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230 NEDBANK GROUP Limited INTEGRATED REPORT 20101994 Nedcor Group Employee Incentive SchemeThe scheme is closed for new participants and will be terminated whenall outstanding options have been exercised.At 31 December 2010 there were five participants and 43 500 NedbankGroup share options outstanding.2005 Nedbank Employee Share SchemeThe above scheme consists of three subschemes, namely the OptionScheme, Restricted Share Scheme and the Matched Share Scheme.The Option SchemeNo allocations were made during 2010.At 31 December 2010 there were 135 participants and 708 979 NedbankGroup share options outstanding. All remaining share options issuedunder this scheme were issued with time- and performance-basedvesting criteria.Restricted Share SchemeDuring 2010 the committee issued restricted shares to eligibleparticipants. An allocation under this scheme may be granted, subject tocommittee approval, under the following circumstances:• On-appointment Restricted Share Plan (RSP) allocations forinternal and external appointmentsOn-appointment restricted share allocations are offered at thediscretion of the committee to new senior managers and also tostaffmembers who have been appointed to more senior positionsand have been recommended for an allocation by the Group Exco.The committee amended its policy in 2011 so that on-appointmentallocations take place biannually, up to 10 trading days after theannouncement of the annual and interim financial results. Thevesting period for on-appointment allocations is three years fromthe date of allocation, subject to the achievement of corporateperformance targets (for performance shares only).• Annual RSP allocationsAnnual restricted share allocations apply to qualifying staffmembersin terms of criteria approved by the committee. The committeeamended its policy in 2011 so that allocations take place annuallyup to 10 trading days after the announcement of the annual financialresults.As approved by shareholders at the Nedbank Group annual generalmeeting held on 4 May 2010, the maximum number of NedbankGroup ordinary shares that could be allocated from that date in termsof the existing Nedbank Group employee share incentive schemes is49 717 637, of which 3 362 828 had been allocated to staff at31 December 2010.At 31 December 2010 share options and restricted shares in issue underthe Nedbank Group employee schemes (vested and unvested) were11 712 513.During 2010 all on-appointment and annual RSP allocations were issuedon the following basis:• 50% performance shares: restricted shares with corporate performancetargets• 50% retention shares: restricted shares without corporate performancetargetsAnnual allocations were made to 1 625 staffmembers on 2 and3 March 2010. On-appointment allocations were made to a total of114 staffmembers on 2 and 3 March 2010 and on 5 and 6 August 2010.All RSPs are issued in terms of the approved rules of the scheme at nocost and participants are entitled to receive dividends. In 2010 a total of4 358 878 restricted shares were issued.Corporate performance targetsThe committee approved the use of a combination of equally weightedinternal absolute and external relative corporate performance targets forthe performance shares awarded in 2010. The details of these targets areas follows:Return on equity (RoE) above cost of equity (COE)ROE is measured as the simple average published ROE (excluding goodwill) over a three-year period compared with the simple-average COE over thesame period. Vesting occurs according to the following sliding scale:Vesting ratios (for 50% of the allocation) based on ROE (excluding goodwill)COE+ 0% or worseCOE+ 1,25%COE+ 2,5%COE+ 3,75%COE+ 5%COE+ 6%COE+ 7%COE+ 8% or better0% 25% 50% 75% 100% 110% 120% 130%The target of COE + 5% is aligned to the published Nedbank Group medium- to long-term performance targets.Share price relative to Fini 15The three-year performance of relative share price movement against movement in the Fini 15 is used as the relative external measure. Vesting occursaccording to the following sliding scale:Vesting ratios (for 50% of the allocation) based on share price relative to Fini 15Fini 15- 20% or worseFini 15- 15%Fini 15- 10%Fini 15- 5%Fini 15 Fini 15+ 10%Fini 15+ 20%Fini 15+ 30% or better0% 25% 50% 75% 100% 110% 120% 130%Current best practice regarding good governance of remuneration indicates that corporate performance targets may not be altered once they havebeen set.
231Reports andcertificationsConsolidatedannual financialstatementsShareholdermeeting mattersDefinitions andabbreviationsInstrumentcodesContactdetailsremuneration reportMatched Share SchemeThe Matched Share Scheme is used both for the compulsory deferral ofcertain STI payments as well as the voluntary deferral of a certain amountof the STI granted. Staffmembers have an opportunity to allocate up to50% of their after-tax STI towards the acquisition of Nedbank Groupshares or to deposit Nedbank Group shares to the equivalent valueinto the trust that administers this scheme. The incentive to do so is amatching of this investment to the equivalent value on a one-for-onebasis. The scheme’s obligation to deliver or procure the delivery of thematched shares rests on two conditions, namely that:• staffmembers are still in the service of the group on the vesting date(three years after acquisition) for 50% of the matched shares; and• the group has met an agreed performance target over a three-yearperiod for the remaining 50% of the matched shares.The number of participants who committed shares under the MatchedShare Scheme at 31 December 2010 is noted below:2010 2009 2008263The number ofshares held in thescheme totals649 447.247The number ofshares held in thescheme totals583 048.412The number ofshares held in thescheme totals595 170.During 2010 a total of 67 127 shares were allocated to participants of the2007 Matched Share Scheme as the time-based vesting criteria had beenmet. The corporate performance condition was not met.Although the Matched Investment Plan is available as a further matchingscheme, it was not offered as an option to staffmembers in 2010. Thecommittee retains the discretion to implement the Matched InvestmentPlan based on business and market conditions.Phantom Cash-settled Restricted Share PlanDuring 2007 the committee approved the Phantom Cash-settledRestricted Share Plan for key staffmembers in the United Kingdom. Thedesign principles and rules mirror the RSP (2005 Nedbank EmployeeShare Scheme). A total of 19 UK staffmembers participated in thescheme during 2010 and 67 076 phantom shares were allocated duringthis period.Nedbank Africa subsidiary schemesNo allocations were made in 2010.Nedbank Eyethu Employee SchemesNedbank Group implemented its black economic empowerment (BEE)staff schemes in August 2005. The following schemes were approved atthe time:• the Black Executive Trust;• the Black Management Scheme;• the Broad-based Scheme; and• the Evergreen Trust.Share and share option allocations have been made to new andinternally appointed staffmembers since the inception of the schemes, inaccordance with the scheme rules and the respective trust deeds.In 2010 two black staffmembers were selected as new participants ofthe Black Executive Trust. These participants are in senior managementpositions with groupwide impact, were identified by the Group Exco andapproved by the committee and trustees.At 31 December 2010 a total of 40 black staffmembers were participantsin the scheme.In 2010 altogether 324 black staffmembers in management positionswere identified by the Group Exco and approved by the committeeand trustees as participants in the Black Management Scheme. At31 December 2010 a total of 1 708 black staffmembers were participantsin the scheme.On 27 July 2010 the Eyethu Broad-based Scheme vested. This was animportant milestone in the group’s broad-based BEE transaction andproved to be a huge success both to the group and the participants. Thescheme was a once-off share grant to all permanent Nedbank Groupstaffmembers who met the eligibility criteria at the inception date ofthe scheme. A trading restriction of five years applied to shares issuedunder this scheme. In total 14 699 staffmembers were beneficiaries andreceived a total award of R182 million. During the five-year period thegroup also paid a total of R36,8 million in dividends to all participants.The Evergreen Trust was created with the specific purpose of improvingthe living standards and personal circumstances of black permanentstaffmembers at the lower income levels by providing grantsand/or benefits to qualifying staffmembers. At 31 December 2010 atotal of 39 beneficiaries are in the process of completing their grade 12qualification, equivalent to a NQF3, to whom funding for studies weregranted by the trust.Nedbank Africa Empowerment SchemesIn January 2010 Nedbank Swaziland launched its empowerment employeescheme, namely Sinakekelwe Employee Share Scheme. This included ablack management and a broad-based scheme. At 31 December 2010there were 48 and 208 participants respectively.No allocations were made under the Nedbank Namibia Ofifiya BlackManagement Scheme in 2010.Employee directorshipsIn all instances where employees are members of external boards all feesearned accrue to Nedbank Group.
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