2012 Integrated report - Sappi

competitive
The policy on fatalities at work serves as a guiding principle to
the compensation committee when faced with this decision.
The performance measures for 2013 will therefore be:
Operating Profit (60%)
Working Capital (30%)
Safety (10%)
It is the company’s intention to move from Operating Profit as
a performance criteria to Net Profit once the group’s financial
turnaround has delivered Net Profit consistently for at least
three consecutive years.
> From 2013 onwards, executive directors and executive
committee members will receive their annual bonus
determined in accordance with the 2013 management
incentive scheme rules in cash and have voluntarily offered
to purchase Sappi shares with a portion of their cash bonus.
The CEO has volunteered to utilise 40% of his after-tax cash
bonus to purchase Sappi shares. Other executive committee
members have volunteered to utilise 30% of their after-tax
cash bonus to purchase Sappi shares.
Shares will be held in trust on behalf of participants.
Participants will be entitled to all rights in respect of the shares,
including dividends and voting rights.
In addition, if a participant is still in the employ of Sappi 36
months after purchasing the shares and none of the shares
have been sold or encumbered during the 36-month period,
then participants will receive a cash amount based on the then
current market value of Sappi shares on the JSE Limited of
20% of the original number of shares purchased, which
amount will be grossed up for tax as applicable.
The terms and conditions of the annual management incentive
scheme for executive directors and group executive committee
members afford the company the right to seek redress and
recoup from an individual(s) where the board determines within
a 12-month period of such payment, that the performance
goals (whether for the individual participant or for the group)
were in fact not achieved following a restatement of financial
results or otherwise.
Long term incentives
During 2012, the company operated two long term incentive
plans, namely the Sappi Limited Share Incentive Trust (‘Scheme’)
and the Sappi Limited Performance Incentive Trust (‘Plan’).
Executive directors and other key senior managers (approximately
40 participants) received a grant from the ‘Plan’ and all other
participants received a grant from the ‘Scheme’ (approximately
500 participants). From 2013 onwards, all eligible participants
will receive grants in terms of the ‘Plan’ and ‘Scheme’ grants will
be discontinued altogether.
Performance plan share awards
Shares granted to participants under the Performance Plan Share
are conditional grants subject to performance conditions
measured over a four year period. These awards will only vest if
Sappi’s performance relative to a peer group of 14 other industry
related companies is ranked at median or above the median.
The performance criteria are Total Shareholder Return (TSR) and
Cash Flow Return on Net Assets (CFRONA) weighted 50:50.
The peer group consisted of the following companies:
Resolute Forest Products (formerly Abitibi Bowater)
UPM-Kymmene OYJ
Holmen AB
Stora Enso OYJ
Mondi plc
MeadWestvaco
Fibria Celulose SA
Nippon Paper Group
International Paper
Weyerhauser
Metsä Board (formerly M-real OYJ)
Norkse Skogindustria
Oji Holdings
Domtar
For the four year period ending September 2011 and a vesting
date of December 2011, Sappi performance to the peer group
measured on TSR was ranked 12th place, which resulted in no
shares vesting.
2011 and 2012 Performance Share Plan vesting schedule
(% of awards vesting)
100
75
Vesting
50
25
0
15 14 13 12 11 10 9 8 7 6 5 4 3 2 1
Ranking
Last Median First
sappi Integrated Report 2012 89