2012 Integrated report - Sappi

Notes to the group annual financial statements
for the year ended September 2012
28. Share-based payments continued
The following table sets forth certain information with respect to the 1,149,600 Share options and Performance shares granted by
Sappi to executive directors:
Issue date
Number of
options/shares (1)
Expiry date
Exercise
price (ZAR) (1)
13 December 2004 39,600 13 December 2012 46.51
22 December 2008 (2) 242,000 22 December 2012 –
09 December 2009 (2) 315,000 09 December 2013 –
03 December 2010 (2) 283,000 03 December 2014 –
02 December 2011 (2) 270,000 02 December 2015 –
(1) Adjusted for the Share options and Performance shares granted as a result of the rights issue.
(2) Performance shares.
1,149,600
Refer to note 35 for more information on directors’ participation in the Scheme and the Plan.
No new loans have been granted to the executive directors since 28 March 2002.
Black Economic Empowerment
In June 2010, Sappi completed a Black Economic Empowerment (‘BEE’) transaction (the ‘BEE transaction’) that enabled Sappi to meet
its BEE targets in respect of BEE equity ownership. The South African government has through the years promulgated various pieces of
legislation to increase the participation of Historically Disadvantaged South Africans (‘HDSAs’) in the South African economy and, through
BEE legislation, formalised the country’s approach in this regard. Sappi views BEE as a key requirement for sustainable growth and social
development in South Africa.
In April 2006, Sappi announced a BEE transaction (the ‘Plantation BEE Transaction’) that included a consortium of investors and certain
categories of Sappi’s South African employees. However, the Plantation BEE Transaction did not meet Sappi’s undertakings under the
Forestry Charter gazetted in June 2009 (which sets the objectives and principles for BBBEE (‘Broad-based Black Economic
Empowerment’) in the forestry industry and includes the BBBEE scorecard and targets to be applied, as well as certain undertakings by
government and South African forestry companies to assist the forestry industry to achieve its BBBEE targets). Accordingly, Sappi
decided to unwind the Plantation BEE Transaction and to implement the BEE transaction, a new sustainable transaction of equivalent
value using its listed securities.
The BEE transaction has resulted in potentially 4.5% of the issued share capital of Sappi being held as follows:
• Sappi’s South African Employees (62.5%);
• South African Black Managers (15%);
• Strategic Partners (12.5%) (refer to the section ‘The BEE transaction’ in this note); and
• Communities surrounding the South African mill operations and plantations (10%).
The BEE transaction
The BEE transaction comprised two distinct parts:
• The value created through the Plantation BEE Transaction was settled by the issue of 4.3 million fully paid up ordinary shares at a price
based on the 30 day volume weighted average share price (‘VWAP’) of Sappi as at Friday, 05 February 2010 of ZAR33.50.
• The creation and issuance of a new class of unlisted equity shares referred to as ‘A’ ordinary shares. The ‘A’ ordinary shares were
issued at their par value of ZAR1 to a trust formed for the benefit of certain Sappi employees including HDSAs (the ‘ESOP Trust’), a
trust formed for the benefit of certain Sappi managers that are HDSAs (the ‘MSOP Trust’) and a trust formed for the benefit of
communities surrounding the major mills and/or plantations operated by Sappi in South Africa (the ‘Sappi Foundation Trust’, and
together with the ESOP Trust and the MSOP Trust, the ‘BEE Trusts’). The issuance of the ‘A’ ordinary shares was financed through
notional non-interest-bearing loans extended by Sappi to the BEE Trusts. The BEE transaction resulted in the BEE Trusts and the
Strategic Partners holding, collectively, ordinary and ‘A’ ordinary shares equivalent to 4.5% of the share capital of Sappi Limited, which
corresponds to an effective 30% interest in Sappi’s South African business under the Forestry Charter and BEE legislation in general.
The number of ordinary shares allocated to the Strategic Partners and Sappi employees who were participants of the Plantation
BEE Transaction are as follows:
Entity
Ordinary
share allocation
Strategic Partners:
Lereko Investments (Pty) Limited 1,971,693
Malibongwe Women Development Trust 432,842
AMB Capital Limited 643,221
3,047,756
Employees (through the ESOP Trust) 1,280,597
Total 4,328,353
152