Common use of Incentive Scheme Clause in Contracts

Incentive Scheme. 6.2.1.1 The employee will be eligible to participate in the Incentive Scheme for Top Management as approved by the Board from time to time. For the 2005/06 financial year, the basis for the Incentive Scheme will be the Team Award and the Individual Award as approved by the Board. (The Board of Directors is currently reviewing the Team Award. Once a decision is made on the Team Award it will be communicated to you.) 6.2.1.2 The Team Award constitutes 80% and the Individual Award 20% of the overall award. Achievement of 80% or less of the Team Award or Individual Award targets, will result in an overall award of 0%. If the Team Award is achieved but the Individual Award is 80% or less, the overall award is 0% and vice versa. 6.2.1.3 The employee will qualify for the following pro-rata bonus, calculated over the period 1 September 2005 to 31 March 2006, if 100% actual performance is achieved: Guaranteed package R3,698,788 x 70% x 100% = R2,587,752 Pro-rata bonus = (R2,578,752 ÷ 12 x 7) = R1,509,522 6.2.1.4 A bonus pool has been created which is equal to the total of each member of top management’s on target bonus where 100% of EBIT is achieved. The bonus pool is geared to increase by 3% for every 1% addition EBIT and decrease by 10% for every 1% below EBIT. The bonus pool goes to zero if EBIT is 90% or less. The Bonus Pool is capped at 1% of actual EBIT. 6.2.1.5 The Team Award is the same for all members of Top Management, e.g. actual achievement will be the same for all. On the other hand, the Individual Award is different for all and will depend on the performance of each individual. For every 1% actual performance above 100%, an additional 1% is added, e.g. if actual performance is 105%, the Individual Award is calculated at 110%. Similarly, for every 1% below 100%, the percentage bonus will decrease by a further 1%, e.g. if actual performance is 95%, the Individual Award is calculated at 90%. Where one or more individuals do not qualify for an Individual Award (performance below 80%), their portion of the bonus pool is divided between the other members of top management.