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Governance and Remuneration
Remuneration report

The expected value percentages approved by the committee for the 2014 financial year (and which were used to determine the final number of units issued) are as follows:

To determine the number of conditional shares and share appreciation rights to be issued to each participant, the expected value of each conditional share and share appreciation right is calculated using a stochastic model approved by the audit committee, similarly, the actual rand value that the Company wishes to deliver to each participant in terms of SAR is then divided by such expected value to determine the number of share appreciation rights to be issued.

The Remcom has the discretion, at each grant date, to adjust the number of conditional shares and/or share appreciation rights determined in accordance with the above two paragraphs should it believe that the probability of achieving all the performance conditions is less than 100% thus affecting the number of awards that are likely to vest.

Performance vesting criteria

The performance conditions, applicable to CSP2 and SAR awards, are set by the Remcom in accordance with the rules of the scheme and remain fixed for the entire vesting period. No changes may be made to the conditions once they have been set, other than corporate action in the market affecting the definition of “the peer group”.

Certain of the performance conditions are measures relative to a peer group of South Africa platinum producing companies, where “the peer group” is defined as follows for the 2014 financial year.

• Anglo American Platinum Limited
• Lonmin Plc
• Northam Platinum Limited
• Eastern Platinum Limited
• Aquarius Platinum Limited
• Royal Bafokeng Platinum Limited

The performance vesting condition applicable to CSP2 awards is based on total shareholder return (TSR) relative to a peer group of South African platinum producing companies (the peer group). The TSR is measured as the compounded annual growth rate (CAGR) in TSR for Implats and the peer group over the three-year performance period. The peer group companies and Implats are ranked based on their respective CAGR in TSR. This ranking determines the vesting percentage as follows:

To determine the number of conditional shares to be issued to each participant, the expected value of each Implats share is calculated with reference to the listed market price on the date of granting the award less the fair value of expected dividends to be paid over the vesting period. The actual rand value that the Company wishes to deliver to each participant in terms of CSP will then be divided by such expected value to determine the number of conditional shares to be issued.

• Rights awarded in terms of the SAR vest based on the following three performance targets, all equal in weighting:
  
  

  1.	Absolute growth in TSR (one-third weighting)
  	Absolute TSR % of CSP   that vest   CPI   0   CPI +2%   100
  2.	EBITDA margin over revenue over three years relative to the peer group (one-third weighting)
  	Position of Implats relative   to peer group % of CSP   that vest   Lowest three   0   Fourth   50   Third   75   Second   90   First   100
  3.	Fatality frequency rate over three years relative to the peer group (one-third weighting)
  	Position of Implats relative   to peer group % of CSP   that vest   Lowest three   0   Fourth   50   Third   75   Second   90   First   100

The Morokotso Trust

The Morokotso Trust was founded in 2006 and administers the Employee Share Ownership Programme (ESOP). All South African operations' A, B and C-level employees, who joined the Company before 4 July 2008, are beneficiaries of the ESOP.

Qualifying employees were each allocated 568 or 399 Implats shares depending on joining date, by the Morokotso Trust at an initial purchase price of R159.18 per share. The trust holds these shares on behalf of employees for a period of 10 years, with 40% having vested after five years (2011) and a 60% pay-out scheduled after 10 years (2016). Twenty-three thousand, four-hundred and forty-eight (23 448) beneficiaries benefited from the sale of 40% of their shares in July 2011, receiving an average amount of R3 500 per beneficiary. This release of shares when the Implats share price was relatively low had a demotivating effect at an operational level as employees had much higher expectations.

The shares were acquired by the trust funded by an interest-free loan from Impala and Marula. Dividends received on the shares during the holding period are paid to Impala and Marula in lieu of interest.

Retention plans

The Company operates a retention bonus scheme in terms of which 20% of basic salary is awarded but payment deferred. Eligibility to this scheme is confined to senior executives, line managers and senior professional staff. Middle and senior management employees' package structures were reviewed and they were afforded the opportunity to move one quarter (1/4) of their retention amount to their monthly salary. This option was provided as a result of the fact that no increases were granted to middle and senior management employees.

Impala also operates a Group hard currency procedure that applies to executive directors and senior executives (Level 24 and above) on a voluntary basis with the aim to attract and retain senior executive skills. This procedure was terminated on 31 December 2011 for all newly appointed employees and current beneficiaries were ring-fenced.

Executive remuneration for the past financial year

Fixed remuneration

The following table summarises the fixed remuneration of the executive directors, prescribed officers and other senior executives of the Company for the year ended 30 June 2014:

No bonus payments were made to executive directors in 2013.

The executive annual incentive scheme payment for financial year 2014 was approved by the Remcom at the following average percentages of guaranteed pay as per the approved reward mix.

The CEO, TP Goodlace, has again chosen to forego this incentive payment and it has to be noted that since joining the Company in 2012, he has not taken an increase nor participated in any long or short-term incentive schemes of the Company. He remains resolute in his decisions based on low PGM basket prices and the financial crisis facing the platinum industry. The CEO's net pay after tax for 2014 was R3.6 (2013:  R3.6) million.

Directors' fees in aggregate for serving on the board and board committees for the year under review were as follows: