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Announcement in relation to notice of Annual General Meeting
Telkom SA SOC Limited
(Registration Number 1991/005476/30)
ISIN ZAE000044897
JSE Share Code TKG
("Telkom" or "the Company")
Announcement in relation to the amendment to and confirmation in respect of Notice of Annual
General Meeting
Shareholders of Telkom (“Shareholders”) are advised that –
1. at the annual general meeting of Telkom to be held on 27 August 2014 (“AGM”), the board of
directors of the Company (“the Board”) will propose that Special Resolution Number 1, as set out in
the notice of the AGM dated 28 July 2014, be amended so as to reduce the limit on the number of
ordinary shares that may be repurchased in any one financial year under the general authority
granted by such resolution from 20% to 10% of the Company’s issued ordinary share capital at the
time that the authority is granted. The reason for the proposed amendment is that, after due
consideration of feedback received from Shareholders in respect of the resolutions as set out in the
notice of AGM, the Board has decided to limit the scope of the authority that would be conveyed by
Special Resolution Number 1, in order to provide more comfort to Shareholders;
2. an unfortunate printing error has affected Special Resolution Number 5, as set out in the notice of
AGM. It is confirmed that the resolution should read as set out below –
“18. SPECIAL RESOLUTION NUMBER 5
Amendment of provisions in Forfeitable Share Plan : Scheme Allocation
“RESOLVED THAT the Telkom SA SOC Limited Employee Forfeitable Share Plan
(“Employee FSP”) be amended by –
18.1 the substitution of clause 5.1 thereof with the following new clause -
“5.1 Shares available for the Plan
5.1.1 Subject to clauses 5.1.2 and 13, the aggregate number of
Shares which may be allocated under the Plan, when
added to the total number of Shares which have been
allocated previously under this Plan but that have not yet
Vested except for such Shares which had not Vested with a
Participant as a result of the forfeiture or lapsing of the
Awards, and any Shares allocated to employees under any
other share incentive scheme operated by the Company,
but that have not yet vested in or been released to the
relevant employees in accordance with the terms of the
applicable scheme except for such Shares which had not
vested in or been released to the relevant employees as a
result of the forfeiture or lapsing of the relevant awards,
shall not exceed 26 039 195 (twenty six million thirty nine
thousand one hundred and ninety five) Shares, equating to
approximately 5% (five percent) of the number of issued
ordinary shares of the Company as at the date of adoption
of this Plan. In the event of a discrepancy between the
number of Shares and the percentage of issued Shares it
equates to, the number of Shares shall prevail over the
stated percentage.
5.1.2 The limit referred to in clause 5.1.1 shall exclude Shares
purchased in the market as contemplated in clause 7.1 in
Settlement of Awards and Shares purchased in the market
in settlement of any other share incentive scheme operated
by the Company from time to time.
5.1.3 The limit referred to in clause 5.1.1 shall include Shares -
5.1.3.1 allotted and issued by the Company in Settlement
of Awards as contemplated in clause 7.2; and
5.1.3.2 held in treasury by any Participating Company that
are applied in Settlement of Awards as
contemplated in clause 7.1,
or in settlement of any other share incentive scheme
operated by the Company from time to time (except to the
extent that the provisions of any other share scheme
adopted subsequently to this Plan provides that Shares are
to be excluded from such limit).”
18.2 the deletion of clause 14 in its entirety (with the subsequent clauses being
renumbered accordingly).””
The following explanatory note, which accompanied Special Resolution Number 5 in the notice of
AGM, is repeated below –
“At the annual general meeting of the Company held on 27 September 2013, shareholders
approved the adoption of the Employee FSP on the basis that aggregate number of Telkom
shares which may be allocated thereunder, when added to the total number of Telkom
shares which have been allocated previously under the Employee FSP but that have not yet
vested, and any Telkom shares allocated to employees under any other share incentive
scheme operated by the Company, but that have not yet vested in or been released to the
relevant employees in accordance with the terms of the applicable scheme, may not (subject
to certain limited exceptions) exceed 26 039 195 (twenty six million and thirty nine thousand
one hundred and ninety five) Telkom shares, equating to approximately 5% of the number of
issued ordinary shares of the Company as at the date of adoption of the Employee FSP.
The Board had initially proposed that the limit be 52 078 390 (Fifty two million and seventy
eight thousand three hundred and ninety) Telkom shares, equating to approximately 10% of
the Company’s then issued ordinary share capital, but after the posting of the notice of
annual general meeting, Telkom received inputs from shareholders regarding the relevant
resolution, pursuant whereto the Board decided to limit the scope of the authority by the
reduction of such limit to 26 039 195 Telkom shares, equating to approximately 5% of the
Company’s then issued ordinary share capital, in order to provide more comfort to the
shareholders.
The Board however believes it is necessary to exclude Telkom shares that are purchased in
the market in settlement of awards under the Employee FSP (and any other share incentive
scheme operated by the Company from time to time) from the 26 039 195 Telkom share
limit. As such, only where awards are settled through the issue of new Telkom shares or
through the use of Telkom shares held in treasury, will the 26 039 195 Telkom share limit
apply. This will give greater effect to the purpose of the Employee FSP, which is to –
- recognise contributions made by employees at various levels within the Telkom group,
and to provide an incentive to advance the group’s interests and improve its financial
performance, by affording them the opportunity to receive shares in the Company,
thereby aligning their interests with those of shareholders;
- endorse a performance based culture within the Telkom group; and
- enable the Company to attract and retain employees with the competencies required for
formulating and implementing the group’s business strategies.
Where awards are settled through the purchase of Telkom shares in the market, the
shareholding of shareholders in the Company would not be diluted.
The Employee FSP furthermore provides in clause 14 for the possibility that a participant
who has continued to hold the beneficial ownership in any shares that had constituted
forfeitable shares prior to vesting date, for at least a year following the vesting of such
shares in the participant, could, in the discretion of the Company’s Remuneration
Committee, be given one fully paid additional share for each multiple of ten of the shares
that had formerly constituted forfeitable shares still held by that participant at such time,
provided that the participant has continued to be employed within the Telkom group for the
duration of such year. The JSE has however indicated recently that specific shareholder
approval would be required to issue additional shares should the additional shares not be
issued from the scheme allocation, which makes the option unviable to administer for the
Company, amongst others, as shares from the scheme allocation would have to be kept in
reserve pending the lapsing of the year after vesting, instead of being applied actively in the
incentivisation of employees during the vesting period.
The JSE also recently indicated that, despite its approval of the relevant provision of the
Employee FSP in 2013 which allows forfeited shares to be re-awarded as part of the
scheme allocation by providing for their exclusion from the scheme allocation limit when
forfeited, it requires such provision to be amended as it now seems to interpret the provision
to read that shares issued under the Employee FSP but that are forfeited do not revert back
to the Employee FSP. Whilst Telkom believes that the JSE correctly approved the relevant
provision of the Employee FSP in its current form when the FSP was originally adopted in
2013, it is willing to amend the provision in accordance with the regulator’s requirements.
By the adoption of special resolution number 5 -
- new clauses 5.1.2.2 and 5.1.3 would be incorporated into the present clause 5.1 of the
Employee FSP, which would enable the exclusion of Telkom shares that are purchased
in the market in settlement of awards under the Employee FSP (and any other share
incentive scheme operated by the Company from time to time) from the 26 093 195
Telkom share limit, as proposed by the Board;
- clause 14 and the current clause 5.1.2.2, which provides for the awarding of additional
shares, would be deleted from the Employee FSP; and
- the current clause 5.1.2.1, which provides shares awarded but which do not vest as a
result of the forfeiture or lapsing of awards, may be excluded from the scheme allocation
limit (in order that they may be re-awarded), would be deleted from the Employee FSP
and the introductory paragraph of clause 5.1.1 would be amended to provide that
(subject to, amongst others, clause 5.1.2) the aggregate number of shares which may
be allocated under the Employee FSP, when added to –
o the total number of Shares which have been allocated previously under the
Employee FSP but that have not yet vested, except for such shares which had
not vested with a participant as a result of the forfeiture or lapsing of the awards;
and
o any shares allocated to employees under any other share incentive scheme
operated by the Company, but that have not yet vested in or been released to
the relevant employees in accordance with the terms of the applicable scheme,
except for such shares which had not vested in or been released to the relevant
employees as a result of the forfeiture or lapsing of the relevant awards, may not
exceed the scheme allocation limit of 26 039 195 shares.”
Pretoria
15 August 2014
Sponsor
The Standard Bank of South Africa Limited
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