may vote for or against the proposal or you may abstain from voting.
Abstentions and broker non-votes will not affect the outcome of the vote.
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Proposal No. 4 The amendment and
restatement of our current Amended and Restated Stock Incentive Plan will
be approved if the votes cast in favor of the proposal exceed the number
of votes cast against the proposal. You may vote for or against the
proposal or you may abstain from voting. Abstentions and broker non-votes
will not affect the outcome of the vote. |
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If you provide your voting
instructions on your proxy, your shares will be voted as you instruct, and
according to the best judgment of the persons named in the proxy if a proposal
comes up for a vote at the annual meeting that is not on the proxy.
If you do not indicate a specific
choice on a proxy that you sign and submit, your shares will be voted:
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FOR each of the director nominees; |
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FOR the ratification of the selection of
Deloitte as our independent registered public accounting firm; |
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FOR the approval of executive compensation; and
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FOR the approval of the amendment and
restatement of our current Amended and Restated Stock Incentive Plan.
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If your shares are held in
street name, and you do not instruct the bank or broker as to how to vote your
shares on Proposals 1, 3 or 4, the bank or broker may not exercise discretion to
vote for or against those proposals. This would be a broker non-vote and these
shares will not be counted as having been voted on the applicable proposal. With
respect to Proposal 2, the bank or broker may exercise its discretion to vote
for or against that proposal in the absence of your instruction. Please
instruct your bank or broker so your vote can be counted.
The Board recommends:
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a vote FOR each of the director
nominees; |
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a vote FOR ratification of Deloitte as
our independent registered public accounting firm; |
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a vote FOR the approval of executive
compensation; and |
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a vote FOR the approval of the amendment
and restatement of our current Amended and Restated Stock Incentive Plan.
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Revocability of Proxies
You may revoke your proxy at any
time prior to exercise of the proxy by delivering a written notice of revocation
or a duly executed proxy with a later date by mail to our corporate secretary at
Net 1 UEPS Technologies, Inc., PO Box 2424, Parklands 2121, South Africa, or by
attending the meeting and voting in person. If you hold shares through a bank or
brokerage firm, you must contact that firm to revoke any prior voting
instructions.
Internet Availability of Proxy Materials and Annual
Report
A complete set of proxy materials
relating to our annual meeting is available on the internet. These materials,
consisting of the Notice of Annual Meeting of Shareholders and Proxy Statement,
including proxy card, and annual report, may be viewed and downloaded at
https://materials.proxyvote.com/Approved/64107N.
Market Information
Our common stock is listed on The
Nasdaq Global Select Market (Nasdaq) in the United States under the symbol
UEPS and, via a secondary listing, on the Johannesburg Stock Exchange (JSE),
in South Africa under the symbol NT1. The Nasdaq is our principal market for
the trading of our common stock. Our transfer agent in the United States is
Computershare Shareowner Services LLC, 480 Washington Blvd., Jersey City, New
Jersey 07310. Our transfer agent in South Africa is Link Market Services South
Africa (Pty) Ltd (Link Market), 13th Floor, Rennie House, 19 Ameshoff Street,
Braamfontein, 2001, South Africa.
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Special Instructions to South African Shareholders
We are required to comply with
certain South African regulations related to the circulation and tabulation of
proxies issued to our South African Shareholders. The proxy form marked Net 1
UEPS Technologies, Inc. Proxy for Shareholders Registered on South African
Branch Register must be used by South African Shareholders. The South African
proxy must be lodged, posted or faxed to Link Market so as to reach them by
16h00, local time, on November 6, 2015. South African Shareholders that have
already dematerialized their shares through a Central Securities Depository
Participant (CSDP) or broker, other than with own-name registration, should
not complete the South African proxy. Instead they should provide their CSDP or
broker with their voting instructions or, alternatively, they should inform
their CSDP or broker of their intention to attend the annual meeting in order
for their CSDP or broker to be able to issue them with the necessary
authorization to enable them to attend such meeting. South African Shareholders
that hold their shares in certificated form or dematerialized own-name
registration should complete the South African proxy and return it to Link
Market.
Solicitation
We will bear the entire cost of
the solicitation, including the preparation, assembly, printing and mailing of
this proxy statement, including the proxy card and any additional solicitation
materials furnished to our shareholders. Copies of solicitation materials will
be furnished to brokerage houses, fiduciaries and custodians holding shares in
their names that are beneficially owned by others so that they may forward this
solicitation material to such beneficial owners. We may reimburse these persons
for their reasonable expenses in forwarding solicitation materials to beneficial
owners. The original solicitation of proxies by mail may be supplemented by a
solicitation by personal contacts, telephone, facsimile, electronic mail or any
other means by our directors, officers or employees. No additional compensation
will be paid to our directors, officers or employees for performing these
services. Except as described above, we do not presently intend to solicit
proxies other than by mail.
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL NO. 1: ELECTION OF DIRECTORS
The terms of office of each of
our current directors will expire at the annual meeting. The Board has nominated
for re-election each of our current directors (see Information Regarding the
Nominees for information on all directors) for a one-year term.
The persons named in the
enclosed proxy intend to vote properly executed and returned proxies FOR
the election of all nominees proposed by the Board unless authority to vote is
withheld. In the event that any nominee is unable or unwilling to serve, the
persons named in the proxy will vote for such substitute nominee or nominees as
they, in their discretion, shall determine. The Board has no reason to believe
that any nominee named herein will be unable or unwilling to serve.
The Board recommends that you vote FOR election of each of
the director nominees.
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Information Regarding the Nominees
Dr. Serge C. P. Belamant 62 years
old Director since 1997 |
Dr. Belamant founded our Company and has been
our Chief Executive Officer since 2000 and the Chairman of our Board since
2003. Dr. Belamant has more than 30 years of experience in the fields of
operations research, security, biometrics, artificial intelligence and
online and offline transaction processing systems. Dr. Belamant spent ten
years working as a computer scientist for Control Data Corporation where
he won a number of international awards. Later, he was responsible for the
design, development, implementation and operation of the Saswitch ATM
network in South Africa that is still rated as one of the largest ATM
switching systems in the world. Dr. Belamant has patented a number of
inventions in a number of fields, including biometrics and gaming. Dr.
Belamant holds a PhD in Information Technology and Management. |
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The Board believes that Dr. Belamants
strategic vision, technological ingenuity and extensive knowledge of the
payments industry makes him an invaluable member of the Board. Dr.
Belamant has been the guiding force behind the development of most of our
products and services. |
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Herman G. Kotzé 46 years old
Director since 2004 |
Mr. Kotzé has been our Chief Financial Officer,
secretary and treasurer since 2004. From January 2000 until June 2004, he
served on the board of Aplitec as Group Financial Director. Mr. Kotzé
joined Aplitec in November 1998 as a strategic financial analyst. Prior to
joining Aplitec, Mr. Kotzé was a business analyst at the Industrial
Development Corporation of South Africa. Mr. Kotzé is a qualified South
African chartered accountant. |
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The Board believes that Mr. Kotzés financial,
accounting and taxation expertise and experience with corporate
transactions, as well as his long history with our Company and deep
knowledge of our business and industry makes him well-suited to serve as a
director. |
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Christopher S. Seabrooke 62 years
old Director since 2005 |
Mr. Seabrooke is Chief Executive Officer and a
director of Sabvest Limited, an investment holding company which is listed
on the JSE. Mr. Seabrooke also serves as a non-employee director of the
following JSE listed companies: Brait SE, Datatec Limited, Massmart
Holdings Limited, Metrofile Holdings Limited, Torre Industries Limited and
Transaction Capital Limited. In the past five years he was also a
non-employee director of JSE listed Chrometco Limited. Mr. Seabrooke is a
member of The Institute of Directors in South Africa. Formerly, he was the
Chairman of the South African State Theater and the Deputy Chairman of
each of the National Arts Council and the Board of Business and Arts South
Africa. Mr. Seabrooke has degrees in Economics and Accounting from the
University of Natal and an MBA from the University of Witwatersrand.
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The Board believes that Mr. Seabrookes
expertise in finance, accounting and corporate governance and broad
experience as a director of several publicly-traded companies covering a
broad range of industries makes him a valuable member of our Board.
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Alasdair J. K. Pein 55 years old Director
since 2005 |
Mr. Pein is currently CEO of Ascension Partners
Limited, a Cayman-based provider of investment services to high net worth
clients. Mr. Pein is a director of Mundane International Limited, a
Guernsey-based financial investment fund. Mr. Pein also serves as a
director of Ecolutia Services AG, a global provider of water, wastewater
and environmental treatment solutions. Between 1994 and March 2009, Mr.
Pein served as the CEO of the Oppenheimer familys private equity
business. During this period of time Mr. Pein held directorships of a
number of private companies. In addition, Mr. Pein was a director of
Arsenal Digital Solutions, a privately-held U.S. company that provides
on-demand data protection services, from 2001 to 2008. Mr. Pein is a
qualified South African chartered accountant. |
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The Board believes that Mr. Peins financial
and accounting expertise, as well as his private equity experience and
skills in dealing with compensation, human resources and corporate
governance issues, makes him a valuable member of our Board. |
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Paul Edwards 61 years old Director since
2005 |
Mr. Edwards is Executive Chairman of Emerging
Markets Payments Holdings, an Africa and Middle East payments business.
Previously, Mr. Edwards was a non-employee director of Starcomms Limited,
a Nigerian telecommunications operator since 2005. Prior to that, Mr.
Edwards was Executive Chairman of Chartwell Capital, a corporate finance
house, Chief Executive Officer of MTN Group, a pan-African mobile
operator, and Group Chief Executive of Johnnic Holdings Ltd, a diversified
holding company. |
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Mr. Edwards has a BSc and an MBA from the
University of Cape Town. |
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The Board believes that Mr. Edwards knowledge
and experience of the telecommunications industry, especially in Africa,
provides us with valuable insight into the potential opportunities to
expand our business internationally and makes him a valuable member of our
Board. |
PROPOSAL NO. 2: RATIFICATION OF SELECTION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of our Board
has proposed that Deloitte be selected to serve as our independent registered
public accounting firm for the fiscal year ending June 30, 2016. A
representative of Deloitte is expected to be present at the annual meeting. Such
representative will have an opportunity to make a statement if he or she desires
to do so and is expected to be available to respond to appropriate questions
from shareholders. Deloitte currently serves as our independent registered
public accounting firm.
We are asking our shareholders to
ratify the selection of Deloitte as our independent registered public accounting
firm for the fiscal year ending June 30, 2016. Although ratification is not
required by our Amended and Restated By-Laws or otherwise, the Board is
submitting the selection of Deloitte to our shareholders for ratification as a
matter of good corporate practice. In the event our shareholders fail to ratify
the appointment, the Audit Committee may reconsider this selection. Even if the
selection is ratified, the Audit Committee in its discretion may select a
different registered public accounting firm at any time during the year if it
determines that such a change would be in our best interests and the best
interests of our shareholders.
The Board recommends a vote FOR ratification of the selection
of Deloitte.
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PROPOSAL NO. 3: AN ADVISORY VOTE TO APPROVE EXECUTIVE
COMPENSATION
We are providing you with the
opportunity to vote to approve, on an advisory, non-binding basis, the
compensation of our executive officers named in the Summary Compensation Table
under Executive Compensation, whom we refer to as our named executive
officers or NEOs. This proposal, which is commonly referred to as say on pay,
is required by Section 14A of the U.S. Securities Exchange Act of 1934, as
amended (the Exchange Act).
The philosophy of our executive
compensation program is to link compensation to the achievement of our key
strategic and financial goals. Therefore, we reward our executives for their
contributions to our annual and long-term performance by tying a significant
portion of their total compensation to key drivers of increased shareholder
value. At the same time, we believe our program does not encourage excessive
risk-taking by management. The Executive Compensation section of this proxy
statement beginning on page 21, including the Compensation Discussion and
Analysis, describes in detail our executive compensation program and the
decisions made by the Remuneration Committee with respect to our fiscal year
ended June 30, 2015.
The Board is asking shareholders
to cast a non-binding advisory vote on the following resolution:
Resolved, that the
compensation paid to the Companys named executive officers, as disclosed
pursuant to the disclosure rules of the U.S. Securities and Exchange Commission,
including the Compensation Discussion and Analysis, compensation tables and
narrative discussions, is approved on a non-binding advisory basis.
Because your vote is advisory, it
will not be binding upon the Board or the Remuneration Committee. However, the
Board and the Remuneration Committee value the opinions expressed by our
shareholders and will consider the outcome of the vote when considering future
executive compensation decisions.
The Board recommends a vote FOR approval of the compensation
of our named executive officers.
PROPOSAL NO. 4: APPROVAL OF THE AMENDMENT AND RESTATEMENT OF
OUR CURRENT PLAN
We are asking you to approve an
amendment and restatement of our Amended and Restated Stock Incentive Plan of
Net 1 UEPS Technologies, Inc. to increase the aggregate number of shares of our
common stock authorized for issuance by an additional 2,500,000. In this proxy
statement, we refer to the current Amended and Restated Stock Incentive Plan of
Net 1 UEPS Technologies, Inc. as the Current Plan, and we refer to the
amendment and restatement of the Current Plan that we are asking you to approve
as the 2015 Plan. In addition, we are requesting that shareholders approve the
terms of the 2015 Plan relating to awards intended to qualify as
performance-based compensation for purposes of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the Code). The 2015 Plan does not contain
any modifications, alterations or revisions of any other term or provision of
our Current Plan except with respect to the increase in the share reserve and
the extension of the term of the plan. The closing price of our common stock on
Nasdaq on September 29, 2015, was $16.31.
Our Board approved, and
recommended the 2015 Plan for approval by our shareholders, in August 2015.
Our Board believes it important
to our continued success that we have an adequate reserve of shares available
for issuance under the 2015 Plan for use in attracting, motivating and retaining
qualified employees, officers, consultants and directors.
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Why you should vote for the 2015 plan
History of the Current Plan
The Current Plan was initially
adopted in 2004. In 2006, our shareholders approved the first amendment and
restatement of the Current Plan, which authorized the issuance of an additional
2,845,600 shares for awards that were expected to be granted during a five-year
period of annual grants beginning in 2006. The last time shareholders were asked
to approve an increase the number of shares available was in 2009. In 2009,
shareholders approved another amendment to the Current Plan, to (among other
things) increase the number of shares available for issuance by 2,800,000 and
extend the term of the plan by five years. As of September 25, 2015, only
736,023 shares, or approximately a quarter of the 2009 share increase, remain
available for the August 2016 annual grant cycle and beyond.
On August 19, 2015, our Board
further amended and restated the Current Plan, subject to shareholder approval,
to (among other things) increase the number of shares available for issuance by
2,500,000 and extend the term of the plan to August 19, 2025. Our Board
recommends that shareholders approve the 2015 Plan to allow us to continue
granting stock options and other stock-based awards. As discussed below under
--Compensation Discussion and Analysis, equity awards granted under the
Current Plan are a principal element of our executive officers compensation
package. These awards emphasize long-term performance of our Company, as
measured by creation of shareholder value, and foster a commonality of interest
between shareholders and employees. We believe that the 2015 Plan is critical in
enabling us to attract and retain key employees and to create effective
incentives for those employees to contribute to our growth and financial
success. The increase in the number of shares under the 2015 Plan represents
approximately five percent of the aggregate number of outstanding shares of our
common stock on as of June 30, 2015. We anticipate that this increase in
available shares will enable us to continue our equity compensation program at
its current rate of aggregate annual awards for approximately five additional
years.
In addition, the 2015 Plan
reflects our continuing commitment to preserving shareholder value and promoting
corporate responsibility, as evidenced by the following design features:
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No evergreen provisions are included in the
2015 Plan. This means that the maximum number of shares issuable under the
plan is fixed and cannot be increased without shareholder approval, the
plan expires by its terms upon a specified date, and no new stock options
are awarded automatically upon exercise of an outstanding stock option.
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Shareholder approval is required for the
repricing of awards or the implementation of any award exchange program.
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There are limits on the number of awards that
any one participant may receive in a given year. |
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The maximum number of shares that may be
granted during a calendar year to any one participant with respect to
stock options, stock appreciation rights, and other stock-based awards
(other than performance-based awards that are not options) is 569,120
shares. |
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For performance-based awards that are not
options, a participant is limited during a calendar year to receiving
awards having an aggregate value of up to $20,000,000 as of the grant
date. |
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The 569,120-share limit on most awards
represents 20% of the original share reserve under the Current Plan at its
inception. Although the Board is proposing to increase the share reserve
under the 2015 Plan, we have decided to maintain the original
569,120-share award limit. |
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Performance-based awards exempt from the
$1,000,000 cap on deductible compensation imposed by Section 162(m) of the
Code, may be granted under the Current Plan. The performance criteria
permitted to be used for such awards are designed to provide the
Remuneration Committee maximum flexibility to tailor incentives targeted
toward performance that it believes best achieves our corporate objectives
and financial success. |
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If the 2015 Plan is approved,
2,500,000 new shares of common stock will be available for issuance (in addition
to the shares currently available for future awards or subject to outstanding
awards), and the plan would be scheduled to remain in effect until August 19,
2025. Other material differences included in the 2015 Plan are described
throughout the summary below, which is qualified in its entirety by reference to
the full text of the plan set forth in Exhibit A to this proxy statement. If the
2015 Plan is not approved, no award may be granted under the Current Plan after
June 7, 2019, unless the share reserve is exhausted before then, but awards
granted under the Current Plan on or before June 7, 2019 may extend beyond that
date.
We Manage Our Equity
Incentive Award Use Carefully, and Dilution Is Reasonable
We continue to believe that
equity awards such as stock options are a vital part of our overall compensation
program. However, we recognize that equity awards dilute existing shareholders,
and, therefore, we must responsibly manage the growth of our equity compensation
program. We are committed to effectively monitoring our equity compensation
share reserve, including our burn rate, to ensure that we maximize
shareholders value by granting the appropriate number of equity incentive
awards necessary to attract, reward, and retain employees.
The following table shows our
dilution and burn rate percentages.
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As of |
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June 30, 2015 |
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Dilution under Current Plan at fiscal year end
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7% |
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3-Year annual average burn rate (2) |
2% |
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(1) Dilution under Current Plan at fiscal year end is
calculated as the sum of (x) shares available for grant plus (y) shares subject
to outstanding equity incentive awards divided by our common stock outstanding,
all amounts determined as of June 30, 2015.
(2) 3-Year annual average burn rate is calculated as the simple
three-year average of our gross annual dilution under the Current Plan, with the
gross annual dilution calculated as the sum of stock options granted and the
fair value of shares subject to restriction granted divided by our outstanding
common stock at each fiscal year end as of June 30, 2013 through 2015.
The dilution under Current Plan at fiscal year end and 3-year
annual average burn rate described above may not be indicative of what the
actual amounts are in the future. The 2015 Plan does not contemplate the amount
or timing of specific equity awards. The potential dilution is a forward-looking
statement. Forward-looking statements are not facts. Actual results may differ
materially because of factors such as those identified in reports the Company
has filed with the U.S. Securities and Exchange Commission (SEC).
The Size of Our Share Reserve
Request Is Reasonable
If the 2015 Plan is approved by
our shareholders, we expect to have approximately 3,236,023 shares available for
grant after our annual meeting (based on shares available as of September 25,
2015), which we anticipate being a pool of shares sufficient for grants through
August 31, 2021, and necessary to provide a predictable amount of equity for
attracting, retaining, and motivating employees.
The size of our request is also
reasonable in light of the equity granted to our directors and employees over
the past six years.
9
Performance-Based Awards
Approval of the 2015 Plan by our
shareholders will also constitute approval of terms and conditions set forth in
the plan that will permit us to grant stock options, stock appreciation rights
and performance-based stock and cash awards under the 2015 Plan that may qualify
as performance-based compensation within the meaning of Section 162(m) of the
Code. Section 162(m) of the Code disallows a deduction to any publicly-held
corporation and its affiliates for certain compensation paid to covered
employees in a taxable year to the extent that compensation to a covered
employee exceeds $1 million. However, some kinds of compensation, including
qualified performance-based compensation is not subject to this deduction
limitation. For compensation awarded under a plan to qualify as
performance-based compensation under Section 162(m) of the Code, among other
things, the following terms must be disclosed to and approved by the
shareholders before the compensation is paid: (i) a description of the employees
eligible to receive such awards; (ii) a per-person limit on the number of shares
subject to stock options, stock appreciation rights and performance-based stock
awards, and the amount of cash subject to performance-based cash awards, that
may be granted to any employee under the plan in any year; and (iii) a
description of the business criteria upon which the performance goals for
performance-based awards may be granted (or become vested or exercisable).
Accordingly, we are requesting that our shareholders approve the 2015 Plan,
which includes terms and conditions regarding eligibility for awards, annual
per-person limits on awards and the business criteria for performance-based
awards granted under the 2015 Plan (as described in the summary below).
We believe it is in the best
interests of our Company and our shareholders to preserve the ability to grant
performance-based compensation under Section 162(m) of the Code. However, in
certain circumstances, we may determine to grant compensation to covered
employees that is not intended to qualify as performance-based compensation
for purposes of Section 162(m) of the Code. Moreover, even if we grant
compensation that is intended to qualify as performance-based compensation for
purposes of Section 162(m) of the Code, we cannot guarantee that such
compensation ultimately will be deductible by us.
Description of the 2015 Plan
The material features of the 2015
Plan are outlined below. The following description of the 2015 Plan is a summary
only and is qualified in its entirety by reference to the complete text of the
2015 Plan which is entitled the Amended and Restated 2015 Stock Incentive Plan
of Net 1 UEPS Technologies, Inc. Shareholders are urged to read the actual text
of the 2015 Plan in its entirety, which is appended to this proxy statement as
Appendix A.
Number of Shares
If the 2015 Plan is approved, the
number of shares issuable under the plan will be increased by 2,500,000 shares
to an aggregate of 11,052,580 shares since adoption of the plan.
Shares covered by awards that
expire, terminate or lapse without payment will again be available for the grant
of awards under the 2015 Plan, as well as shares that are delivered to us by the
holder to pay withholding taxes or as payment for the exercise price of an
award, if permitted by the Remuneration Committee. The number of shares
underlying any substitute awards granted are counted against the aggregate
number of shares available for awards under the 2015 Plan. The maximum number of
shares for which stock options, stock appreciation rights, and other stock-based
awards (other than performance-based awards that are not options) may be granted
during a calendar year to any participant is 569,120 shares. For
performance-based awards that are not options, a participant is limited during a
calendar year to receiving awards having an aggregate value of up to $20,000,000
as of the grant date. The shares deliverable in connection with awards granted
under the 2015 Plan may consist, in whole or in part, of authorized but unissued
shares or treasury shares.
10
To account for stock splits,
stock dividends, reorganizations, recapitalizations, mergers, consolidations,
spin-offs and other corporate events, the 2015 Plan requires the Remuneration
Committee to equitably adjust the number and kind of shares of common stock
issued or reserved pursuant to the plan or outstanding awards, the maximum
number of shares issuable pursuant to awards, the exercise price for awards, and
other affected terms of awards to reflect such event. Such adjustments to
outstanding awards are discretionary, rather than mandatory, under the existing
terms of the Current Plan. Discretionary adjustments made to outstanding awards
to reflect events such as stock splits could result in our having to record
significant additional compensation expenses at that time. This change in the
2015 Plan to mandatory adjustments is equitable and should enable us to avoid
having to record additional compensation expenses for adjustments to outstanding
awards to reflect stock splits and the like.
In the event of certain corporate
events, including stock sales, mergers, and sales of substantial assets, the
Remuneration Committee may, but is not obligated to, cancel outstanding awards
for full value, waive vesting requirements, provide for the issuance of
substitute awards, and/or provide that, for a period of time before such
corporate event, stock options will be exercisable for all shares subject to the
option and that upon the occurrence of the corporate event the options will
terminate. In this regard, the 2015 Plan clarifies that the Remuneration
Committees discretion is limited by the anti-acceleration provisions of Section
409A of the Code.
Administration
The Board or a designated
subcommittee of the Board administers the 2015 Plan. A designated subcommittee
must, unless the Board determines otherwise, consist solely of (i) at least two
individuals who qualify as non-employee directors within the meaning of Rule
16b-3 under the Exchange Act, during any period that the Company are subject to
Section 16 of the Exchange Act; and (ii) outside directors within the meaning
of Section 162(m) of the Code, during any period that the Company is subject to
Section 162(m) of the Code. The Board has designated the Remuneration Committee
as the subcommittee responsible for administering the 2015 Plan.
The Remuneration Committee
determines who receives awards under the 2015 Plan, as well as the form of the
awards, the number of shares underlying the awards, and the terms and conditions
of the awards consistent with the terms of the plan. Awards may, in the
discretion of the Remuneration Committee, be made in assumption of, or in
substitution for, outstanding awards previously granted by us or our affiliates
or a company acquired by us or with which we combine. However, the 2015 Plan
clarifies that, consistent with applicable Nasdaq marketplace rules, no
repricing of outstanding awards may be undertaken without obtaining prior
shareholder approval.
The Remuneration Committee is
authorized to interpret the 2015 Plan, to establish, amend and rescind any rules
and regulations relating to the plan, and to make any other determinations that
it deems necessary or desirable for the administration of the plan. The
Remuneration Committee also may correct any defect, supply any omission or
reconcile any inconsistency in the 2015 Plan in the manner and to the extent
that the Remuneration Committee deems it necessary or desirable.
The 2015 Plan authorizes the
Remuneration Committee to require payment of any amount determined to be
necessary to withhold for federal, state, local or other taxes resulting from
the exercise, grant or vesting of an award. The 2015 Plan clarifies, however,
that any payment of withholding taxes by delivery of shares or having shares
withheld by the Company may not exceed the amount necessary to satisfy the
statutory minimum withholding amount due.
Eligibility
The 2015 Plan permits grants of
awards to our employees, directors and consultants. Any eligible person may be
granted nonqualified stock options, but only employees may be granted incentive
stock options. As of June 30, 2015, we had approximately 4,764 employees,
including four executive officers and three non-employee directors, who were
eligible under the Current Plan.
11
Types of Awards
Incentive stock options,
nonqualified stock options, stock appreciation rights, limited stock
appreciation rights, restricted stock, performance-based awards and other awards
based on our common stock may be granted under the Current Plan.
Stock Options
The 2015 Plan permits the
Remuneration Committee to grant employees incentive stock options, which qualify
for special tax treatment in the United States, and permits the Remuneration
Committee to grant employees, directors and consultants nonqualified stock
options. The Remuneration Committee establishes the duration of each stock
option at the time it is granted. The maximum duration of an incentive stock
option is ten years after the date of grant.
The Remuneration Committee
establishes the exercise price of each stock option at the time it is granted.
The exercise price of a stock option may not be less than the fair market value,
as defined in the Current Plan, of our common stock on the date of grant. As of
September 29, 2015, the fair market value of our common stock as reported
on the Nasdaq Global Select Market was $16.31 per share. The Remuneration
Committee may establish vesting and performance requirements that must be met
before the exercise of stock options. Unless otherwise determined by the
Remuneration Committee, stock options vest ratably, on an annual basis, over a
period of three years, commencing with the first anniversary of the grant date
and subject to the holders continued service with us.
The exercise price of stock
options may be paid in cash or cash equivalents by the holder. The Remuneration
Committee may permit an option holder to pay the exercise price, or to satisfy
withholding tax liabilities that arise upon exercise, by tendering shares of our
common stock owned by the holder or by having us withhold some of the shares
deliverable upon exercise of the option, with a fair market value equal to the
exercise price and statutory minimum tax withholding liabilities. The
Remuneration Committee may also permit a stock option holder to exercise the
option by tendering a promissory note, in such form as the Remuneration
Committee may specify, that bears a market rate of interest and is fully
recourse.
If there is a public market for
our common stock, the Remuneration Committee may permit a stock option holder to
exercise all or part of the option holders vested options through a cashless
exercise procedure. Under a cashless exercise procedure, the option holder
delivers irrevocable instructions to a broker to sell the shares obtained upon
exercise of the option and deliver promptly to the Company proceeds of the sale
equal to the exercise price of the option and related tax withholding
obligation.
Stock Appreciation Rights
The Remuneration Committee also
may grant stock appreciation rights, either alone or in tandem with stock
options. Stock appreciation rights entitle their holder upon exercise to receive
an amount in any combination of cash or shares of our common stock (as
determined by the Remuneration Committee) equal in value to the excess of the
fair market value of the shares covered by the rights over the grant price. The
Remuneration Committee may also grant limited stock appreciation rights that are
exercisable upon the occurrence of specified contingent events. Such awards may
provide for a different method of determining appreciation, specify that payment
must be made only in cash, or provide that any related awards are not
exercisable while such limited stock appreciation rights are exercisable. No
stock appreciation right may have a term longer than ten years duration under
the Current Plan. In contrast, the existing terms of the 2015 Plan do not
include a term limit on stock appreciation rights.
12
Other Stock-Based Awards
The 2015 Plan also permits the
Remuneration Committee to grant awards that are valued by reference to, or
otherwise based on the fair market value of, our common stock. The Remuneration
Committee determines the form of award and the conditions to which awards are
subject, including the satisfaction of performance goals, the completion of
periods of service, or the occurrence of events. Stock-based awards may be
granted alone or in conjunction with any other award granted under the Current
Plan. Unless otherwise determined by the Remuneration Committee, stock-based
awards vest as to 20% of the shares on each of the grant date and the first four
anniversaries of the grant date subject to the recipients continued service
with us.
Performance-Based Awards
In general, Section 162(m) of the
Code prevents the deductibility for U.S. income tax purposes of compensation in
excess of one million dollars paid in any taxable year to an individual who, on
the last day of that year, is the Companys chief executive officer or is among
its three other most highly compensated executive officers (other than the chief
financial officer, to whom Section 162(m) does not apply), except that a
deduction may be taken for compensation that qualifies as performance-based
compensation under Section 162(m) of the Code.
Stock options granted at fair
market value ordinarily satisfy the performance-based requirements of Section
162(m) of the Code, if shareholder disclosure and approval requirements are met.
If restricted stock or other performance-based awards are intended to satisfy
the Code Section 162(m) deductibility requirements, payments under such awards
must be conditioned on attainment of pre-established objective performance
measures that have been established and certified by a committee of outside
directors and approved by shareholders. The performance criteria under the 2015
Plan on which applicable performance measures may be based include:
|
|
consolidated earnings before or after taxes
(including earnings before interest, taxes, depreciation and
amortization), |
|
|
net income, |
|
|
operating income, |
|
|
earnings per share, |
|
|
fundamental earnings per share (as determined
by the Remuneration Committee), |
|
|
book value per share, |
|
|
return on shareholders equity, |
|
|
expense management, |
|
|
return on investment, |
|
|
improvements in capital structure, |
|
|
profitability of an identifiable business unit
or product, |
|
|
maintenance or improvement of profit margins,
|
|
|
stock price, |
|
|
market share, |
|
|
revenues or sales, |
|
|
costs, |
|
|
cash flow, |
|
|
working capital, and |
|
|
return on assets. |
Performance criteria for
performance-based awards under the 2015 Plan may relate to any combination of
the Company as a whole, a subsidiary, and/or any business unit. Performance
targets may be set at a specific level or may be expressed relative to measures
at comparison companies or a defined index.
13
Under the 2015 Plan, the maximum
amount of a performance-based award that may be granted during a calendar year
to any participant is: (i) with respect to performance-based awards that are
stock options, options covering 569,120 shares, and (ii) with respect to
performance-based awards that are not options, awards having an aggregate value
as of the grant date of $20,000,000. A performance-based award is paid, if at
all, at such time as determined by the Remuneration Committee in its discretion,
subject to Section 162(m) of the Code and Section 409A of the Code.
Transferability
Unless otherwise determined by
the Remuneration Committee, awards may not be transferred or assigned by the
holder other than by will or the laws of descent and distribution.
Amendment
The Board may amend the 2015 Plan
at any time, provided that no amendment may be made without the consent of an
affected award holder that diminishes the rights of the holder, except that the
Board may amend the plan in any manner it deems necessary for awards to meet the
requirements of the Code or other applicable laws.
No amendment to the 2015 Plan may
be made without the approval of shareholders if the amendment would increase the
total number of shares reserved for issuance under the plan or change the
maximum number of shares for which awards may be granted to participants, except
for such changes in accordance with the plans adjustment provisions described
above.
Plan Term
Under the 2015 Plan, no award may
be granted after August 19, 2025, but awards granted before that date may extend
beyond that date. Under the terms of the existing Current Plan, no awards may be
granted after June 7, 2019.
United States Federal Income
Tax Consequences
The following discussion of the
U.S. federal income tax consequences relating to the 2015 Plan is based on
present U.S. federal tax laws and regulations and does not purport to be a
complete description of the U.S. federal tax laws. Participants may also be
subject to certain state and local taxes and non-United States taxes, which are
not described below.
When a nonqualified stock option
is granted, there are generally no United States income tax consequences for the
option holder or our Company at that time. When a nonqualified stock option is
exercised, the option holder generally recognizes compensation equal to the
excess, if any, of the fair market value of the underlying shares on the
exercise date over the exercise price. Our Company or its subsidiary that
employs the stock option holder may be entitled to a deduction equal to the
compensation recognized by the stock option holder.
When an incentive stock option,
within the meaning of Section 422 of the Code, is granted, there are no United
States income tax consequences for the option holder or our Company at that
time. Generally, when an incentive stock option is exercised, the option holder
does not recognize income and our Company does not receive a deduction. The
incentive stock option holder, however, must treat the excess, if any, of the
fair market value of the shares on the exercise date over the exercise price as
an item of adjustment for purposes of the alternative minimum tax.
If an incentive stock option
holder disposes of the shares after holding them for at least two years after
the incentive stock option was granted and one year after the option was
exercised, the amount the option holder receives upon the disposition over the
exercise price is treated as long-term capital gain to the option holder. Our
Company or its subsidiary is not entitled to a deduction.
14
If the stock option holder makes
a disqualifying disposition of the shares by disposing of the shares before
satisfying the holding periods described above, the option holder generally
recognizes compensation income equal to the excess, if any, of (1) the fair
market value of the shares on the exercise date, or, if less, the amount
received on the disposition, over (2) the exercise price. Our Company or its
subsidiary may be entitled to a deduction equal to the compensation recognized
by the stock option holder.
When a stock appreciation right
is granted, there are no U.S. federal income tax consequences for the
participant or our Company at that time. When a stock appreciation right is
exercised, the participant generally recognizes compensation equal to the cash
and/or the fair market value of the shares received on exercise. Our Company or
its subsidiary may be entitled to a deduction equal to the compensation
recognized by the participant.
In general, other types of awards
that may be issued under the Current Plan are taxable to the holder upon
receipt, except that awards of restricted stock are taxable to the holder on the
date the shares vest or become transferable, or on the date of receipt if the
holder makes an election under Section 83(b) of the Code. Our Company or its
subsidiary may be entitled to a deduction equal to the compensation recognized
by the participant receiving other stock-based awards, including restricted
stock awards.
New plan benefits
The benefits or amounts that will
be received by or allocated to our executive officers, non-employee directors
and employees under the 2015 Plan are not determinable because the 2015 Plan
does not provide for set benefits or amounts, or objective criteria for
determining the compensation thereunder with regard to any participants, and we
have not approved any awards that are conditioned on shareholder approval of
this proposal.
Current plan benefits
The table below contains the
benefits or amounts that the individuals and groups listed below have received
under the Current Plan since the plans inception:
|
|
Number of Shares Subject to |
|
Number of Shares of Restricted
|
|
|
Options Granted Under the |
|
Stock Granted Under the |
Name and
Position |
|
Current Plan |
|
Current Plan |
Dr. Serge C.P. Belamant, Chief Executive Officer, Chairman
of the Board and Director |
|
1,012,210 |
|
881,957 |
Herman G. Kotzé, Chief Financial Officer, Treasurer,
Secretary and Director |
|
617,797 |
|
655,274 |
Phil-Hyun Oh, President KSNET |
|
26,928 |
|
85,333 |
Nitin Soma, Vice-President Information Technology |
|
409,445 |
|
371,328 |
All Executive Officers, as a Group |
|
2,066,380 |
|
1,993,892 |
All Current Directors who are not executive officers, as a
Group |
|
125,001 |
|
113,864 |
Each Nominee for Election as a Director |
|
1,755,008 |
|
1,651,095 |
Each associate of any such directors, executive officers,
or directors |
|
- |
|
- |
Each other current and former 5% holder or future 5%
recipient |
|
- |
|
- |
All employees as a Group (including all current
non-executive officers) |
|
700,035 |
|
2,453,867 |
The Board recommends a vote FOR the amendment and
restatement of the Current Plan.
15
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
MEETINGS OF THE BOARD AND DIRECTOR INDEPENDENCE
Our Board typically holds a
regular meeting once every quarter and holds special meetings when necessary.
During the fiscal year ended June 30, 2015, our Board held a total of five
meetings. All of the directors who served during our 2015 fiscal year attended
100% of the meetings of the Board. All of the directors attended 100% of the
aggregate number of meetings of those committees of the Board on which such
director served during the year. We encourage each member of the Board to attend
the annual meeting of shareholders, but have not adopted a formal policy with
respect to such attendance.
All of our directors who served
during fiscal 2015 attended last years annual meeting, except Mr. Pein. The
non-management directors meet regularly without any management directors or
employees present. These meetings are held on the day of or day preceding other
Board or committee meetings.
The Board annually examines the
relationships between the Company and each of our directors. After this
examination, the Board has concluded that Messrs. Seabrooke, Pein and Edwards
are independent as defined under Nasdaq Rule 5605(a)(2) and under Rule
10A-3(b)(1) under the Exchange Act, as that term relates to membership on the
Board and the various Board committees.
COMMITTEES OF THE
BOARD
The Board has established an
Audit Committee, a Remuneration Committee and a Nominating and Corporate
Governance Committee. The members of our Board Committees are presented in the
table below:
|
|
|
|
|
|
Nominating and |
|
|
|
|
|
|
Corporate |
|
|
Audit |
|
Remuneration |
|
Governance |
Director |
|
Committee |
|
Committee |
|
Committee |
Dr. Serge C.P. Belamant (#) |
|
|
|
|
|
|
Paul Edwards |
|
X |
|
X |
|
X |
Herman G. Kotzé (#) |
|
|
|
|
|
|
Alasdair J.K. Pein |
|
X |
|
X* |
|
X |
Christopher S.
Seabrooke |
|
X* |
|
X |
|
X* |
# Executive |
|
|
|
|
|
|
* Chairperson |
|
|
|
|
|
|
Audit Committee
The Audit Committee consists of
Messrs. Seabrooke, Pein and Edwards, with Mr. Seabrooke acting as the
Chairperson. The Board has determined that Mr. Seabrooke is an audit committee
financial expert as that term is defined in applicable SEC rules, and that all
three members meet Nasdaqs financial literacy criteria. The Audit Committee
held eight meetings during the 2015 fiscal year. See Audit Committee Report on
page 37.
The Audit Committee was
established by the Board for the primary purpose of overseeing or assisting the
Board in overseeing the following:
|
|
the integrity of our financial statements;
|
|
|
our compliance with legal and regulatory
requirements; |
|
|
the qualifications and independence of our
registered public accounting firm; |
|
|
the performance of our independent auditors and
of the internal audit function; |
|
|
the accounting and financial reporting
processes and the audits of our financial statements; and |
|
|
our systems of disclosure controls and
procedures, internal controls over financial reporting, and compliance
with ethical standards adopted by us. |
16
A copy of our Audit Committee
charter is available without charge on our website, www.net1.com under the
Investor RelationsGovernance section.
Remuneration Committee
The Remuneration Committee
comprises Messrs. Pein, Seabrooke and Edwards, with Mr. Pein acting as the
Chairperson. The Remuneration Committee held four meetings during the 2015
fiscal year. The Remuneration Committee has the following principal
responsibilities, authority and duties:
|
|
review and approve performance goals and
objectives relevant to the compensation of all our executive officers,
evaluate the performance of each executive officer in light of those goals
and objectives, and set each executive officers compensation, including
incentive-based and equity- based compensation, based on such evaluation;
|
|
|
make recommendations to the Board with respect
to incentive and equity-based compensation plans; |
|
|
review and make recommendations to the Board
regarding compensation-related matters outside the ordinary course,
including, but not limited, to employment contracts, change-in-control
provisions and severance arrangements; |
|
|
administer our stock option, stock incentive,
and other stock compensation plans, including the function of making and
approving all grants of options and other awards to all executive officers
and directors, and all other eligible individuals, under such plans;
|
|
|
review annually and make recommendations to the
Board regarding director compensation; |
|
|
assist management in developing and, when
appropriate, recommend to the Board, the design of compensation policies
and plans; |
|
|
review and discuss with management the
disclosures in our Compensation Discussion and Analysis and any other
disclosures regarding executive compensation to be included in our public
filings or shareholder reports; and |
|
|
recommend to the Board whether the Compensation
Discussion and Analysis should be included in our proxy statement, Form
10-K, or information statement, as applicable, and prepare the related
report required by the rules of the SEC. |
A copy of our Remuneration
Committee charter is available without charge on our website, www.net1.com under
the Investor RelationsGovernance section.
Nominating and Corporate Governance Committee
The Nominating and Corporate
Governance Committee comprises Messrs. Seabrooke, Pein and Edwards, with Mr.
Seabrooke acting as the Chairperson. The Nominating and Corporate Governance
Committee held four meetings during the 2015 fiscal year. The principal duties
and responsibilities of the Nominating and Corporate Governance Committee are as
follows:
|
|
monitor the composition, size and independence
of the Board; |
|
|
establish criteria for Board and committee
membership and recommend to our Board proposed nominees for election to
the Board and for membership on each committee of the Board; |
|
|
monitor our procedures for the receipt and
consideration of director nominations by shareholders and other persons
and for the receipt of shareholder communications directed to our Board;
|
|
|
make recommendations regarding proposals
submitted by our shareholders; |
|
|
establish and monitor procedures by which the
Board will conduct, at least annually, evaluations of its performance;
|
|
|
review our Corporate Governance Guidelines
annually and recommend changes, as appropriate, for review and approval by
the Board; and |
17
|
|
make recommendations to the Board regarding
management succession planning and corporate governance best practices.
|
A copy of our Nominating and Corporate Governance Committee
charter is available without charge on our website, www.net1.com under the
Investor RelationsGovernance section.
BOARD LEADERSHIP STRUCTURE AND BOARD OVERSIGHT OF RISK
Board Leadership
Our Board is led by our Chairman, Dr. Belamant, who is also our
Chief Executive Officer. The Board believes that Dr. Belamants service as both
Chairman of the Board and Chief Executive Officer is in our best interests and
the best interests of our shareholders.
A combined Chairman and Chief Executive Officer leadership
structure is commonly utilized by public companies in the United States, and our
Board believes that this leadership structure has been effective for us and
minimizes the potential for duplication of efforts and conflict of roles. Dr.
Belamant possesses detailed and in-depth knowledge of the issues, opportunities
and challenges facing us, and is thus better positioned than a non-employee
Chairman to focus the Boards time and attention on the matters that are most
critical to us. Additionally, having one person serve as both Chairman of the
Board and Chief Executive Officer enables decisive leadership, ensures clear
accountability and enhances our ability to communicate our message and strategy
clearly and consistently to our shareholders, employees, customers and
suppliers.
While our Amended and Restated By-Laws do not require that the
roles of Chairman of the Board and Chief Executive Officer be filled by the same
person, our Board believes that having Dr. Belamant fill both positions is the
appropriate leadership structure for us.
We do not have a lead director. The Board believes that all of
our independent directors are active and engaged Board members and that a number
of them fulfill a lead director role at various times depending upon the
particular issues involved. Further, Mr. Seabrooke, who is the Chairman of both
the Nominating and Corporate Governance Committee and the Audit Committee and is
a member of the Remuneration Committee, presides over all executive sessions of
the independent directors.
The Boards Role in Risk Oversight
Managing risk is an ongoing process inherent in all decisions
made by management. The Board discusses risk throughout the year, particularly
at Board meetings when specific actions are considered for approval. The Board
has ultimate responsibility to oversee our enterprise risk management program.
This oversight is conducted primarily through various committees of the Board as
described below.
Our Enterprise Risk Management Committee is responsible for
identifying, assessing, prioritizing and developing action plans to mitigate the
material business, operational and strategic risks affecting us. The Enterprise
Risk Management Committee comprises our Chief Executive Officer (who serves as
Chairperson), Chief Financial Officer and Group Compliance Officer. The Group
Compliance Officer meets semi-annually with the leaders of our various business
units and his findings are reported to and discussed by the Enterprise Risk
Management Committee. The Enterprise Risk Management Committee meets and reports
to the Audit Committee semi-annually.
The Audit Committee directly provides oversight of risks
relating to the integrity of our consolidated financial statements, internal
control over financial reporting and the internal audit function. The
Remuneration Committee oversees the management of risks related to our executive
compensation program. The Nominating and Corporate Governance Committee oversees
the management of risks related to management succession planning.
18
REMUNERATION COMMITTEE
INTERLOCKS AND INSIDER
PARTICIPATION
None of the members of our Remuneration Committee has at any
time been one of our officers or employees. None of our executive officers
serves or in the past has served as a member of the Board or remuneration
committee of any entity that has one or more of its executive officers serving
on our Board or our Remuneration Committee.
NOMINATIONS PROCESS AND
DIRECTOR QUALIFICATIONS
The Nominating and Corporate Governance Committee reviews with
the Board the skills and characteristics required of Board members. Our
Corporate Governance Guidelines provide that the Nominating and Corporate
Governance Committee consider a candidates independence, as well as the
perceived needs of the Board and the candidates background, skills, business
experience and expected contributions. At a minimum, members of the Board must
possess the highest professional ethics, integrity and values, and be committed
to representing the long-term interests of our shareholders. They must also have
an inquisitive and objective perspective, practical wisdom and mature judgment.
The Nominating and Corporate Governance Committee may also take into account the
benefits of diversity in candidates viewpoints, background and experience, as
well as the benefits of constructive working relationships among directors.
Other than as set forth in our Corporate Governance Guidelines, the Nominating
and Corporate Governance Committee does not have a formal policy with respect to
diversity.
The Nominating and Corporate Governance Committee also reviews
and determines whether existing members of the Board should stand for
re-election, taking into consideration matters relating to the number of terms
served by individual directors, the ability of an individual director to devote
the appropriate level of time and attention to Board duties in light of other
positions he holds (including other directorships) and the changing needs of the
Board. We do not have a limit on the number of terms an individual may serve as
a director on our Board.
The Nominating and Corporate Governance Committee utilizes a
variety of methods for identifying and evaluating nominees for director. The
Nominating and Corporate Governance Committee regularly assesses the appropriate
composition, size and independence of the Board, and whether any vacancies are
expected due to change in employment or otherwise. In the event that vacancies
are anticipated, or otherwise arise, the Nominating and Corporate Governance
Committee considers various potential candidates for director. Candidates are
evaluated at regular or special meetings of the Nominating and Corporate
Governance Committee, and may be considered at any point during the year. The
Nominating and Corporate Governance Committee will consider shareholder
recommendations for candidates for the Board that are properly submitted in
accordance with Section 4.16 of our Amended and Restated By-Laws in the same
manner it considers nominees from other sources. In evaluating such
recommendations, the Nominating and Corporate Governance Committee will use the
qualifications standards described above and will seek to achieve a balance of
knowledge, experience and capability on the Board.
SHAREHOLDER COMMUNICATIONS
WITH THE BOARD
Any shareholder who wishes to communicate directly with the
Board may do so via mail or facsimile, addressed as follows:
Net 1 UEPS Technologies, Inc.
Board
of Directors
PO Box 2424
Parklands, 2121, South Africa
Fax: 27 11
880 7080
The corporate secretary shall transmit any communication to the
Board, or individual director(s), as applicable, as soon as practicable upon
receipt. Absent safety or security concerns, the corporate secretary shall relay
all communications, without any other screening for content.
19
CORPORATE GOVERNANCE GUIDELINES
The Board has adopted a set of corporate governance guidelines.
We will continue to monitor our corporate governance guidelines and adopt
changes as necessary to comply with rules adopted by the SEC and Nasdaq, and to
conform to best industry practice. This monitoring will include comparing our
existing policies and practices to policies and practices suggested by various
groups or authorities active in corporate governance and the practices of other
public companies. A copy of our corporate governance guidelines is available on
our website at www.net1.com under the Investor RelationsGovernance section.
CODE OF ETHICS
The Board has adopted a written code of ethics, as defined in
the regulations of the SEC. We require all of our directors, officers,
employees, contractors, consultants and temporary staff, including our Chief
Executive Officer, our Chief Financial Officer (who also serves as our principal
accounting officer) and other senior personnel performing similar functions, to
adhere to this code in addressing the legal and ethical issues encountered in
conducting their work. Our code of ethics requires avoidance of conflicts of
interest, compliance with all laws and other legal requirements, conduct of
business in an honest and ethical manner, integrity and actions in our best
interest. Directors, officers and employees are required to report any conduct
that they believe in good faith to be an actual or apparent violation of the
code. The Sarbanes-Oxley Act of 2002 requires companies to have procedures to
receive, retain and treat complaints received regarding accounting, internal
accounting controls or auditing matters and to allow for the confidential and
anonymous submission by employees of concerns regarding questionable accounting
or auditing matters. We currently have such procedures in place. A copy of our
code of ethics is available upon request made either by mail to our corporate
secretary at Net 1 UEPS Technologies, Inc., PO Box 2424, Parklands 2121, South
Africa or by telephone to our Investor Relations Department at + 1 917-767-6722.
A copy of our code of ethics is also available free of charge on our website at
www.net1.com under the Investor RelationsGovernance section.
COMPENSATION OF DIRECTORS
Directors who are also executive officers do not receive
separate compensation for their services as directors. During fiscal 2015, our
non-employee directors received compensation as described below.
|
|
Fees Earned or
|
|
|
Stock
Awards(1)(2) |
|
|
Stock Options |
|
|
|
|
Name |
|
Paid in Cash ($) |
|
|
($) |
|
|
($) |
|
|
Total ($) |
|
Paul Edwards |
|
81,796 |
|
|
39,325 |
|
|
- |
|
|
121,121 |
|
Alasdair J.K. Pein |
|
109,824 |
|
|
52,800 |
|
|
- |
|
|
162,624 |
|
Christopher S. Seabrooke |
|
137,280 |
|
|
66,000 |
|
|
- |
|
|
203,280 |
|
(1) As of June 30, 2015, the number of shares of restricted
stock held by each non-employee director is as follows: Mr. Edwards 8,105 Mr.
Pein 17,316; Mr. Seabrooke 13,604.
(2) Represents shares of restricted stock granted on August 27,
2014, one-third of which vest on August 27, 2015, 2016 and 2017, respectively.
Vesting of such shares is conditioned upon the recipients continuous service as
a member of our Board through the applicable vesting date. The dollar value
reflected is based on the closing price of our common stock on the date of
grant. Based on this price, the number of shares granted was as follows: Mr.
Edwards3,502; Mr. Pein4,702 and Mr. Seabrooke5,877.
In determining fiscal 2015 compensation, the Board analyzed the
annual compensation of non-employee directors of U.S.- and UK-listed transaction
processor companies with a range of market equity capitalizations above, below
and comparable to ours. The peer group comprised: Heartland Payment Systems,
Inc., Global Payments Inc., WEX Inc., Euronet Worldwide, Inc., Total System
Services, Inc., Verifone Systems, Inc., Jack Henry & Associates, Inc., Sage
Group plc and Green Dot Corporation. In addition, the Board considered the
various roles of the non-employee directors. Directors receive a base fee for
membership on the Board. Directors who serve on Board committees and/or serve as
Chairperson of Board committees receive additional compensation in recognition
of the additional time they are required to spend on committee matters.
20
EQUITY
COMPENSATION PLAN
INFORMATION
The following table sets forth information regarding our
compensation plans under which our equity securities are authorized for issuance
as of June 30, 2015:
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
securities |
|
|
|
Number of |
|
|
Weighted |
|
|
remaining |
|
|
|
securities to be
|
|
|
average |
|
|
available for |
|
|
|
issued upon |
|
|
exercise price
|
|
|
future issuance
|
|
|
|
exercise of |
|
|
of |
|
|
under equity |
|
|
|
outstanding |
|
|
outstanding |
|
|
compensation |
|
|
|
options, |
|
|
options, |
|
|
plans (excluding
|
|
|
|
warrants and |
|
|
warrants and |
|
|
securities
reflected |
|
|
|
rights |
|
|
rights |
|
|
in column (a))
|
|
Plan Category |
|
(a) |
|
|
(b) |
|
|
(c) |
|
Equity compensation plans
approved by security holders
Current Plan |
|
2,303,406 |
|
$ |
15.05 |
|
|
1,055,515 |
|
Equity compensation plans not approved by
security holders |
|
|
|
|
|
|
|
|
|
Stock options granted to
employees of Prism Holdings
Proprietary Limited group (Prism)
(1) |
|
97,763 |
|
$ |
22.51 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
2,401,169 |
|
|
|
|
|
1,055,515 |
|
(1) In connection with the acquisition of Prism in July 2006,
we granted Prism employees options to purchase shares of common stock at an
exercise price of $22.51 per share, which was the average of the high and low
sale prices of the common stock on the date of grant. These options are all
currently exercisable and expire on August 24, 2016.
EXECUTIVE
COMPENSATION
ANALYSIS OF RISK IN OUR COMPENSATION STRUCTURE
As part of its responsibilities to annually review all
incentive compensation and equity-based plans, and evaluate whether the
compensation arrangements of our employees incentivize unnecessary and excessive
risk-taking, the Remuneration Committee evaluated the risk profile of our
compensation policies and practices for fiscal 2015 and concluded that they do
not motivate imprudent risk taking. In its evaluation, the Remuneration
Committee reviewed our employee compensation structures, and noted numerous
design elements that manage and mitigate risk without diminishing the incentive
nature of the compensation, including:
|
|
a balanced mix between cash and equity, and
annual and longer-term incentives; |
|
|
caps on incentive awards at reasonable levels;
|
|
|
linear payouts between target levels with
respect to annual cash incentive awards; |
|
|
discretion on individual awards, particularly
in special circumstances; and |
|
|
long-term incentives. |
The Remuneration Committee also reviewed our compensation
programs for certain design features that may have the potential to encourage
excessive risk-taking, including: over-weighting towards annual incentives,
highly leveraged payout curves, unreasonable thresholds, and steep payout cliffs
at certain performance levels that may encourage short-term business decisions
to meet payout thresholds. The Remuneration Committee concluded that our
compensation programs do not include such elements.
In addition, the Remuneration Committee analyzed our overall
enterprise risks and how compensation programs may impact individual behavior in
a manner that could exacerbate these enterprise risks.
21
For this purpose, the Remuneration Committee considered our
growth and return performance, volatility and leverage. In light of these
analyses, the Remuneration Committee concluded that it has a balanced pay and
performance program that does not encourage excessive risk-taking that is
reasonably likely to have a material adverse effect on us. We believe our
compensation programs encourage and reward prudent business judgment and
appropriate risk-taking over the long term.
COMPENSATION DISCUSSION AND ANALYSIS
Fiscal 2015 Compensation Summary
|
|
Base salaryBase salary represents a significant portion
of compensation, given the cash generative nature of our business. Dr.
Belamant, our Chief Executive Officer, Mr. Kotzé, our Chief Financial
Officer, and Mr. Soma, our Vice PresidentInformation Technology, each
received a 4% base salary increase for fiscal 2015. |
|
|
|
|
|
CEO/CFO cash incentive awards In August 2014, we
established an annual cash incentive award plan for fiscal 2015 for Dr.
Belamant and Mr. Kotzé, as we have done in prior years. The plan was
intended to link payment to the achievement of specific financial
performance (quantitative) goals on a Company-wide basis, and operational
(qualitative) goals. Based on our fiscal 2015 financial performance, Dr.
Belamant and Mr. Kotzé each received the maximum amount of the
quantitative portion of the award, which was based on achievement of
specified quantitative goals that were in excess of target levels. Dr.
Belamant and Mr. Kotzé each received the maximum of the potential amount
of the qualitative portion of the award for their achievement of specified
goals related to corporate action and mitigation of regulatory issues and
implementing strategic objectives and operating plans. |
|
|
|
|
|
Cash incentive awards for Mr. OhIn July 2014, we
concluded two new service agreements with Mr. Oh, President of KSNET,
which contain cash incentive award targets. Mr. Oh achieved 87% of the
quantitative award and 100% of the qualitative award for fiscal 2015 under
his KSNET service agreement. Mr. Oh did not achieve any of his qualitative
targets under the Net1 Korea service agreement for fiscal 2015. |
|
|
|
|
|
Bonus for Mr. SomaMr. Soma, our Senior Vice
PresidentInformation Technology, received a bonus of $315,000 for fiscal
2015. |
|
|
|
|
|
Stock-based awardsWe made an annual award of stock
options with time-based vesting provisions to a group that included Dr.
Belamant and Messrs. Kotzé, Oh and Soma. We also awarded restricted stock
to a group that included Dr. Belamant and Messrs. Kotzé and Soma.
|
Overview
The goal of our executive compensation program is the same as
our goal for operating the Companyto create long-term value for our
shareholders. To achieve this goal, we seek to reward our named executive
officers for sustained financial and operating performance and leadership
excellence, to align their interests with those of our shareholders and to
encourage them to remain with us for long and rewarding careers. This section of
the proxy statement explains how our compensation program is designed and
operates in practice with respect to the four individuals who comprised our
named executive officers at the end of our 2015 fiscal yearDr. Belamant and
Messrs. Kotzé, Oh and Soma. Our named executive officers have the broadest job
responsibilities and are the only individuals who have policy-making authority.
Each element of our executive compensation program is designed
to fulfill one or more of our performance, alignment and retention objectives.
These elements consist of salary, bonus and both equity and non-equity incentive
compensation. Each named executive officer receives one or more, but not
necessarily all, of these elements. In determining the type and amount of
compensation for each executive officer, we focus on both current pay and the
opportunity for future compensation and seek to combine compensation elements so
as to optimize his or her contribution to us.
22
We consider the mix of our compensation components from year to
year based on our overall performance, an executives individual contributions,
and compensation practices of other U.S.- and UK-based public companies
including companies in our peer group described below. We do not have an exact
formula for allocating between cash and non-cash compensation. We do,
nonetheless, provide for a balanced mix of compensation components that are
designed to encourage and reward behavior that promotes shareholder value in
both the short and long term.
The chart below illustrates the mix of the elements of the 2015
compensation program we established for our named executive officers, using
target levels for the cash incentive component.
Compensation Objectives
Performance. We reward excellent performance by our
named executive officers and motivate them to continue to produce superior,
long-term results through a combination of cash bonuses, incentive payments that
depend on achievement of pre-defined levels of financial and operating goals and
equity awards in the form of stock options or restricted stock that derive their
value from increases in our share price and/or satisfaction of other financial
and strategic performance goals. Base salary, bonus and non-equity incentive
compensation are designed to reward annual achievements and be commensurate with
each executive officers scope of responsibility, demonstrated ingenuity,
dedication, leadership and management effectiveness. Equity incentive
compensation generally focuses on achievement of longer term results.
Alignment. We seek to align the interests of our named
executive officers with our shareholders by evaluating them on the basis of
financial and non-financial measurements that we believe ultimately drive
long-term shareholder value. The elements of our compensation package that we
believe align these interests most closely are a combination of annual
quantitative and qualitative cash compensation awards, stock option awards which
increase in value as our stock price increases and restricted stock awards which
vest over time and are granted or become vested upon the satisfaction of
specified performance goals.
23
Retention. The Remuneration Committee recognizes that
the talent pool in South Africa is more limited than in other more developed
countries. In addition, the long tenure of our South Africa-based management
team, in particular, Dr. Belamant and Messrs. Kotzé and Soma, has made them
especially knowledgeable about our business and industry and thus particularly
valuable to us. Dr. Belamant in particular has intricate knowledge of, and has
created large parts of the proprietary technology and software deployed by us in
our operations, which is an indispensable part of our technological advantage in
our various operations and future developments in our growth pipeline. We wish
to avoid losing these long-tenured officers and their invaluable knowledge,
particularly given how important they are to our future performance. Therefore,
retention is a key objective of our executive compensation program. We attempt
to retain our named executive officers by seeking to provide a competitive pay
package and using continued service as a condition to receipt of full
compensation. The extended vesting terms of equity awards have the effect of
tying this element of compensation to continued service with us.
Implementing our Objectives
Process for Determining Compensation. The
Remuneration Committee analyzes compensation data of companies that it selects
as a peer group to better understand how our pay package compares with those
companies. The Remuneration Committee then uses this knowledge to develop our
executive compensation program based on its judgment of what is appropriate and
necessary to fulfill and maintain our staffing needs. As described in more
detail below, it considers internal pay equity as between the Chief Executive
Officer and the Chief Financial Officer and uses a formulaic approach to set the
Chief Financial Officers compensation relative to the Chief Executive Officers
compensation but does not do so for the other named executive officers.
The peer group selected by the Remuneration Committee comprises
a broad spectrum of companies, which range significantly in size from a revenue,
profitability and enterprise value perspective. The peer group consists of
payment processing companies generally considered comparable to us in terms of
their businesses (such as being a payment systems provider) as well as other
companies within other parts of the information technology sector and those
operating in or providing services in emerging markets.
Our peer group, which includes both U.S. and UK listed
companies, consists of the following companies: Heartland Payment Systems, Inc.,
Global Payments Inc., WEX Inc., Euronet Worldwide, Inc., Total System Services,
Inc., Verifone Systems, Inc., Jack Henry & Associates, Inc., Sage Group plc
and Green Dot Corporation.
The Remuneration Committees process for determining
compensation includes an analysis of all elements of compensation. The
Remuneration Committee compares these compensation components separately and in
total to compensation at the peer group companies, taking into account, among
other things, the relative market capitalizations of the Company and the members
of the peer group. The Remuneration Committee sets the compensation of Mr. Kotzé
based on the total compensation package of Dr. Belamant. Since the role played
by Mr. Kotzé is significantly broader than that of a typical Chief Financial
Officer, the Remuneration Committees goal is to set this package at
approximately 45% to 65% of Dr. Belamants total compensation package. Because
the Remuneration Committee considers international comparables in its
compensation analysis for both Dr. Belamant and Mr. Kotzé, their total
compensation packages are denominated in U.S. dollars. Because Mr. Somas
compensation package is derived from the amount of compensation we pay to Mr.
Kotzé, his compensation package is also denominated in U.S. dollars. Our
executive officers based in South Africa may elect to be paid in a currency
other than U.S. dollars, in which case the U.S. dollar amount is converted into
South African Rand (ZAR) at the exchange rate in effect at the time of
payment. In the early part of each fiscal year, the Remuneration Committee
establishes base salaries and sets the short-term cash incentive award plan
remuneration targets and payment criteria for Dr. Belamant and Mr. Kotzé.
Following the end of each fiscal year, the Remuneration Committee determines the
annual incentive cash payments and bonuses, if any, to be made to each executive
officer based on their and our performance during the fiscal year.
24
Compensation for fiscal 2015 for Mr. Oh was determined in
accordance with his service agreements. Mr. Ohs compensation is denominated and
paid in Korean won (KRW) in accordance with the terms of his negotiated service
agreements. Under the service agreements, he receives a base salary and is
entitled to receive a cash incentive payment based upon the achievement of
certain targets that are linked to the operating performance of Net1 Korea and
KSNET. We have aligned KSNETs fiscal year end with ours. However, in order to
remain consistent with our Korean peer competitors, we continue to determine Mr.
Ohs cash incentive payment (and our KSNET staffs remuneration) using KSNETs
financial results for the twelve month period ending December of each year.
Accordingly, we determined Mr. Ohs cash incentive payment for the twelve month
period ended December 31, 2014.
Before the Remuneration Committee makes decisions on
compensation for the year, it discusses with Dr. Belamant each executive
officers performance during the year, his or her accomplishments and specific
areas of progress. Dr. Belamant bases his evaluation on his knowledge of each
executive officers performance (with due regard to the operational environment)
and targets that have been set for a particular performance period. The
executive officers are then evaluated based on their individual performance
during the fiscal year. Dr. Belamant makes a recommendation to the Remuneration
Committee on each executive officers compensation, except for his own and Mr.
Kotzés compensation. Executive officers do not propose or seek approval for
their own compensation. Dr. Belamants and Mr. Kotzés annual performance review
is developed by the Remuneration Committee as a whole.
The Remuneration Committee also consults with Dr. Belamant and
Mr. Kotzé regarding non-executive officer employee compensation and is
responsible for approving all awards under our Current Plan.
Equity Grant Practices. We believe that
long-term performance of our Company is achieved through a culture that
encourages long-term performance by our executive officers through the use of
stock and stock-based awards. Accordingly, awards of stock options and
restricted stock are a fundamental element in our executive compensation program
because they emphasize long-term performance, as measured by creation of
shareholder value, and help align the interests of our shareholders and
employees. We have granted equity awards through our Current Plan which was
adopted by our Board and approved by our shareholders to permit the grant of
stock options and other stock-based awards to our employees, directors and
consultants. Options granted under the plan vest ratably over a period of three
to five years after grant unless otherwise provided in a particular award
agreement and have ten-year terms from the date of grant.
In determining the size of an equity award to an executive
officer, the Remuneration Committee considers the executives then current cash
total compensation package (which includes salary, potential bonus and cash
incentive award plan compensation), any previously received equity awards, the
value of the grant at the time of award and the number of shares available for
grants pursuant to our Current Plan.
We record stock-based compensation charges over the vesting
term of the equity award as required under current accounting standards. When
awarding equity compensation, management and the Remuneration Committee seek to
weigh the cost of these grants with their potential benefits as a compensation
tool. We believe that combining grants of stock options and restricted stock
effectively balances our objective of focusing our employees, including our
named executive officers, on delivering long-term value to our shareholders,
with our objective of providing value to our employees with the equity awards.
Stock options have value only to the extent that our stock price on the date of
exercise exceeds the stock price on the date of grant or any particular minimum
share price necessary to vest such options, and thus are an effective
compensation tool only if the stock price appreciates during the vesting term.
In this sense, stock options are a motivational tool.
Employment Agreements. Our South African resident
executives are employed on an at will basis, without employment agreements,
severance payment arrangements (except as required by local labor laws), or
payment arrangements that would be triggered by a change in control. The absence
of such arrangements enables us to terminate the employment of these named
executive officers with discretion as to the terms of any severance arrangement
that might be provided upon such termination. This is consistent with our
performance-based employment and compensation philosophy.
25
We do have restraint of trade agreements with each of these
named executive officers. The terms of these agreements provide that upon the
termination of the executives employment, the executive is restricted, for a
period of 24 months, from soliciting business from certain customers, working
for or holding interests in our competitors or participating in a competitive
activity within the territories where we do business.
We do from time to time enter into employment agreements
with senior executives of companies that we acquire in connection with the
acquisition. Compensation under such employment agreements would not ordinarily
be determined by reference to peer group comparisons. We entered into two
service agreements with Mr. Oh in June 2014, in connection with his roles at
Net1 Korea and KSNET. The terms of these two three-year agreements were based on
the original KSNET service agreement with Mr. Oh that concluded in October 2010,
and no peer group comparisons were performed.
We appointed Mr. Oh as a representative director of Net1 Korea
and entered into a three-year service agreement with him in conjunction with
such appointment. Under the Net1 Korea service agreement, Mr. Oh is entitled to
receive the following cash compensation: (i) an annual base salary of KRW 10
million and (ii) an annual bonus of up to KRW 80 million, based on the
achievement of qualitative targets determined by our Chairman. The qualitative
target for the 2015 fiscal year was the successful launch in Korea during the
year of any of our products that are not currently marketed by Net1 Korea in the
Korean market (e.g., Virtual Credit Card, Variable PIN, Money transfers, and
bill payments). The other terms of the Net1 Korea service agreement are
substantially similar to the terms of the KSNET service agreement described
below.
Under the KSNET service agreement, Mr. Oh is entitled to
receive: (i) an annual base salary of KRW 405 million and (ii) an annual bonus
of up to KRW 440 million, which comprises a quantitative and qualitative
portion.
The quantitative portion of the annual bonus is capped at a
maximum of KRW 338 million and will be based on the achievement of specified
levels of KSNETs free cash flow and profit before interest and tax and any
bonus under the service agreement (PBIT) during any calendar year during the
term of the service agreement, as described below. Mr. Oh is entitled to receive
KRW 2 million for every KRW 1 billion of free cash flow (defined as operating
cash flow, minus tax and capital expenditures) during the year. The maximum
payable in respect of the free cash flow metric is KRW 50 million.
If PBIT is at least 90% but less than 100% of the previous
years PBIT, then Mr. Oh is entitled to receive (i) KRW 208 million, minus (ii)
KRW 10 million for each 1% by which current PBIT is less than the previous
years PBIT. If PBIT is equal to or greater than the previous years PBIT, then
Mr. Oh is entitled to receive KRW 208 million, plus KRW 3,333,333 for each 1%
increase in PBIT when compared to the previous year (up to a maximum of KRW 80
million in respect of the excess), for a total maximum of KRW 288 million.
The qualitative portion of the annual bonus is capped at a
maximum of KRW 102 million and is based on the achievement of certain key
objectives to be determined annually by our Chairman. Each item comprising the
qualitative portion is based on performance during our fiscal year ending June
30. Achievement of the qualitative targets will be determined by our
Remuneration Committee each year. The qualitative targets for the 2015 fiscal
year were:
(i) If KSNET maintains or improves its market position in the Korean
card value-added network (VAN) market, or if KSNET internally improves the
relative contribution of the banking VAN, payment gateway (PG), and purchase
business unit compared to the core VAN business unit (i.e. if banking VAN, PG,
and purchase business unit contribute more than the current 14% of gross
profit), Mr. Oh is entitled to receive KRW 50 million; and
(ii) If KSNET is not
the subject of any adverse regulatory findings, fines, or penalties during the
relevant period, Mr. Oh is entitled to receive KRW 52 million.
Under the terms of his service agreements, Mr. Oh is
entitled to participate in national health insurance and the national pension
plan provided under the laws of Korea, to receive reimbursement for annual
physical examinations for him and his spouse, education expenses and to make use
of a company provided car and driver for business and reasonable personal use.
26
Similar to the restraint of trade agreements that we have with
our other named executive officers, Mr. Ohs service agreement provides that
upon the termination of his services with us, he is restricted, for a period of
36 months, from soliciting business from certain customers, working for or
holding interests in our competitors or participating in a competitive activity
within the territories where we do business. The service agreement also provides
for certain payments upon his termination of service by us without just cause,
which payments are described below under Potential Payments Upon Termination or
Change-in-Control on page 34.
Considerations Regarding Tax Deductibility of
Compensation. Section 162(m) of the Code places a limit of $1 million on the
amount of compensation that we may deduct in any one year with respect to our
Chief Executive Officer and each of the three most highly compensated executive
officers other than our Chief Executive Officer or Chief Financial Officer.
Certain qualified performance-based compensation is not subject to this
deduction limit. To maintain flexibility in compensating our named executive
officers in a manner designed to promote our various corporate goals, it is not
a policy of the Remuneration Committee that all executive compensation must be
tax-deductible. The Remuneration Committee believes that the importance of
retaining this flexibility outweighs the benefits of tax deductibility.
Compensation Consultants. Neither we nor the
Remuneration Committee have any contractual arrangement with any compensation
consultant or used the services of any compensation consultant who has a role in
determining or recommending the amount or form of executive officer
compensation.
Role of Shareholder Say-on-Pay Votes. We provide
our shareholders with the opportunity to cast an annual, nonbinding advisory
vote to approve executive compensation (a say-on-pay proposal). At our annual
meeting of shareholders held on November 19, 2014, approximately 73% of the
votes cast on the say-on-pay proposal at that meeting were voted in favor of the
proposal. The Remuneration Committee considered the outcome of that advisory
vote to be an endorsement of the Remuneration Committees compensation
philosophy and implementation. The Remuneration Committee will continue to
consider the outcome of say-on-pay votes when making future compensation
decisions for our named executive officers.
Elements of 2015 Compensation
Base Salary. Salaries for fiscal 2015 were determined in
the first quarter of the 2015 fiscal year after a review of our peer group
companies described above. The annual base salaries of Dr. Belamant and Messrs.
Kotzé and Soma were increased by 4% to $975,000, $516,000 and $315,000,
respectively. The increase in annual base salary in each case was effective July
1, 2014. Mr. Oh received base salaries for fiscal 2015 under the terms of his
new service agreements. See Implementing our ObjectivesEmployment Agreements.
Payments under Cash Incentive Award Plan for Dr. Belamant
and Mr. Kotzé. During the first quarter of fiscal 2015, the Remuneration
Committee established a cash incentive award plan for Dr. Belamant and Mr. Kotzé
pursuant to which each of them would be eligible to earn a cash incentive award
based on our fiscal 2015 financial performance and his individual contribution
toward the achievement of certain corporate objectives. The plan provided for a
target-level cash incentive award of 100% of the executives base salary for
fiscal 2015, 70% of which was to be based on a quantitative metric (achievement
of specified levels of fundamental diluted earnings per share) and 30% of which
was to be based on the level of achievement of the qualitative factors described
below.
The quantitative portion of the award provided for threshold,
target and maximum amounts of 50%, 100% and 200% for Dr. Belamant, and 50%, 100%
and 150% for Mr. Kotzé, of the executives respective base salary multiplied by
0.70 (to reflect that 70% of the target award was based on the quantitative
factors). The qualitative portion of the award was limited to 100% of the
executives base salary multiplied by 0.30 (to reflect that 30% of the target
award was based on qualitative factors).
27
Quantitative Portion of the Cash Incentive Award Plan
The quantitative portion of the cash incentive award plan was
based on the achievement of specified levels of fundamental diluted earnings per
share for fiscal 2014. The following levels of fundamental diluted earnings per
share entitle the executive to receive the following percentages of this portion
of the award:
|
|
At or below $ 1.90 (threshold)0% |
|
|
$ 2.10 (target)100% |
|
|
At or above $ 2.30 (maximum)200% for Dr.
Belamant and 150% for Mr. Kotzé |
Fundamental EPS above $1.90 and below $2.30 is interpolated on
a linear basis and rounded to the nearest percentage.
Quantitative Portion of the Cash Incentive Award
PlanPotential and Actual Payments
The table below presents our potential and actual payments to
Dr. Belamant and Mr. Kotzé related to the quantitative portion of our cash
incentive award plan for fiscal 2015:
2015 Quantitative portion of cash incentive
award plan |
|
|
|
Dr. Serge
C.P. |
|
|
Herman G.
Kotzé |
|
|
|
BelamantChief |
|
|
Chief
Financial |
|
|
|
Executive Officer |
|
|
Officer |
|
|
|
Potential |
|
|
|
|
|
Potential |
|
|
|
|
|
|
Payment |
|
|
Actual |
|
|
Payment |
|
|
Actual |
|
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
Threshold |
|
0 |
|
|
|
|
|
0 |
|
|
|
|
Target |
|
682,500 |
|
|
|
|
|
361,200 |
|
|
|
|
Maximum |
|
1,365,000 |
|
|
|
|
|
541,800 |
|
|
|
|
Actual |
|
|
|
|
1,365,000 |
|
|
|
|
|
541,800 |
|
After the close of fiscal 2015, the Remuneration Committee met
and determined each element of the Companys financial performance described
above and each executives contribution toward the progress against the
qualitative objectives. Based on achievement of fundamental diluted earnings per
share of in excess of $2.30 per share, the Remuneration Committee determined to
award Dr. Belamant and Mr. Kotzé cash incentive payments of $1,365,000 and
$541,800, respectively, in respect of the quantitative portion of the cash
incentive award plan. These amounts represent the maximum payment under the
quantitative portion of the cash incentive award plan.
Qualitative Portion of the Cash Incentive Award Plan
Each of Dr. Belamant and Mr. Kotzé was entitled to receive up
to 30% of his annual base salary based on his individual contribution toward the
achievement of the following Company-wide shareholder enhancing objectives no
later than August 2015 (which is the scheduled time during the year that the
Remuneration Committee reviews performance against the qualitative metrics of
our cash incentive award plan):
|
|
corporate action and mitigation of regulatory
issues; |
|
|
implementation of the strategic and operating
plans; and |
|
|
acquisitions and new business initiatives
resulting in new revenue streams. |
After the close of fiscal 2015, the Remuneration Committee
considered whether to make payments in respect of the qualitative portion of the
cash incentive award plan. The Remuneration Committee determined to award each
of Dr. Belamant and Mr. Kotzé 100%, or $292,500 and $154,800, respectively, of
the qualitative portion of the cash incentive award.
28
In reaching its conclusion, the Remuneration Committee
considered several factors. First, Dr. Belamant and Mr. Kotzé continued to
effectively manage and mitigate a plethora of new and legacy regulatory issues.
In particular, the Remuneration Committee noted that the SEC concluded its
investigation and did not recommend an enforcement action and that the Financial
Services Board in South Africa lifted its Section 12 suspension of our Smart
Life insurance business. Furthermore, the Remuneration Committee considered the
ongoing issues relating to the SASSA tender and managements careful and
thoughtful evaluation of the potential benefits and risks of participating in
the new tender. The Remuneration Committee felt that management effectively
balanced the potential benefits of obtaining a new SASSA contract against the
requirements of the new tender, the other business opportunities available to
the Company and the existing imperatives of the business. Management also dealt
well with well a host of other regulatory actions and threatened litigation
involving the National Credit Act and the Black Sash.
Second, the Company commenced the implementation of its
strategic and operating plans during fiscal 2015. This has involved a refocus of
the Companys business on mobile applications as well as an enhancement of the
provisioning of independent financial inclusivity to less privileged consumers
who were poorly serviced by existing financial services providers. The
Remuneration Committee determined that tangible progress achieved in these
efforts has resulted in materially higher earnings compared with 2014 and an
improved share price.
Lastly, the Remuneration Committee noted the implementation of
new business initiatives, in particular, the national ATM rollout and EasyPay
Everywhere, and management's continued identification and execution of
meaningful investments, notably the Companys strategic investments in
Transact24 and One Credit which were concluded in fiscal 2015.
Bonus for Mr. Oh pursuant to employment contracts. The
table below presents our potential and actual payments to Mr. Oh related to the
achievement of his quantitative targets for fiscal 2015:
|
|
Cash flow metric |
|
|
PBIT metric |
|
|
Total |
|
|
|
Potential |
|
|
|
|
|
Potential |
|
|
|
|
|
Potential |
|
|
|
|
|
|
Payment |
|
|
Actual |
|
|
Payment |
|
|
Actual |
|
|
Payment |
|
|
Actual |
|
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
Threshold |
|
1,864 |
|
|
|
|
|
100,676 |
|
|
|
|
|
102,540 |
|
|
|
|
Target |
|
1,864 |
|
|
|
|
|
193,894 |
|
|
|
|
|
195,758 |
|
|
|
|
Maximum |
|
46,609 |
|
|
|
|
|
268,468 |
|
|
|
|
|
315,077 |
|
|
|
|
Actual |
|
|
|
|
7,457 |
|
|
|
|
|
265,672 |
|
|
|
|
|
273,129 |
|
For fiscal 2015, the Remuneration Committee awarded $95,083 to
Mr. Oh for the qualitative portion of his bonus. In reaching its award
determination, the Remuneration Committee concluded that Mr. Oh had met two of
his qualitative objectives for fiscal 2015: (1) maintaining or improving our
market position in the Korean Card VAN market and (2) KSNET not being subject to
any adverse regulatory findings, fines or penalties. The Remuneration Committee
determined that Mr. Oh had not successfully launched any of our products in
Korea, which was one of his objectives
Bonus for Mr. Soma. Mr. Soma, our Vice-President
Information Technology received a bonus of $315,000 for fiscal 2015 as a result
of his participation in various new business development initiatives;
maintaining and strengthening our relationships with key IT suppliers, card
associations and IT regulatory bodies; ongoing oversight of various software
development projects, including the applications for delivery of financial
inclusion in South Africa; and continuing oversight of the information
technology component of our Sarbanes-Oxley compliance.
29
Equity Incentive Awards. In August 2014, Dr. Belamant,
Mr. Kotzé, Mr. Oh and Mr. Soma were awarded options to purchase 83,448; 44,178;
26,928 and 26,928 shares of our common stock, respectively. These options are
exercisable at a price of $11.23 per share, which was the closing price of our
common stock on Nasdaq on August 27, 2014. One-third of the options awarded to
Dr. Belamant, Mr. Kotzé, Mr. Oh and Mr. Soma 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.
In addition, on August 27, 2014, Dr. Belamant and Mr. Kotzé
were awarded 83,448 and 44,178 shares of our restricted stock, respectively. On
November 5, 2014, Mr. Soma was awarded 24,328 shares of our restricted stock.
These shares of restricted stock will vest in full on the date , if any, when
the following conditions are satisfied: (1) the closing price of our common
stock equals or exceeds $19.41 (subject to adjustments for any stock splits and/
or stock dividends) for a period of 30 consecutive trading days during a period
commencing on the date when we file our Annual Report on Form 10-K for the
fiscal year ended 2017 and ending on December 31, 2017, and (2) the recipient is
employed by us on a full-time basis when the condition in (1) is met. If both of
these conditions are not satisfied, then none of the shares of our restricted
stock will vest, and such shares will be forfeited. The $19.41 price target
represents a 20% increase, compounded annually, in the price of our common stock
on Nasdaq based on the $11.23 closing price on August 27, 2014.
Other. We provide on-site residential security services
for Dr. Belamant consisting of two armed guards. These services are provided
based on bona fide business-related security concerns and are an integral part
of our overall risk management program. The Board believes that provision of
these security services is a necessary and appropriate business expense because
Dr. Belamants personal safety and security are of the utmost importance to us
and our shareholders. These security services may be viewed as conveying a
personal benefit to Dr. Belamant. Under Mr. Ohs service agreement, he was paid
or reimbursed for the items described under Compensation Discussion and
AnalysisImplementing our ObjectivesEmployment Agreements.
REMUNERATION COMMITTEE REPORT
For the Year Ended June 30, 2015
The information contained in this report shall not be deemed
to be soliciting material or filed with the SEC or subject to the
liabilities of Section 18 of the Exchange Act, except to the extent that Net 1
UEPS Technologies, Inc. specifically incorporates it by reference into a
document filed under the Exchange Act.
The Remuneration Committee, which comprises three independent
directors, has reviewed and discussed the Compensation Discussion and Analysis
section of this proxy statement with our Chief Executive Officer, Dr. Serge C.P.
Belamant, and our Chief Financial Officer, Herman G. Kotzé. Based on this review
and discussion, the Remuneration Committee recommended to our Board that the
Compensation Discussion and Analysis section be included in our Annual Report
on Form 10-K and this proxy statement.
Remuneration Committee
Alasdair J.K. Pein, Chairman
Christopher S. Seabrooke
Paul
Edwards
EXECUTIVE COMPENSATION TABLES
The following narrative, tables and footnotes describe the
total compensation earned during fiscal years 2015, 2014 and 2013, as
applicable, by our named executive officers. The total compensation presented
below in the Summary Compensation Table does not reflect the actual compensation
received by our named executive officers or the target compensation of our named
executive officers in fiscal 2015. The actual value realized by our named
executive officers in fiscal 2015 from long-term equity incentives (options and
restricted stock) is presented in the Option Exercises and Stock Vested Table on
page 34.
30
Target annual incentive awards for fiscal 2015 are presented in
the Grants of Plan-Based Awards table on page 32.
SUMMARY COMPENSATION TABLE (1)
The following table sets forth the compensation earned by our
named executive officers for services rendered during fiscal years 2015, 2014
and 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option |
|
|
Plan |
|
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Awards |
|
|
Compens- |
|
|
Compens- |
|
|
|
|
Name and |
|
|
|
|
Salary ($)
|
|
|
Bonus
($) |
|
|
Awards |
|
|
($) |
|
|
ation ($) |
|
|
ation |
|
|
Total |
|
Principal Position |
|
Year |
|
|
(2) |
|
|
(3) |
|
|
($) |
|
|
(4) |
|
|
(3) |
|
|
($) |
|
|
($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Serge C.P. Belamant, |
|
2015 |
|
|
975,000 |
|
|
- |
|
|
276,213(5)
|
|
|
379,613 |
|
|
1,657,500 |
|
|
24,810(6)
|
|
|
3,313,136 |
|
Chief Executive Officer, |
|
2014 |
|
|
937,125 |
|
|
- |
|
|
- |
|
|
306,533 |
|
|
1,555,628 |
|
|
27,270(6) |
|
|
2,826,556 |
|
Chairman of the Board and
Director |
|
2013 |
|
|
892,500 |
|
|
812,175 |
|
|
- |
|
|
295,656 |
|
|
- |
|
|
32,548(6)
|
|
|
2,032,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Herman G. Kotzé, Chief |
|
2015 |
|
|
516,000 |
|
|
- |
|
|
146,229(5)
|
|
|
200,970 |
|
|
696,600 |
|
|
- |
|
|
1,559,799 |
|
Financial Officer, Treasurer, |
|
2014 |
|
|
496,125 |
|
|
- |
|
|
- |
|
|
162,281 |
|
|
649,924 |
|
|
- |
|
|
1,308,330 |
|
Secretary and Director |
|
2013 |
|
|
472,500 |
|
|
429,975 |
|
|
- |
|
|
156,524 |
|
|
- |
|
|
- |
|
|
1,058,999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
386,856 |
|
|
- |
|
|
- |
|
|
122,498 |
|
|
368,212 |
|
|
63,009(8)
|
|
|
940,575 |
|
Phil-Hyun Oh, President |
|
2014 |
|
|
357,322 |
|
|
- |
|
|
97,998(7) |
|
|
- |
|
|
190,572 |
|
|
65,707(8) |
|
|
711,599 |
|
KSNET |
|
2013 |
|
|
349,701 |
|
|
- |
|
|
- |
|
|
- |
|
|
186,507 |
|
|
63,062(8)
|
|
|
599,270 |
|
|
|
2015 |
|
|
315,000 |
|
|
315,000 |
|
|
77,850(5) |
|
|
122,498 |
|
|
- |
|
|
- |
|
|
830,348 |
|
Nitin Soma, Vice-President |
|
2014 |
|
|
302,400 |
|
|
290,304 |
|
|
- |
|
|
98,913 |
|
|
- |
|
|
- |
|
|
691,617 |
|
Information Technology |
|
2013 |
|
|
288,000 |
|
|
72,000 |
|
|
- |
|
|
144,930 |
|
|
- |
|
|
- |
|
|
504,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Includes only those columns relating to compensation
awarded to, earned by, or paid to the named executive officers in any of
fiscal 2015, 2014 or 2013. All other columns have been omitted. |
|
|
(2) |
The applicable amount for Dr. Belamant, Mr. Kotzé and Mr.
Soma is denominated in United States dollars (USD) and paid in ZAR at
the exchange rate in effect at the time of payment. Mr. Ohs salary is
denominated and paid in Korean won (KRW) and has been translated into
USD at the average exchange rate for fiscal 2015. |
|
|
(3) |
Bonus and non-equity incentive plan compensation
represent amounts earned by Dr. Belamant, Mr. Kotzé and Mr. Soma for the
fiscal years ended June 30, and were paid after close of the fiscal year.
The quantitative portion earned of Mr. Ohs 2015 non-equity incentive plan
was paid in February 2015 and the qualitative portion was paid after close
of the fiscal year. In fiscal 2013, each of Dr. Belamant and Mr. Kotzé
received a bonus in lieu of payment under the non-equity incentive plan.
The amounts for Dr. Belamant, Mr. Kotzé and Mr. Soma are denominated in
USD and the amount for Mr. Oh is denominated and paid in KRW, translated
into USD at the average exchange rate for the year in which payment was
made. |
|
|
(4) |
Represents FASB ASC Topic 718 grant date fair value of
stock options granted under our Current Plan. See note 18 to the
consolidated financial statements included in our Annual Report on Form
10-K for the year ended June 30, 2015, for the relevant assumptions used
in calculating grant date fair value under FASB ASC Topic 718. |
|
|
(5) |
Represents FASB ASC Topic 718 grant date fair value of
restricted stock granted under our Current Plan. See note 18 to the
consolidated financial statements included in our Annual Report on Form
10-K for the year ended June 30, 2015, for the relevant assumptions used
in calculating grant date fair value under FASB ASC Topic 718. |
|
|
(6) |
Represents costs for security guards for Dr. Belamant,
which are paid in ZAR. |
|
|
(7) |
Represents FASB ASC Topic 718 grant date fair value of
shares of restricted stock awarded in August 2013, one-third of which vest
on August 21 of 2014, 2015 and 2016. Vesting of the award shares is
conditioned upon Mr. Ohs continuous service through the applicable
vesting date. See note 18 to the consolidated financial statements
included in our Annual Report on Form 10-K for the year ended June 30,
2015, for the relevant assumptions used in calculating grant date fair
value under FASB ASC Topic 718. |
|
|
(8) |
Represents payments made by us for Mr. Ohs Korea
mandatory employee national health insurance, national pension, school
fees and automobile expenses, which are paid in KRW translated into USD at
the average exchange rate for the year. The fiscal 2015, 2014 and 2013
amounts include car rental of $28,525, $29,157 and $25,510,
respectively. |
31
GRANTS OF PLAN-BASED AWARDS (1)
The following table provides information concerning non-equity
and equity incentive plan awards granted during fiscal 2015 to each of our named
executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other |
|
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Option |
|
|
|
|
|
Grant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
Awards: |
|
|
Exercise |
|
|
Date Fair |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
Number of |
|
|
or Base |
|
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
|
of Shares |
|
|
Securities |
|
|
Price of |
|
|
Stock and |
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
Incentive |
|
|
of Stock |
|
|
Underlying |
|
|
Option |
|
|
Option |
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards (2) |
|
|
or Units |
|
|
Options |
|
|
Awards |
|
|
Awards |
|
|
|
|
|
|
Date of |
|
|
Type |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant |
|
|
Committee |
|
|
of |
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
Date |
|
|
Action |
|
|
Award |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
(#) |
|
|
(#) |
|
|
($/Sh) |
|
|
($) |
|
Dr. Serge |
|
- |
|
|
08/27/14 |
|
|
AC |
|
|
34,125 |
|
|
975,000 |
|
|
1,657,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
C.P. |
|
08/27/14 |
|
|
08/27/14 |
|
|
SO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,448 |
|
$ |
11.23 |
|
|
379,613 |
|
Belamant |
|
08/27/14 |
|
|
08/27/14 |
|
|
RS |
|
|
|
|
|
|
|
|
|
|
|
83,448 |
|
|
|
|
|
|
|
|
276,213 |
|
|
|
- |
|
|
08/27/14 |
|
|
AC |
|
|
18,060 |
|
|
516,000 |
|
|
696,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Herman G. |
|
08/27/14 |
|
|
08/27/14 |
|
|
SO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,178 |
|
$ |
11.23 |
|
|
200,970 |
|
Kotzé |
|
08/27/14 |
|
|
08/27/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,178 |
|
|
|
|
|
|
|
|
146,229 |
|
Phil-Hyun |
|
- |
|
|
06/30/14 |
|
|
AC |
|
|
102,540 |
|
|
195,758 |
|
|
315,078 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oh |
|
08/27/14 |
|
|
08/27/14 |
|
|
SO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,928 |
|
$ |
11.23 |
|
|
122,498 |
|
Nitin |
|
08/27/14 |
|
|
08/27/14 |
|
|
SO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,928 |
|
$ |
11.23 |
|
|
122,498 |
|
Soma |
|
11/05/14 |
|
|
11/05/14 |
|
|
RS |
|
|
|
|
|
|
|
|
|
|
|
24,328 |
|
|
|
|
|
|
|
|
77,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
AC (annual cash incentive award); RS (restricted stock);
SO (stock option). Includes only those columns relating to grants awarded
to the named executive officers in fiscal 2015. All other columns have
been omitted. |
|
|
(2) |
On August 27, 2014, the Remuneration Committee approved a
fiscal 2015 cash incentive award plan for Dr. Belamant and Mr. Kotzé. The
plan and the actual payments made there under are described in detail
under Compensation Discussion and AnalysisElements of 2015
CompensationPayments under Cash Incentive Award Plan for Dr. Belamant and
Mr. Kotzé. There was no threshold for the qualitative portion of the
award plan and therefore the amount presented includes only the
quantitative portion of the plan. At or below fundamental diluted earnings
per share of $1.90, no amounts would have been paid. Target and maximum
payouts were to be made at fundamental diluted earnings per share of $2.10
and $2.30, respectively, with awards to be interpolated on a linear basis
relative to $2.10 at levels of fundamental diluted earnings per share
between $1.90 and $2.30. A cash incentive plan for Mr. Oh is set forth in
his service agreement. The plan and the actual payments made there under
are described in detail under Compensation Discussion and Analysis
Elements of 2015 CompensationBonus for Mr. Oh pursuant to employment
contracts. The threshold, target and maximum amounts for Mr. Oh are
denominated in KRW and have been translated to U.S. dollars using the
average exchange rate for fiscal 2015. |
32
OUTSTANDING EQUITY AWARDS AT 2015 FISCAL YEAR-END
(1)
The following table shows all outstanding equity awards held by
our named executive officers at the end of fiscal 2015. The market value of
unvested shares reflected in this table is calculated by multiplying the number
of unvested shares by the per share closing price of $18.28 of our common stock
on June 30, 2015, the last trading day of the fiscal year.
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
Number |
|
|
Number |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
of
|
|
|
of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan |
|
|
Equity
Incentive |
|
|
|
Securities |
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
Plan
Awards: |
|
|
|
Under- |
|
|
Under- |
|
|
|
|
|
|
|
|
|
|
|
Market |
|
|
Number
of |
|
|
Market
or |
|
|
|
lying |
|
|
lying |
|
|
|
|
|
|
|
|
Number
of |
|
|
Value
of |
|
|
Unearned |
|
|
Payout
Value of |
|
|
|
Unexer- |
|
|
Unexer- |
|
|
|
|
|
|
|
|
Shares
or |
|
|
Shares
or |
|
|
Shares, Units |
|
|
Unearned |
|
|
|
cised |
|
|
cised |
|
|
|
|
|
|
|
|
Units
of |
|
|
Units
of |
|
|
or
Other |
|
|
Shares, Units or |
|
|
|
Options |
|
|
Options |
|
|
Option |
|
|
|
|
|
Stock
That |
|
|
Stock That |
|
|
Rights
That |
|
|
Other
Rights |
|
|
|
(#) |
|
|
(#) |
|
|
Exercise |
|
|
Option |
|
|
Have
Not |
|
|
Have
Not |
|
|
Have
Not |
|
|
That
Have Not |
|
|
|
Exer- |
|
|
Unexer- |
|
|
Price |
|
|
Expiration |
|
|
Vested |
|
|
Vested |
|
|
Vested |
|
|
Vested |
|
Name |
|
cisable |
|
|
cisable |
|
|
($) |
|
|
Date |
|
|
(#) |
|
|
($) |
|
|
(#) |
|
|
($) |
|
Dr. Serge C.P. |
|
80,000 |
|
|
- |
|
$ |
22.51 |
|
|
8/24/2016 |
|
|
83,448(4)
|
|
|
1,525,429 |
|
|
|
|
|
|
|
Belamant |
|
200,000 |
|
|
- |
|
$ |
24.46 |
|
|
8/24/2018 |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
130,000 |
|
|
- |
|
$ |
13.16 |
|
|
5/20/2019 |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
100,000 |
|
|
- |
|
$ |
10.59 |
|
|
11/10/2020 |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
37,334 |
|
|
- |
|
$ |
7.98 |
|
|
10/28/2021 |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
- |
|
|
34,000(1)
|
|
$ |
8.75 |
|
|
08/22/2022 |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
- |
|
|
80,952(2)
|
|
$ |
7.35 |
|
|
08/21/2023 |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
- |
|
|
83,448(3)
|
|
$ |
11.23 |
|
|
08/27/2024 |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Herman G. |
|
35,000 |
|
|
- |
|
$ |
22.51 |
|
|
8/24/2016 |
|
|
44,178(4)
|
|
|
807,574 |
|
|
|
|
|
|
|
Kotzé |
|
100,000 |
|
|
- |
|
$ |
24.46 |
|
|
8/24/2018 |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
110,000 |
|
|
- |
|
$ |
13.16 |
|
|
5/20/2019 |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
67,000 |
|
|
- |
|
$ |
10.59 |
|
|
11/10/2020 |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
20,000 |
|
|
- |
|
$ |
7.98 |
|
|
10/28/2021 |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
- |
|
|
18,000(1)
|
|
$ |
8.75 |
|
|
08/22/2022 |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
- |
|
|
42,856(2)
|
|
$ |
7.35 |
|
|
08/21/2023 |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
- |
|
|
44,178(3)
|
|
$ |
11.23 |
|
|
08/27/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phil-Hyun Oh |
|
- |
|
|
26,928(3)
|
|
$ |
11.23 |
|
|
08/27/2024 |
|
|
8,889(5)
|
|
|
162,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nitin Soma |
|
20,000 |
|
|
- |
|
$ |
22.51 |
|
|
8/24/2016 |
|
|
24,328(6)
|
|
|
444,716 |
|
|
|
|
|
|
|
|
|
60,000 |
|
|
- |
|
$ |
24.46 |
|
|
8/24/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000 |
|
|
- |
|
$ |
13.16 |
|
|
5/20/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
16,666(1)
|
|
$ |
8.75 |
|
|
08/22/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
26,122(2)
|
|
$ |
7.35 |
|
|
08/21/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
26,928(3)
|
|
$ |
11.23 |
|
|
08/27/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
These options vest on August 22, 2015. |
|
|
(2) |
Fifty percent of these options vest on each of August 21,
2015 and 2016, respectively. |
|
|
(3) |
Represents stock options awarded in August 2014 to the
extent that they remained unvested as of June 30, 2015. One-third of these
options vest on each of August 27, 2015, 2016 and 2017,
respectively. |
|
|
(4) |
These shares of restricted stock were awarded in August
2014, and will vest in full only on the date, if any, the following
conditions are satisfied: (1) the closing price of our common stock equals
or exceeds $19.41 (subject to appropriate adjustment for any stock split
or stock dividend) for a period of 30 consecutive trading days during a
measurement period commencing on the date that we file our Annual Report
on Form 10-K for the fiscal year ended 2017 and ending on December 31,
2017 and (2) the recipient is employed by us on a full- time basis when
the condition in (1) is met. |
|
|
(5) |
These 8,889 shares of restricted stock were awarded in
August 2013, and fifty percent of these shares are scheduled to vest on
each of August 21, 2015 and 2016, with vesting conditioned upon continuous
service through the applicable vesting date. |
|
|
(6) |
These 24,328 shares of restricted stock were awarded in
November 2014, and will vest in full on the date, if any, the following
conditions are satisfied: (1) the closing price of our common stock equals
or exceeds $19.41 (subject to adjustments for any stock splits and/ or
stock dividends) for a period of 30 consecutive trading days during a
period commencing on the date when we file our Annual Report on Form 10-K
for the fiscal year ended 2017 and ending on December 31, 2017 and (2) the
recipient is employed by us on a full- time basis when the condition in
(1) is met. |
33
OPTION EXERCISES AND STOCK VESTED
There were no stock options exercised by our named executive
officers during fiscal 2015. The following table shows all stock awards that
vested during fiscal 2015.
|
|
Stock Options |
|
|
Stock Awards |
|
|
|
Number of shares
|
|
|
Value Realized
|
|
|
Number of shares
|
|
|
Value Realized
|
|
|
|
acquired on
Exercise |
|
|
on Exercise |
|
|
acquired on
vesting |
|
|
on Vesting |
|
Name |
|
(#) |
|
|
($)(1) |
|
|
(#) |
|
|
($)(2) |
|
Dr. Serge C.P. Belamant |
|
74,666(3)
|
|
|
444,263 |
|
|
91,666 |
|
|
1,240,241 |
|
|
|
68,000(4) |
|
|
352,240 |
|
|
|
|
|
|
|
|
|
40,476(5)
|
|
|
266,332 |
|
|
|
|
|
|
|
Herman G. Kotzé |
|
40,000(3) |
|
|
238,000 |
|
|
55,000 |
|
|
744,150 |
|
|
|
36,000(4)
|
|
|
186,480 |
|
|
|
|
|
|
|
|
|
21,429(5) |
|
|
141,003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phil-Hyun Oh |
|
|
|
|
|
|
|
4,444 |
|
|
49,728 |
|
Nitin Soma |
|
35,000(6)
|
|
|
51,800 |
|
|
18,333 |
|
|
248,045 |
|
|
|
35,000(7) |
|
|
195,522 |
|
|
|
|
|
|
|
|
|
33,334(4)
|
|
|
110,669 |
|
|
|
|
|
|
|
|
|
13,061(5) |
|
|
61,648 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
The value realized on exercise is calculated as the
closing price of our common stock on the exercise date multiplied by the
number of stock options that were exercised on the exercise
date. |
|
|
(2) |
The value realized on vesting is calculated as the
closing price of our common stock on the vesting date multiplied by the
number of common shares of restricted stock that vested. |
|
|
(3) |
Represents the exercise of stock options with an exercise
price of $7.98. |
|
|
(4) |
Represents the exercise of stock options with an exercise
price of $8.75. |
|
|
(5) |
Represents the exercise of stock options with an exercise
price of $7.35. |
|
|
(6) |
Represents the exercise of stock options with an exercise
price of $10.59. |
|
|
(7) |
Represents the exercise of stock options with an exercise
price of $6.59 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
As described above under Compensation Discussion and
Analysis, we do not have employment, severance or change of control agreements
with named executive officers, other than the service agreements with Mr. Oh. In
addition, none of our outstanding equity awards include provisions for
accelerated vesting upon a change in control of our Company or termination of
employment following such a change in control.
Under the terms of Mr. Ohs service agreements, if he is
removed from office as a director of KSNET or Net1 Korea without justifiable
cause, he is entitled to receive the amounts of base salary and the bonus (if
any) that would have been due and payable to him if he was fully employed with
us for the remainder of the then-current fiscal year. The term justifiable
cause includes any of the following circumstances, as well as any other
circumstances permitted under applicable law:
|
|
Mr. Oh has breached the provisions on
non-competition or confidentiality of the service agreements; |
|
|
Mr. Oh has taken actions that are likely to
result in a material loss of or harm to the business, reputation or
goodwill of KSNET or Net1 Korea; |
|
|
Mr. Oh has misappropriated funds or assets of
KSNET or Net1 Korea; |
|
|
Mr. Oh has concealed from or falsely disclosed
to KSNET or Net1 Korea his name, age, education, experience, or other
personal information; |
|
|
Mr. Oh has failed to show performance results
or job capacity; |
|
|
Mr. Oh has committed a crime or offense which
will adversely affect the interest or reputation of KSNET or Net1 Korea;
or |
34
|
|
Mr. Oh has committed gross negligence, willful
misconduct or any violation of laws in performance of his duties.
|
Assuming that Mr. Oh was removed from office as a director of
KSNET or Net1 Korea without justifiable cause on the last day of fiscal 2015,
i.e., June 30, 2015, Mr. Oh would have been entitled to receive a cash severance
equal to his achieved qualitative awards, or $95,083, for the fiscal year.
Mr. Oh is also entitled to a severance payment equal to 300% of
his monthly base salary for each completed year of service at KSNET and Net1
Korea. Using exchange rates applicable as of June 30, 2015, and seven years of
completed service at KSNET and one year of completed service at Net1 Korea, Mr.
Oh would be entitled to a severance payment of $663,014.
Except as described above with respect to Mr. Oh, there would
be no compensation, other than that prescribed by local labor laws in the case
of unfair dismissal or retrenchment, that would become payable under the
existing plans and arrangements if the employment of any of our named executive
officers had terminated on June 30, 2015.
We do not have any ongoing obligation to provide
post-termination benefits to our named executive officers after termination of
employment.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Review, Approval or Ratification of Related Person
Transactions
We review all relationships and transactions in which we and
our directors and named executive officers or their immediate family members are
participants to determine whether such persons have a direct or indirect
material interest. Our Chief Executive Officer and Chief Financial Officer are
primarily responsible for the development and implementation of processes and
controls to obtain information from the directors and named executive officers
with respect to related person transactions and for then determining, based on
the facts and circumstances, whether we or a related person has a direct or
indirect material interest in the transaction. As required under SEC rules,
transactions that are determined to be directly or indirectly material to us or
a related person are disclosed in our proxy statement. In addition, our Audit
Committee reviews and approves or ratifies any related person transaction that
is required to be disclosed. In the course of its review and approval or
ratification of a disclosable related party transaction, our Audit Committee
considers:
|
|
the nature of the related persons interest in
the transaction; |
|
|
the material terms of the transaction,
including, without limitation, the amount and type of transaction; |
|
|
the importance of the transaction to the
related person; |
|
|
the importance of the transaction to us; |
|
|
whether the transaction would impair the
judgment of a director or executive officer to act in our best interest;
and |
|
|
any other matters the Audit Committee deems
appropriate. |
Any member of the Audit Committee who is a related person with
respect to a transaction under review may not participate in the deliberations
or vote respecting approval or ratification of the transaction, provided,
however, that such director may be counted in determining the presence of a
quorum at a meeting of the Audit Committee that considers the transaction.
Related Party Transactions
There were no related party transactions during fiscal 2015
that are required to be disclosed under Item 404 of Regulation S-K.
35
AUDIT AND NON-AUDIT FEES
The following table shows the fees that we paid or accrued for
the audit and other services provided by Deloitte for the fiscal years ended
June 30, 2015 and 2014.
|
|
2015 |
|
|
2014 |
|
|
|
$ 000 |
|
|
$ 000 |
|
Audit Fees |
|
1,844 |
|
|
1,960 |
|
Audit-Related Fees |
|
- |
|
|
- |
|
Tax Fees |
|
- |
|
|
- |
|
Other Fees: Responding to SEC Inquiry |
|
- |
|
|
351 |
|
All Other Fees |
|
- |
|
|
- |
|
|
|
|
|
|
|
|
Audit Fees This category includes the audit of our annual
consolidated financial statements, review of financial statements included in
our quarterly reports on Form 10-Q, the required audit of managements
assessment of the effectiveness of our internal control over financial reporting
and the auditors independent audit of internal control over financial
reporting, and the services that an independent auditor would customarily
provide in connection with subsidiary audits, statutory requirements, regulatory
filings, and similar engagements for the fiscal year, such as comfort letters,
attest services, consents, and assistance with review of documents filed with
the SEC. This category also includes advice on audit and accounting matters that
arose during, or as a result of, the audit or the review of interim financial
statements.
Audit-Related Fees This category consists of assurance and
related services by the independent registered public accounting firm that are
reasonably related to the performance of the audit or review of our financial
statements and are not reported above under Audit Fees. There were no such
fees paid in the fiscal years ended June 30, 2015 or 2014.
Tax Fees This category consists of professional services
rendered by Deloitte for tax compliance and tax advice. The services for the
fees disclosed under this category include tax return review and technical tax
advice. There were no such fees paid in the fiscal years ended June 30, 2015 or
2014.
Other Fees: Responding to SEC Inquiry This category consists
of services, including costs, incurred by Deloitte that arose during, or as a
result of, the investigation by the DOJ/SEC. The services for the fees disclosed
under this category include responding to document production requests, and
preparation for presentations made by Deloitte directly to the SEC.
All Other Fees This category consists of miscellaneous fees
that are not otherwise included in the previous four categories. There were no
such fees paid in the fiscal years ended June 30, 2015 or 2014.
Pre-Approval of Non-Audit Services
Pursuant to our Audit Committee charter, our Audit Committee
reviews and pre-approves both audit and non-audit services to be provided by our
independent auditors. The authority to grant pre-approvals of non-audit services
may be delegated to one or more designated members of the Audit Committee whose
decisions will be presented to the full Audit Committee at its next regularly
scheduled meeting. During fiscal years 2015 and 2014, all of services provided
by Deloitte with respect to fiscal years 2015 and 2014 were pre-approved by the
Board and the Audit Committee.
36
AUDIT COMMITTEE REPORT
The Audit Committee of the Board consists of three independent
directors, as required by Nasdaq listing standards. The Audit Committee operates
under a written charter adopted by the Board and available on our website at
www.net1.com under the Investor RelationsGovernance section. The Audit
Committee is responsible for overseeing our financial reporting process on
behalf of the Board. The members of the Audit Committee are Messrs. Seabrooke,
Pein and Edwards. The Audit Committee selects, subject to shareholder
ratification, our independent registered public accounting firm.
Management is responsible for our financial statements and the
financial reporting process, including internal controls. The independent
registered public accounting firm is responsible for performing an independent
audit of our consolidated financial statements in accordance with auditing
standards generally accepted in the United States and of our internal control
over financial reporting and for issuing a report thereon. The Audit Committees
responsibility is to monitor and oversee these processes.
In this context, the Audit Committee has met and held
discussions with management and Deloitte. Our Chief Executive Officer and Chief
Financial Officer represented to the Audit Committee that the consolidated
financial statements were prepared in accordance with accounting principles
generally accepted in the United States, and the Audit Committee reviewed and
discussed the consolidated financial statements with our Chief Executive Officer
and Chief Financial Officer and Deloitte. The Audit Committee discussed with
Deloitte the matters required to be discussed by the Statement on Auditing
Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU §380),
as adopted by the Public Company Accounting Oversight Board in Rule 3200T. These
matters included a discussion of Deloittes judgments about the quality (not
just the acceptability) of our accounting principles as applied to our financial
reporting.
Deloitte also provided the Audit Committee with the written
disclosures and letter required by the PCAOB regarding Deloittes communications
with the Audit Committee concerning independence, and the Audit Committee
discussed with Deloitte the firms independence. The Audit Committee further
considered whether the provision by Deloitte of the non-audit services described
above is compatible with maintaining the auditors independence.
Based upon the Audit Committees discussion with management and
Deloitte and the Audit Committees review of the representations of management
and the disclosures by Deloitte to the Audit Committee, the Audit Committee
recommended to the Board that our audited consolidated financial statements be
included in our Annual Report on Form 10-K for the year ended June 30, 2015, for
filing with the SEC.
Audit Committee
Christopher
S. Seabrooke, Chairman
Alasdair J.K. Pein
Paul Edwards
37
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table presents, as of September 25, 2015,
information about beneficial ownership of our common stock by:
|
|
each person or group of affiliated persons who or which,
to our knowledge, owns beneficially more than 5% of our outstanding shares
of common stock; |
|
|
|
|
|
each of our directors and named executive officers; and
|
|
|
|
|
|
all of our directors and executive officers as a group.
|
Beneficial ownership of shares is determined in accordance with
SEC rules and generally includes any shares over which a person exercises sole
or shared voting or investment power. The beneficial ownership percentages set
forth below are based on 47,322,702 shares of common stock outstanding as of
September 25, 2015. All shares of common stock, including that common stock
underlying stock options that are presently exercisable or exercisable within 60
days after September 25, 2015 (which we refer to as being currently exercisable)
by each person are deemed to be outstanding and beneficially owned by that
person for the purpose of computing the ownership percentage of that person, but
are not considered outstanding for the purpose of computing the percentage
ownership of any other person. Unless otherwise indicated, to our knowledge,
each person listed in the table below has sole voting and investment power with
respect to the shares shown as beneficially owned by such person, except to the
extent applicable law gives spouses shared authority.
Except as otherwise noted, each shareholders address is c/o
Net 1 UEPS Technologies, Inc., President Place, 4th Floor, Corner of Jan Smuts
Avenue and Bolton Road, Rosebank, Johannesburg, South Africa.
|
|
|
Shares of
Common |
|
|
Name |
|
Stock Beneficially Owned |
|
|
|
|
Number |
|
% |
|
|
Dr. Serge C.P. Belamant(1) |
|
1,837,850 |
|
3.83% |
|
|
Paul Edwards(2) |
|
8,445 |
|
* |
|
|
Herman G. Kotzé(3) |
|
525,094 |
|
1.10% |
|
|
Phil-Hyun Oh (4) |
|
25,421 |
|
* |
|
|
Alasdair J.K. Pein(5) |
|
62,680 |
|
* |
|
|
Christopher S. Seabrooke(6) |
|
14,120 |
|
* |
|
|
Nitin Soma(7) |
|
233,364 |
|
* |
|
|
International Value Advisers, LLC(8) |
|
9,597,085 |
|
20.28% |
|
|
Allan Gray Proprietary Limited (9) |
|
8,767,451 |
|
18.53% |
|
|
Directors and Executive Officers as a group(10) |
|
2,706,974 |
|
5.58% |
|
*Less than one percent
(1) |
Comprises (i) 278,802 shares of unrestricted stock; (ii)
183,623 shares of restricted stock, the vesting of which is subject to the
satisfaction of certain financial performance and other conditions
described elsewhere in this proxy statement; (iii) options to purchase
649,626 shares of common stock, all of which are currently exercisable;
and (iv) 725,799 shares of common stock owned by CI Law Trustees Limited
for the San Roque Trust dated 8/18/92. Dr. Belamant as proxy of CI Law
Trustees has the power to vote all of CI Law Trustees shares. Does not
include options to purchase 96,108 shares of common stock which are
currently not exercisable by Dr. Belamant. |
|
|
(2) |
Comprises 8,445 shares of restricted stock which vest
over time and are subject to forfeiture. Vesting of the restricted stock
is conditioned on Mr. Edwards continued service as a member of our Board
on the applicable vesting date. |
38
(3) |
Comprises (i) 55,000 shares of unrestricted stock; (ii)
83,940 shares of restricted stock, the vesting of which is subject to the
satisfaction of certain financial performance and other conditions
described elsewhere in this proxy statement; and (iii) options to purchase
386,154 shares of common stock, all of which are currently exercisable.
Does not include options to purchase 50,880 shares of common stock which
are currently not exercisable by Mr. Kotzé. |
|
|
(4) |
Comprises (i) 16,445 shares of restricted stock, the
vesting of which is subject to the satisfaction of certain financial
performance and other conditions described elsewhere in this proxy
statement; and (ii) options to purchase 8,976 shares of common stock, all
of which are currently exercisable. Does not include options to purchase
17,952 shares of common stock which are currently not exercisable by Mr.
Oh. |
|
|
(5) |
Comprises (i) 5 shares of unrestricted stock; (ii) 11,296
shares of restricted stock which vest over time and are subject to
forfeiture; and (iii) 51,379 shares of common stock held by a trust,
settled by Mr. Pein and of which he is a beneficiary. Vesting of the
restricted stock is conditioned on Mr. Peins continued service as a
member of our Board on the applicable vesting date. |
|
|
(6) |
Comprises 14,120 shares of restricted stock which vest
over time and are subject to forfeiture. Vesting of the restricted stock
is conditioned on Mr. Seabrookes continued service as a member of our
Board on the applicable vesting date. |
|
|
(7) |
Comprises (i) 18,333 shares of unrestricted stock; (ii)
36,328 shares of restricted stock, the vesting of which is subject to the
satisfaction of certain financial performance and other conditions
described elsewhere in this proxy statement; and (iii) options to purchase
178,703 shares of common stock, all of which are currently exercisable.
Does not include options to purchase 31,013 shares of common stock which
are currently not exercisable by Mr. Soma. |
|
|
(8) |
Based solely on Amendment No. 6 to Schedule 13G, dated
September 9, 2015, filed by International Value Advisers, LLC. The
business address of International Value Advisers, LLC is 717 Fifth Avenue,
10th Floor, New York, NY 10022. |
|
|
(9) |
Except as set forth in the last sentence of this
footnote, the number of shares presented and all of the information
contained in this footnote is based solely on Amendment No. 4 to Schedule
13G, dated February 17, 2015, filed by Allan Gray Proprietary Limited
(Allan Gray), a corporation organized under the laws of the Republic of
South Africa. The address of Allan Gray is 1 Silo Square, V&A
Waterfront, Cape Town, 8001. Allan Gray has advised us that it has
reported its beneficial ownership on Schedule 13G as a result of its sole
dispositive power related to these shares and that all of such shares are
owned by clients of entities wholly- owned by Allan Gray, and not by the
Allan Gray entities themselves. |
|
|
(10) |
Represents shares beneficially owned by the directors and
executive officers listed in the table. Includes shares issuable upon
exercise of options to purchase 1,223,459 shares of common stock, all of
which are currently exercisable and 354,197 shares of restricted stock,
the vesting of which is subject to certain conditions discussed
above. |
ADDITIONAL INFORMATION
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires that our executive
officers and directors, and persons who own more than 10% of a registered class
of our equity securities, file reports of ownership and changes in ownership
with the SEC and provide us with copies of such reports. We have reviewed such
reports received by us and written representations from our directors and
executive officers. Based solely on such review and representations, we believe
that all filings requirements applicable to our executive officers, directors
and more than 10% shareholders were complied with during fiscal year 2015.
Annual Report on Form 10-K
A copy of our annual report on Form 10-K (without exhibits) for
the fiscal year ended June 30, 2015, is being distributed along with this proxy
statement. We refer you to such report for financial and other information about
us, but such report is not incorporated in this proxy statement and is not
deemed to be a part of the proxy solicitation material. It is also available on
our website (www.net1.com). In addition, the annual report (with exhibits) is
available at the SECs website (www.sec.gov).
39
Shareholder Proposals and Director Nominations for the 2016
Annual Meeting
Qualified shareholders who wish to have proposals presented at
the 2016 annual meeting of shareholders must deliver them to us by June 4, 2016,
in order to be considered for inclusion in next years proxy statement and proxy
pursuant to Rule 14a-8 under the Exchange Act. Shareholders who intend to
present an item of business for our 2016 annual meeting of shareholders (other
than a proposal presented for inclusion in next years proxy statement and proxy
pursuant to Rule 14a-8) must provide notice of such business to us by June 4,
2016, as set forth more fully in Sections 2.08 and 4.16 of our Amended and
Restated By-Laws. Shareholders who wish to nominate one or more persons for
election as directors must provide notice of such nominations to us by June 4,
2016, as set forth more fully in Sections 2.08 and 4.16 of our Amended and
Restated By-Laws. All proposals and nominations must be delivered to us at our
principal executive offices at PO Box 2424, Parklands 2121, South Africa.
Householding of Proxy Materials
We have adopted a procedure approved by the SEC called
householding. Under this procedure, multiple shareholders who share the same
last name and address will receive only one copy of the annual proxy materials,
unless they notify us that they wish to continue receiving multiple copies. We
have undertaken householding to reduce our printing costs and postage fees.
If you wish to opt-out of householding and receive multiple
copies of the proxy materials at the same address, you may do so at any time
prior to 30 days before the mailing of proxy materials, which typically are
mailed at the end of October of each year, by notifying us in writing at: Net 1
UEPS Technologies, Inc., PO Box 2424, Parklands 2121, South Africa, Attention:
Net 1 UEPS Technologies, Inc. Corporate Secretary. You also may request
additional copies of the proxy materials by notifying us in writing at the same
address.
If you share an address with another shareholder and currently
are receiving multiple copies of the proxy materials, you may request
householding by notifying us at the above-referenced address.
Other Matters
The Board knows of no other matters that will be presented for
consideration at the annual meeting. Return of a valid proxy, however, confers
on the designated proxy holders the discretionary authority to vote the shares
in accordance with their best judgment on such other business, if any, that may
properly come before the meeting or any adjournment or postponement thereof.
|
By Order of the Board of Directors, |
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|
![](def14ax43x1.jpg) |
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Dr. Serge C. P. Belamant |
|
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Chairman and Chief Executive Officer |
|
October 2, 2015
THE BOARD HOPES THAT YOU WILL ATTEND THE MEETING. WHETHER OR
NOT YOU PLAN TO ATTEND, PLEASE PROMPTLY COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY.
40
Exhibit A
AMENDED AND RESTATED 2015 STOCK INCENTIVE PLAN OF
NET 1
UEPS TECHNOLOGIES, INC.
The Company hereby establishes the Amended and Restated 2015
Stock Incentive Plan of Net 1 UEPS Technologies, Inc. (the Plan), which
is a continuation, and amendment and restatement of the second Amended and
Restated 2004 Stock Incentive Plan of Net 1 UEPS Technologies, Inc., which was a
continuation, and amendment and restatement of the Amended and Restated 2004
Stock Incentive Plan, which in turn was the successor to the 2004 Stock
Incentive Plan of Net 1 UEPS Technologies, Inc. and its Subsidiaries, as
amended. The purpose of the Plan is to aid the Company and its Affiliates in
recruiting and retaining key employees, directors or consultants of outstanding
ability and to motivate such employees, directors or consultants to exert their
best efforts on behalf of the Company and its Affiliates by providing incentives
through the granting of Awards. The Company expects that it will benefit from
the added interest which such key employees, directors or consultants will have
in the welfare of the Company as a result of their proprietary interest in the
Companys success.
The following capitalized terms used in the Plan have the
respective meanings set forth in this Section:
a. Act: The Securities Exchange Act of
1934, as amended, or any successor thereto.
b. Affiliate: With respect to the Company,
any entity directly or indirectly controlling, controlled by, or under common
control with, the Company or any other entity designated by the Board in which
the Company or an Affiliate has an interest.
c. Award: An Option, Stock Appreciation
Right or Other Stock-Based Award granted pursuant to the Plan.
d. Beneficial Owner: A beneficial owner,
as such term is defined in Rule 13d-3 under the Act (or any successor rule
thereto).
e. Board: The Board of Directors of the
Company.
f. Code: The Internal Revenue Code of
1986, as amended, or any successor thereto.
g. Committee: The Board, or such committee
of the Board as it shall designate from time to time, in accordance with Section
4.
h. Company: Net 1 UEPS Technologies, Inc.,
a Florida corporation.
i. Disability: Inability of a Participant
to perform in all material respects the Participants duties and
responsibilities to the Company, or any Subsidiary of the Company, by reason of
a physical or mental disability or infirmity which inability is reasonably
expected to be permanent and has continued (i) for a period of six consecutive
months or (ii) such shorter period as the Committee may reasonably determine in
good faith. The Disability determination shall be in the sole discretion of the
Committee and a Participant (or the Participants representative) shall furnish
the Committee with medical evidence documenting the Participants disability or
infirmity which is satisfactory to the Committee.
j. Effective Date: June 7, 2004.
k. Employment: The term Employment as
used herein shall be deemed to refer to (i) a Participants employment if the
Participant is an employee of the Company or any of its Affiliates, (ii) a Participants services as a consultant, if the Participant is
consultant to the Company or its Affiliates and (iii) a Participants services
as an non-employee director, if the Participant is a non-employee member of the
Board.
1
l. Fair Market Value: On a given date, (i)
if the Shares are registered under Section 12(b) or 12(g) of the Act, and listed
for trading on a national exchange or market, the term Fair Market Value shall
mean, as applicable, (a) the official closing price on the relevant date, the
average of the high and low sale price on the relevant date, or the average of
the official closing price over a period of up to thirty consecutive days
immediately prior to or including the relevant date, as determined in the
Committees discretion, as quoted on the New York Stock Exchange, the American
Stock Exchange, the Nasdaq Global Select Market or the Nasdaq Global Market; (b)
the last sale price on the relevant date or the average of the last sale price
over a period of up to thirty consecutive days immediately prior to or including
the relevant date, as determined in the Committees discretion, as quoted on the
Nasdaq Capital Market; (c) the average of the high bid and low asked prices on
the relevant date quoted on the Nasdaq OTC Bulletin Board Service or by the
National Quotation Bureau, Inc. or a comparable service as determined in the
Committees discretion; or (d) if the Shares are not quoted by any of the above,
the average of the closing bid and asked prices on the relevant date furnished
by a professional market maker for the Shares, or by such other source, selected
by the Committee; provided, however, that if an average of prices over a period
of days is not applicable and no public trading of the Shares occurs on the
relevant date but the Shares are so listed, then Fair Market Value shall be
determined as of the earliest preceding date on which trading of the Shares does
occur; and (ii) if the Shares on the relevant date are not listed for trading on
a national exchange or market, then Fair Market Value shall be the value
established by the Committee in good faith.
m. ISO: An Option that is also an
incentive stock option granted pursuant to Section 6.d of the Plan.
n. LSAR: A limited stock appreciation
right granted pursuant to Section 7.d of the Plan.
o. Other Stock-Based Awards: Awards
granted pursuant to Section 8 of the Plan.
p. Option: A stock option granted pursuant
to Section 6 of the Plan.
q. Option Price: The purchase price per
Share of an Option, as determined pursuant to Section 6.a of the Plan.
r. Participant: An employee, director or
consultant of the Company or a Subsidiary who is selected by the Committee to
participate in the Plan.
s. Performance-Based Awards: Certain Other
Stock-Based Awards granted pursuant to Section 8.b of the Plan.
t. Person: A person, as such term is
used for purposes of Section 13(d) or 14(d) of the Act (or any successor section
thereto).
u. Plan: The Amended and Restated 2015
Stock Incentive Plan of Net 1 UEPS Technologies, Inc.
v. Shares: Shares of common stock, par
value $0.001per share, of the Company.
w. Stock Appreciation Right: A stock
appreciation right granted pursuant to Section 7 of the Plan.
x. Subsidiary: With reference to the
Company, a subsidiary corporation, as defined in Section 424(f) of the Code (or
any successor section thereto).
2
|
3. |
SHARES
SUBJECT TO THE
PLAN |
The total number of Shares which may be issued under the Plan,
measured from the Effective Date, is 11,052,580 (which includes an additional
2,500,000 Shares approved as of August 19, 2015). The maximum number of Shares
for which Options, Stock Appreciation Rights, or Other Stock-Based Awards (other
than Performance-Based Awards granted pursuant to Section 8.b), in any
combination, may be granted during a calendar year to any Participant shall be
569,120 Shares. The Shares may consist, in whole or in part, of unissued Shares
or treasury Shares. The issuance of Shares or the payment of cash upon the
exercise of an Award or in consideration of the cancellation or termination of
an Award shall reduce the total number of Shares available under the Plan, as
applicable. Shares which are subject to Awards which terminate or lapse without
the payment of consideration may be granted again under the Plan. Shares
delivered to the Company as part or full payment for the exercise of an Option
or to satisfy withholding obligations upon the exercise of an Option, in each
case if permitted by the Committee, may be granted again under the Plan.
The Plan shall be administered by the Committee, which may
delegate its duties and powers in whole or in part to any subcommittee thereof,
which Committee shall consist, unless otherwise determined by the Board, (i)
during any period that the Company is subject to Section 16 of the Act, solely
of at least two individuals who are intended to qualify as Non-Employee
Directors within the meaning of Rule 16b-3 under the Act (or any successor rule
thereto) and (ii) during any period that the Company is subject to Section
162(m) of the Code, solely of outside directors within the meaning of Section
162(m) of the Code (or any successor section thereto). Awards may, in the
discretion of the Committee, be made under the Plan in assumption of, or in
substitution for, outstanding awards previously granted by the Company or its
affiliates or a company acquired by the Company or with which the Company
combines. The number of Shares underlying such substitute awards shall be
counted against the aggregate number of Shares available for Awards under the
Plan. The Committee is authorized to interpret the Plan, to establish, amend and
rescind any rules and regulations relating to the Plan, to grant awards
consistent with the terms of the Plan, and to make any other determinations that
it deems necessary or desirable for the administration of the Plan. The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan in the manner and to the extent the Committee deems
necessary or desirable. Any decision of the Committee in the interpretation and
administration of the Plan, as described herein, shall lie within its sole and
absolute discretion and shall be final, conclusive and binding on all parties
concerned (including, but not limited to, Participants and their beneficiaries
or successors). The Committee shall have the full power and authority to
establish the terms and conditions of any Award consistent with the provisions
of the Plan and to waive any such terms and conditions at any time (including,
without limitation, accelerating or waiving any vesting conditions).
Notwithstanding the foregoing, the Committee shall not, without obtaining prior
shareholder approval, modify or amend any outstanding Award, nor grant an Award
in substitution for an outstanding Award, if such modification, amendment or
substitution results in repricing the Award, within the meaning of Nasdaq
Marketplace Rule 5635(c) and IM-5635-1, or any successor provision. The
Committee shall require payment of any amount it may determine to be necessary
to withhold for federal, state, local or other taxes as a result of the
exercise, grant or vesting of an Award. Unless the Committee specifies
otherwise, the Participant may elect to pay a portion or all of such withholding
taxes, not in excess of the amount necessary to satisfy the statutory minimum
withholding amount due, by (a) delivery in Shares or (b) having Shares withheld
by the Company from any Shares that would have otherwise been received by the
Participant.
No Award may be granted under the Plan after August 19, 2025,
but Awards granted on or before August 19, 2025 may extend beyond that date.
3
|
6. |
TERMS AND
CONDITIONS OF
OPTIONS |
Options granted under the Plan shall be, as determined by the
Committee, nonqualified or incentive stock options for federal income tax
purposes, as evidenced by the related Award agreements, and shall be subject to
the foregoing and the following terms and conditions and to such other terms and
conditions, not inconsistent therewith, as the Committee shall determine:
a. Option Price. The Option Price per
Share shall be determined by the Committee, but shall not be less than 100% of
the Fair Market Value of the Shares on the date an Option is granted.
b. Exercisability. Options granted under
the Plan shall vest and become exercisable at such time and upon such terms and
conditions as may be determined by the Committee, but in no event shall an
Option be exercisable more than ten years after the date it is granted. Unless
otherwise provided in an Award agreement, an Option shall vest with respect to
twenty percent (20%) of the Shares initially covered by the Option on each of
the first, second, third, fourth and fifth anniversaries of the date the Option
was granted, subject to the Participants continued Employment with the Company
and the other terms and conditions of the Plan and the Award agreement.
c. Exercise of Options. Except as
otherwise provided in the Plan or in an Award agreement, an Option may be
exercised for all, or from time to time any part, of the Shares for which it is
then exercisable. For purposes of Section 6 of the Plan, except as otherwise
provided in an Award agreement, the exercise date of an Option shall be the
later of the date a notice of exercise is received by the Company and, if
applicable, the date payment is received by the Company pursuant to the
following sentence. The purchase price for the Shares as to which an Option is
exercised shall be paid to the Company in full, in accordance with Committee
procedures, at the election of the Participant (i) in cash (US dollars) or cash
equivalent acceptable to the Committee (including offset against US dollars, if
any, owed by the Company to the Participant as of the date of exercise, subject
to any required regulatory approval), (ii) if permitted by the Committee, by
tender to the Company, or attestation to the ownership, of whole Shares owned by
the Participant, including Shares deliverable upon exercise of the Option, (iii)
to the extent permitted by the Committee, if there is a public market for the
Shares at such time, through the delivery of irrevocable instructions to a
broker in a form acceptable to the Committee providing for the assignment to the
Company of the proceeds of a sale or loan with respect to some or all of the
Shares obtained upon the exercise of the Option, (iv) if permitted by the
Committee, with a promissory note in such form as the Committee may specify that
bears a market rate of interest and is fully recourse, (v) by any other means
acceptable to the Committee, or (vi) by any combination of the foregoing as may
be permitted by the Committee, in its sole discretion. Shares tendered in
payment of the Exercise Price will be valued at their Fair Market Value as of
the date that the exercise occurs. No Participant shall have any rights to
dividends or other rights of a shareholder with respect to Shares subject to an
Option until the Participant has given written notice of exercise of the Option,
paid in full for such Shares and, if applicable, has satisfied any other
conditions imposed by the Committee pursuant to the Plan.
d. ISOs. The Committee may grant Options
under the Plan that are intended to be ISOs. Such ISOs shall comply with the
requirements of Section 422 of the Code (or any successor section thereto). No
ISO may be granted to any Participant who at the time of such grant owns ten
percent or more of the total combined voting power of all classes of stock of
the Company or of any Subsidiary, unless (i) the Option Price for such ISO is at
least 110% of the Fair Market Value of a Share on the date the ISO is granted
and (ii) the date on which such ISO terminates is a date not later than the day
preceding the fifth anniversary of the date on which the ISO is granted. Any
Participant who disposes of Shares acquired upon the exercise of an ISO either
(i) within two years after the date of grant of such ISO or (ii) within one year
after the transfer of such Shares to the Participant, shall notify the Company
of such disposition and of the amount realized upon such disposition. All
Options granted under the Plan are intended to be nonqualified stock options,
unless the applicable Award agreement expressly states that the Option is
intended to be an ISO. If an Option is intended to be an ISO, and if for any
reason such Option (or portion thereof) shall not qualify as an ISO, then, to
the extent of such nonqualification, such Option (or portion thereof) shall be
regarded as a nonqualified stock option granted under the Plan; provided that
such Option (or potion thereof) otherwise complies with the Plans requirements
relating to nonqualified stock options. In no event shall any member of the Committee, the Company or any of its Affiliates (or their
respective employees, officers or directors) have any liability to any
Participant (or any other Person) due to the failure of an Option to qualify for
any reason as an ISO.
4
e. Attestation. Wherever in this Plan
or any agreement evidencing an Award a Participant is permitted to pay the
exercise price of an Option or taxes relating to the exercise of an Option by
delivering Shares, the Participant may, subject to procedures satisfactory to
the Committee, satisfy such delivery requirement by presenting proof of
beneficial ownership of such Shares, in which case the Company shall treat the
Option as exercised without further payment and shall withhold such number of
Shares from the Shares acquired by the exercise of the Option.
|
7. |
TERMS AND
CONDITIONS OF
STOCK APPRECIATION
RIGHTS |
a. Grants. The Committee also may grant
(i) a Stock Appreciation Right independent of an Option or (ii) a Stock
Appreciation Right in connection with an Option, or a portion thereof. A Stock
Appreciation Right granted pursuant to clause (ii) of the preceding sentence (A)
may be granted at the time the related Option is granted or at any time prior to
the exercise or cancellation of the related Option, (B) shall cover the same
number of Shares covered by an Option (or such lesser number of Shares as the
Committee may determine) and (C) shall be subject to the same terms and
conditions as such Option except for such additional limitations as are
contemplated by this Section 7 (or such additional limitations as may be
included in an Award agreement).
b. Terms. The exercise price per Share of
a Stock Appreciation Right shall be an amount determined by the Committee but in
no event shall such amount be less than the greater of (i) the Fair Market Value
of a Share on the date the Stock Appreciation Right is granted or, in the case
of a Stock Appreciation Right granted in conjunction with an Option, or a
portion thereof, the Option Price of the related Option and (ii) the minimum
amount permitted by applicable laws, rules, by-laws or policies of regulatory
authorities or stock exchanges. Each Stock Appreciation Right granted
independent of an Option shall entitle a Participant upon exercise to an amount
equal to (i) the excess of (A) the Fair Market Value on the exercise date of one
Share over (B) the exercise price per Share, times (ii) the number of Shares
covered by the Stock Appreciation Right. Each Stock Appreciation Right granted
in conjunction with an Option, or a portion thereof, shall entitle a Participant
to surrender to the Company the unexercised Option, or any portion thereof, and
to receive from the Company in exchange therefore an amount equal to (i) the
excess of (A) the Fair Market Value on the exercise date of one Share over (B)
the Option Price per Share, times (ii) the number of Shares covered by the
Option, or portion thereof, which is surrendered. The date a notice of exercise
is received by the Company shall be the exercise date. Payment shall be made in
Shares or in cash, or partly in Shares and partly in cash (any such Shares
valued at such Fair Market Value), all as shall be determined by the Committee.
Stock Appreciation Rights may be exercised from time to time upon actual receipt
by the Company of written notice of exercise stating the number of Shares with
respect to which the Stock Appreciation Right is being exercised. No fractional
Shares will be issued in payment for Stock Appreciation Rights, but instead cash
will be paid for a fraction or, if the Committee should so determine, the number
of Shares will be rounded downward to the next whole Share. No Stock
Appreciation Right shall have a term longer than ten years duration.
c. Limitations. The Committee may impose,
in its discretion, such conditions upon the exercisability or transferability of
Stock Appreciation Rights as it may deem fit.
d. Limited Stock Appreciation Rights. The
Committee may grant LSARs that are exercisable upon the occurrence of specified
contingent events. Such LSARs may provide for a different method of determining
appreciation, may specify that payment will be made only in cash and may provide
that any related Awards are not exercisable while such LSARs are exercisable.
Unless the context otherwise requires, whenever the term Stock Appreciation
Right is used in the Plan, such term shall include LSARs.
5
|
8. |
OTHER
STOCK-BASED
AWARDS |
a. Generally. The Committee, in its sole
discretion, may grant or sell Awards of Shares, Awards of restricted Shares and
Awards that are valued in whole or in part by reference to, or are otherwise
based on the Fair Market Value of, Shares (Other Stock-Based Awards).
Such Other Stock-Based Awards shall be in such form, and dependent on such
conditions, as the Committee shall determine, including, without limitation, the
right to receive, or vest with respect to, one or more Shares (or the equivalent
cash value of such Shares) upon the completion of a specified period of service,
the occurrence of an event and/or the attainment of performance objectives.
Other Stock-Based Awards may be granted alone or in addition to any other Awards
granted under the Plan. Subject to the provisions of the Plan, the Committee
shall determine to whom and when Other Stock-Based Awards will be made, the
number of Shares to be awarded under (or otherwise related to) such Other
Stock-Based Awards; whether such Other Stock-Based Awards shall be settled in
cash, Shares or a combination of cash and Shares; and all other terms and
conditions of such Awards (including, without limitation, the vesting provisions
thereof and provisions ensuring that all Shares so awarded and issued shall be
fully paid and non-assessable). Unless otherwise provided in an Award agreement,
Other Stock-Based Awards shall vest with respect to twenty percent (20%) of the
Shares initially covered by such Other Stock-Based Award on each of the grant
date and the first, second, third and fourth anniversaries of the date such
Award was granted, subject to the Participants continued Employment with the
Company and the other terms and conditions of the Plan and the Award agreement.
b. Performance-Based Awards.
Notwithstanding anything to the contrary herein, certain Other Stock-Based
Awards granted under this Section 8 may be granted in a manner which is
deductible by the Company under Section 162(m) of the Code (or any successor
section thereto) (Performance-Based Awards). A Participants Performance-Based
Award shall be determined based on the attainment of written performance goals
approved by the Committee for a performance period established by the Committee
(i) while the outcome for that performance period is substantially uncertain and
(ii) no more than 90 days after the commencement of the performance period to
which the performance goal relates or, if less, the number of days which is
equal to 25% of the relevant performance period. The performance goals, which
must be objective, shall be based upon one or more of the following criteria:
(i) consolidated earnings before or after taxes (including earnings before
interest, taxes, depreciation and amortization); (ii) net income; (iii)
operating income; (iv) earnings per Share or fundamental earnings per Share; (v)
book value per Share; (vi) return on shareholders equity; (vii) expense
management; (viii) return on investment; (ix) improvements in capital structure;
(x) profitability of an identifiable business unit or product; (xi) maintenance
or improvement of profit margins; (xii) stock price; (xiii) market share; (xiv)
revenues or sales; (xv) costs; (xvi) cash flow; (xvii) working capital and
(xviii) return on assets. The foregoing criteria may relate to the Company, one
or more of its Subsidiaries or one or more of its divisions or units, or any
combination of the foregoing, and may be applied on an absolute basis and/or be
relative to one or more peer group companies or indices, or any combination
thereof, all as the Committee shall determine. In addition, to the degree
consistent with Section 162(m) of the Code (or any successor section thereto),
the performance goals may be calculated without regard to extraordinary items.
The maximum amount of Performance-Based Awards that may be granted during a
calendar year to any Participant shall be: (x) with respect to Performance-Based
Awards that are Options, Options covering 569,120 Shares and (y) with respect to
Performance-Based Awards that are not Options, Awards having an aggregate value
as of the grant date of $20,000,000. The Committee shall determine whether, with
respect to a performance period, the applicable performance goals have been met
with respect to a given Participant and, if they have, to so certify and
ascertain the amount of the applicable Performance-Based Award. No
Performance-Based Awards will be paid for such performance period until such
certification is made by the Committee. The amount of the Performance-Based
Award actually paid to a given Participant may be less than the amount
determined by the applicable performance goal formula, at the discretion of the
Committee. The amount of the Performance-Based Award determined by the Committee
for a performance period shall be paid to the Participant at such time as
determined by the Committee in its sole discretion after the end of such
performance period; provided, however, that a Participant may, if and to the
extent permitted by the Committee and consistent with the provisions of Sections
162(m) and 409A of the Code, to the extent applicable, elect to defer payment of
a Performance-Based Award.
6
|
9. |
ADJUSTMENTS
UPON CERTAIN
EVENTS |
Notwithstanding any other provisions in the Plan to the
contrary, the following provisions shall apply to all Awards granted under the
Plan:
a. In the event of any change in the outstanding Shares after
the Effective Date by reason of any Share dividend or split, reorganization,
recapitalization, merger, consolidation, spinoff, combination or transaction or
exchange of Shares or other corporate exchange, or any distribution to
shareholders of Shares other than regular cash dividends or any transaction
similar to the foregoing, the Committee shall make such substitution or
adjustment, as it deems to be equitable in its sole discretion and without
liability to any person, as to (i) the number or kind of Shares or other
securities issued or reserved for issuance pursuant to the Plan or pursuant to
outstanding Awards, (ii) the maximum number of Shares for which Options or Stock
Appreciation Rights may be granted during a calendar year to any Participant,
(iii) the maximum amount of a Performance-Based Award that may be granted during
a calendar year to any Participant, (iv) the Option Price or exercise price of
any stock appreciation right and/or (v) any other affected terms of such Awards.
b. In the event a significant corporate transaction, such as
sale of voting stock, merger, sale of substantial assets, or other similar
corporate event involving the Company, occurs after the Effective Date, (i) if
determined by the Committee in the applicable Award agreement or otherwise, any
outstanding Awards then held by Participants which are unexercisable or
otherwise unvested or subject to lapse restrictions may automatically be deemed
exercisable or otherwise vested or no longer subject to lapse restrictions, as
the case may be, as of immediately prior to such corporate transaction, and (ii)
the Committee may, but shall not be obligated to, (A) cancel such Awards for
fair value (as determined in the sole discretion of the Committee) which, in the
case of Options and Stock Appreciation Rights, may equal the excess, if any, of
value of the consideration to be paid in such corporate transaction to holders
of the same number of Shares subject to such Options or Stock Appreciation
Rights (or, if no consideration is paid in any such transaction, the Fair Market
Value of the Shares subject to such Options or Stock Appreciation Rights) over
the aggregate exercise price of such Options or Stock Appreciation Rights or (B)
provide for the issuance of substitute Awards that will substantially preserve
the otherwise applicable terms of any affected Awards previously granted
hereunder as determined by the Committee in its sole discretion or (C) provide
that for a period of at least 15 days prior to the consummation of such
corporate transaction, such Options shall be exercisable as to all shares
subject thereto and that upon the consummation of such corporate transaction,
such Options shall terminate and be of no further force and effect.
Notwithstanding anything in the Plan to the contrary, in no event shall the
Committee exercise its discretion to accelerate the payment or settlement of an
Award where such payment or settlement is on behalf of a United States taxpayer
and constitutes deferred compensation within the meaning of Section 409A of the
Code unless, and solely to the extent, that such accelerated payment or
settlement is permissible under Treasury Regulation section 1.409A -3(j)(4) or
any successor provision.
|
10. |
NO RIGHT
TO EMPLOYMENT OR
AWARDS |
The granting of an Award under the Plan shall impose no
obligation on the Company or any Subsidiary to continue the Employment of a
Participant and shall not lessen or affect the Companys or Subsidiarys right
to terminate the Employment of such Participant. No Participant or other Person
shall have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Participants, or holders or beneficiaries of Awards.
The terms and conditions of Awards and the Committees determinations and
interpretations with respect thereto need not be the same with respect to each
Participant (whether or not such Participants are similarly situated).
|
11. |
SUCCESSORS AND
ASSIGNS |
The Plan shall be binding on all successors and assigns of the
Company and a Participant, including without limitation, the estate of such
Participant and the executor, administrator or trustee of such estate, or any
receiver or trustee in bankruptcy or representative of the Participants
creditors.
7
|
12. |
NONTRANSFERABILITY OF
AWARDS |
Unless otherwise determined by the Committee, an Award shall
not be transferable or assignable by the Participant otherwise than by will or
by the laws of descent and distribution. An Award exercisable after the death of
a Participant may be exercised by the legatees, personal representatives or
distributees of the Participant.
|
13. |
AMENDMENTS OR
TERMINATION |
The Board may amend, alter or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made, (a) without the approval
of the shareholders of the Company, if such action would (except as is provided
in Section 9 of the Plan), increase the total number of Shares reserved for the
purposes of the Plan or change the maximum number of Shares for which Awards may
be granted to any Participant or (b) without the consent of a Participant, if
such action would diminish any of the rights of the Participant under any Award
theretofore granted to such Participant under the Plan; provided, however, that
the Committee may amend the Plan in such manner as it deems necessary to permit
the granting of Awards meeting the requirements of the Code or other applicable
laws.
|
14. |
INTERNATIONAL
PARTICIPANTS |
With respect to Participants who reside or work outside the
United States of America and who are not (and who are not expected to be)
covered employees within the meaning of Section 162(m) of the Code, the
Committee may, in its sole discretion, amend the terms of the Plan or Awards
with respect to such Participants in order to conform such terms with the
requirements of local law.
The Plan shall be governed by and construed in accordance with
the laws of the State of Florida without regard to conflicts of laws.
|
16. |
EFFECTIVENESS OF THE
PLAN |
The Plan initially became effective June 7, 2004, and was
amended by Amendment No.1 thereto on June 21, 2006. The Plan was then amended
and restated on August 24, 2006, subject to shareholder approval, which was
obtained on December 1, 2006. The Plan was further amended and restated on
September 22, 2009, subject to shareholder approval, which was obtained on
November 25, 2009. The Board has approved the Plans third amendment and
restatement, as set forth herein, subject to approval of the shareholders of the
Company at the 2015 Annual Meeting of the Shareholders or a special meeting of
the shareholders at which the Plan, as amended and restated, is presented for
approval, provided that any such special meeting is held within twelve months of
the date this amended and restated Plan is adopted by the Board.
8
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