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Tiger Brands Limited Integrated Annual Report
2014
Annual financial statements
23 Share-based payment plans
continued
23.2
Black managers participation right scheme (equity settled)
In terms of the BEE transaction implemented on 17 October 2005, 4 381 831 Tiger Brands shares were
acquired by the Tiger Brands Black Managers Trust. The allocation of vested rights entitles beneficiaries to
receive Tiger Brands shares (after making capital contributions to the Black Managers Trust) at any time after
the lock-in period. In respect of options allocated on or before 31 July 2010, the lock-in period ends on
31 December 2014. In respect of allocations made after 31 July 2010, the lock-in date will be the latter
of 31 December 2014 or, in respect of one-third of the allocations, three years after the allocation, the next
third, four years and the last third, five years after the allocation. These vested rights are non-transferable.
After the lock-in date, the beneficiaries may exercise their vested rights, in which event the beneficiary may:
Ϣ
Ϣ
instruct trustees to sell all of their shares and distribute the proceeds to them, net of the funds required
to pay the capital contributions, taxation (including employees’ tax), costs and expenses;
Ϣ
Ϣ
instruct the trustees to sell sufficient shares to fund the capital contributions, pay the taxation (including
employees’ tax), costs and expenses, and distribute to them the remaining shares to which they are
entitled; or
Ϣ
Ϣ
fund the capital contributions, taxation (including employees’ tax) costs and expenses themselves and
receive the shares to which they are entitled.
The expense recognised for employee services received during the year to 30 September 2014 is
R17,8 million (2013: R17,0 million).
The following table illustrates the number of, and movements in, share participation rights during the year:
2014
Restated*
2013
Number
Number
Outstanding at the beginning of the year
2 811 031
2 853 209
Granted during the year
336 000
71 000
Forfeited during the year
(52 575)
(99 444)
Shares sold (death of employees)
(13 014)
(13 734)
Outstanding at the end of the year
3 081 442
2 811 031
Exercisable at the end of the year
–
–
*
The amounts have been restated due to the adoption of IAS 19R.
The weighted average remaining contractual life for share options outstanding as at 30 September
2014 is 2,47 years (2013: 1,42 years).
The weighted average fair value of options granted during the year was R205,06 (2013: R205,89).
No weighted average exercise price has been calculated as there were no participation rights exercised.
Participation rights were valued using the Monte-Carlo simulation approach to estimate the average, optimal
payoff of the participation rights using 5 000 permutations. The payoff of each random path was based on
the projected Tiger Brands share price, outstanding debt projections and optimal early exercise conditions.
Volatility is measured as the annualised standard deviation of the daily price changes in the underlying
share under the assumption that the share price is log-normally distributed. Historical daily share price
data was used to estimate the expected volatility.