Our performance in 2009 - Sappi

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29. Share-based payments continued The Sappi Limited Share Incentive Trust (the Scheme) continued 2009 annual report Certain managerial employees are eligible to participate in the Scheme. The amount payable by a participant for Scheme shares, Share options or Allocation shares is the closing price at which shares are traded on the JSE Limited on the trading date immediately preceding the date upon which the board authorised the grant of the opportunity to acquire relevant Scheme shares, Share options or Allocation shares, as the case may be, to a participant. Pursuant to resolutions of the board passed in accordance with the rules of the Scheme, Scheme shares may be released from the Scheme to participants, Share options may be exercised by participants and Allocation shares may be delivered to participants as follows for allocations prior to November 2004: (i) 20% of the total number of shares after one year has elapsed from the date of acceptance by the participant of the grant; (ii) up to 40% of the total number of shares after two years have elapsed from the date of acceptance by the participant of the grant; (iii) up to 60% of the total number of shares after three years have elapsed from the date of acceptance by the participant of the grant; (iv) up to 80% of the total number of shares after four years have elapsed from the date of acceptance by the participant of the grant; and (v) the balance of the shares after five years have elapsed from the date of acceptance by the participant of the grant; and for allocations subsequent to November 2004 as follows: (i) 25% of the total number of shares after one year has elapsed from the date of acceptance by the participant of the grant; (ii) up to 50% of the total number of shares after two years have elapsed from the date of acceptance by the participant of the grant; (iii) up to 75% of the total number of shares after three years have elapsed from the date of acceptance by the participant of the grant; and (iv) the balance of the shares after four years have elapsed from the date of acceptance by the participant of the grant; provided that the board may, at its discretion, anticipate or postpone such dates. Prior to the annual general meeting held on 02 March 2000, the Scheme provided that Share options will lapse, among other reasons, if they remain unexercised after the tenth anniversary of the acceptance and that Scheme shares and Allocation shares must be paid for in full by participants by no later than the tenth anniversary of the acceptance. However, the annual general meeting approved an amendment to decrease the aforesaid ten-year period to eight years, in respect of offers made since 03 December 1999. The board has resolved that the benefits under the Scheme of Participants will be accelerated in the event of a change of control of the company, as defined in the Scheme, becoming effective (a) if, in concluding the change of control, the board in office at the time immediately prior to the proposed change of control being communicated to the board ceases to be able to determine the future employment conditions of the group’s employees or (b) unless the change of control is initiated by the board. Participants are entitled to require such acceleration by written notice to the company within a period of 90 days after the date upon which such change of control becomes effective. The Scheme provides that appropriate adjustments are to be made to the rights of Participants in the event that the group, inter alia, undertakes a rights offer, a capitalisation issue, or consolidation of ordinary shares or any reduction in its ordinary share capital. The Sappi Limited Performance Share Incentive Trust (the Plan) Under the rules of the Plan, participants who will be officers and other employees of the company may be awarded conditional contracts to acquire shares for no cash consideration. If the performance criteria from time to time determined by the human resources committee or compensation committee of the board (Performance Criteria) applicable to each Conditional Contract, are met or exceeded, then Participants shall be entitled to receive such number of shares as specified in the Conditional Contract for no cash consideration after the fourth anniversary of the date on which the board resolves to award a Conditional Contract to that Participant. The Performance Criteria shall entail a benchmarking of the company’s performance against an appropriate peer group of companies. If the board determines that the Performance Criteria embodied in a Conditional Contract have not been satisfied or exceeded, the number of shares to be allotted and issued and/or transferred to a Participant under and in terms of such Conditional Contract shall be adjusted downwards. 161 financials
162 Notes to the group annual financial statements continued 29. Share-based payments continued The Sappi Limited Performance Share Incentive Trust (the Plan) continued Provision is made for appropriate adjustments to be made to the rights of Participants in the event that the company, inter alia, undertakes a rights offer, is a party to a scheme of arrangement affecting the structuring of its issued share capital or reduces its share capital if, (a) the company undergoes a change in control after an Allocation date other than a change in control initiated by the board itself, or (b) the person/s (or those persons acting in concert) who have control of the company as at an Allocation date, take/s any decision, pass/es any resolution and/or take/s any action the effect of which is to delist the company from the JSE Limited and the company becomes aware of such decision, resolution and/or action, the company is obligated to notify every Participant thereof on the basis that such Participant may within a period of one month (or such longer period as the board may permit) take delivery of those shares which he/she would have been entitled to had the Performance Criteria been achieved. Rights offer Following the December 2008 rights offer and in accordance with the provisions of the Scheme and the Plan, adjustments were made to the rights of the Participants so that they were neither better nor worse off than prior to the rights offer. This resulted in additional offers being made to Participants in respect of all outstanding offers at the time of the rights offer. As in the case of shareholders that exercised their rights, the Participants of the Plan will be required to pay the rights offer price of ZAR20.27 per share should the shares vest. Similarly, the Participants of the Scheme may only exercise their additional options, awarded as a result of the rights offer, in conjunction with exercising their pre-rights offer options and upon payment of the rights offer price of ZAR20.27 per share. The following table separates the adjustments made to the rights of the Participants following the rights offer from the annual awards: Allocations (number of shares) Annual awards Rights offer 2009 2008 During the year, the following offers were made to employees: Share options 2,192,410 3,847,680 6,040,090 925,700 Allocation shares – 1,345,500 1,345,500 – Performance shares** 1,815,000 4,725,240 6,540,240 730,000 Scheme shares – 1,577,834 1,577,834 – Restricted shares** Share options and performance – 12,000 12,000 – shares declined (62,080) (63,840) (125,920) (14,000) 3,945,330 11,444,414 15,389,744 1,641,700
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SAPPI GROUP (Sappi Limited) ANNUAL
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• the impact of future investment
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Our reporting strategy As a leading
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1 2 North America 2 4 1 San Francis
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4 Our performance in 2009 Financial
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6 Our performance against financial
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8 Our performance against sustainab
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10 Our performance against sustaina
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12 Our performance against sustaina
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14 Our sustainable business cycle T
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16 Our products 1 2 3 Coated paper
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Our objectives for 2010 Improve pro
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20 Letter to shareholders continued
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22 Letter to shareholders continued
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24 Interview with Ralph Boëttger,
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26 Our leadership Independent non-e
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28 Our leadership continued Indepen
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30 Review of operations Sappi Fine
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32 Review of operations | Sappi Fin
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34 Review of operations | Sappi Fin
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36 Review of operations Sappi Fores
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38 Review of operations | Sappi For
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40 Value added statement for the ye
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42 Chief financial officer’s repo
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62 Five-year review for the year en
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64 Share statistics at September 20
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Risk management Global economic con
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Risk philosophy The Sappi Limited b
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Independence Accountability Given t
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Fairness Social responsibility Lege
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2009 annual report 75 Induction and
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2009 annual report 77 employment of
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2009 annual report 79 board to esta
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As part of continuous improvement t
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Compensation report In 2009, the co
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Balance between fixed and variable
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Executive directors (1) Details of
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2009 annual report 89 R J Boëttger
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2009 annual report 91 Board Committ
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Auditor’s report Independent audi
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Audit committee report The legal re
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Directors’ report for the year en
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Litigation We become involved from
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Group balance sheet at September 20
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Group statement of changes in equit
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Group balance sheet in Rands conven
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Notes to the group annual financial
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• Financial assets and financial
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Page 206 and 207: not be comparable with similarly ti
Page 208 and 209: No issue and/or sale of these share
Page 210 and 211: Notes Confirmation of appointment o
Page 212 and 213: Proxy form for annual general meeti
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