As part of the Company’s efforts to attract and retain qualified personnel, Black Earth Farming created a warrant incentive program. The warrant program was regulated by an agreement dated 11 August 2005, but was subsequently amended by addendums dated 15 November 2007, 25 May 2012 and 15 May 2013. The original program was open to up to 30 employees and comprised of 2,059,000 warrants to subscribe for shares. Each warrant entitles the holder to exchange one warrant for one share. The number of warrants within the program was thereafter increased from 2,059,000 to 10,000,000 warrants at the AGM held on 5 July 2007. 15 May 2013, the AGM approved to increase the maximum number of participants from 30 to 50. As of 31 December 2015, 7,500,161 of these warrants had been issued for nil consideration to Directors, senior executives and other key personnel.
All qualifying participants are allotted a certain number of warrants, of which a proportionate part is vested annually over the number of years set out in each participant’s warrant certificate. Warrants with a lower subscription price shall vest prior to warrants with a higher subscription price. Decision on allocation of warrants is at the discretion of the Board. The subscription price will be affected by the time of allocation of the warrants. In the event where a warrant holder is no longer employed by the Company by the vesting date, warrants that are due to vest are cancelled.
Executives share option plan (ESOP)
At the AGM on 25 May 2012, a three-year performance based incentive plan for senior executives was approved. In order to participate in the 2012-2014 plan, the participants should purchase shares (in the form of SDRs) in the Group. For each share purchased and held under the plan, the Group will grant up to five rights to the participant, one for each of five criteria to be met under the program. The criteria’s relate to the three-year development of certain performance indicators for Black Earth Farming, and specifically its return on capital, profitability, revenue growth and average crop yields. The 2012 plan originally comprised of up to 1,050,000 shares (depending on employee share purchases and participation) held by the employees, entitling to allotment of up to 5,250,000 shares. The initial program was subsequently adjusted 2:3 to account for the rights issue in December 2012. In deciding on whether performance criteria were met and any program adjustments, the Board has discretion. At the end of May 2015, the first three year period of the program ended. As a result of the program, 2,756,796 shares, or 1.33% of the Company’s total outstanding shares at the time, were granted to three 2012 participants in the program. Following the share issue, the Company’s outstanding number of shares increased to 210,426,241, with one vote for each share. At the 2015 AGM, following the completion of participation in the 2012-2014 program, a new three-year program was approved. This 2015-2017 program is structurally the same as the previous program, although the performance criteria have been revised to reflect the results achieved by the Company over the period of the previous program. The 2015-2017 plan will comprise of up to 2,100,000 shares held by the employees, entitling to allotment of up to 10,500,000 rights. For further details on the Executives share option plan, please refer to note 23c) in the Consolidated Financial Statements of the 2015 Annual Report. As at 31 December 2015, 1,562,226 shares have been purchased by participants within the two programs, which may result in an expected 9,518,551 shares being issued in case of fulfilment of the all the five aforementioned criteria. 1,050,000 shares remains to be taken up by participants in 2016 and 2017.