UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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[_] Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional
Materials
[_] Soliciting Material Pursuant to §240.14A -12
NET 1 UEPS TECHNOLOGIES,
INC.
(Name of Registrant as Specified in Its Charter)
______________________________________________________
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
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Check box if any part of the fee is
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NET 1 UEPS TECHNOLOGIES, INC.
____________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on November 15, 2017
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To the Shareholders of Net 1 UEPS Technologies, Inc.:
NOTICE IS HEREBY GIVEN that the 2017 Annual Meeting of
Shareholders of Net 1 UEPS Technologies, Inc. will be held at our principal
executive offices located at President Place, 6th Floor, Cnr. Jan Smuts Avenue
and Bolton Road, Rosebank, Johannesburg, South Africa on November 15, 2017 at
16:00 local time (9am Eastern Time), for the following purposes:
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1.
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To elect five directors to serve until the next Annual
Meeting of Shareholders and until their successors are duly elected and
qualified.
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2.
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To ratify the selection of Deloitte & Touche (South
Africa) as our independent registered public accounting firm for the
fiscal year ending June 30, 2018.
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3.
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To hold an advisory vote to approve executive
compensation.
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4.
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To hold an advisory vote regarding whether an advisory
vote on executive compensation will occur every one, two or three
years.
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5.
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To transact such other business and act upon any other
matter which may properly come before the annual meeting or any
adjournment or postponement of the meeting.
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Our Board of Directors has fixed the close of business on
September 22, 2017, as the record date for determining shareholders entitled to
notice of and to vote at the meeting. A list of the shareholders as of the
record date will be available for inspection by shareholders at our principal
executive offices during business hours for a period of ten days prior to the
meeting.
Your attention is directed to our annual report for the fiscal
year ended June 30, 2017, which is enclosed with this proxy statement.
Sincerely,
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Christopher S. Seabrooke
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Herman G. Kotzé
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Chairman
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Chief Executive
Officer
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Johannesburg, South Africa
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September 29, 2017
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 15, 2017.
A
complete set of proxy materials relating to our annual meeting is available on
the internet. These materials, consisting of the Notice of Annual Meeting of
Shareholders and Proxy Statement, including proxy card, and annual report, may
be viewed and downloaded at https://materials.proxyvote.com/64107N.
You are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, please complete, date, sign and
return the proxy accompanying this notice as promptly as possible in order to
ensure your representation at the meeting. A return envelope (which is postage
prepaid if mailed in the United States) is enclosed for your convenience. Even
if you have voted by proxy, you may still vote in person if you attend the
meeting. Please note, however, that if your shares are held of record by a
broker, bank or other agent and you wish to vote at the meeting, you must
request and obtain a proxy issued in your name from that record holder. You may
also submit your proxy via the internet as specified in the accompanying
internet voting instructions. Shareholders registered on our South African
Branch Register (South African Shareholders) are referred to the special
instructions contained on page 5 of this proxy statement.
TABLE OF CONTENTS
1
NET 1 UEPS TECHNOLOGIES, INC.
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PROXY STATEMENT EXECUTIVE SUMMARY
ANNUAL MEETING OF SHAREHOLDERS
Time and Date
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16:00 local time (9am
Eastern Time) on November 15, 2017
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Place
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President Place, 6th Floor,
Cnr. Jan Smuts Avenue and Bolton Road, Rosebank, Johannesburg, South
Africa
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Record Date
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September 22, 2017
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PROPOSALS TO BE VOTED ON AND BOARD
VOTING RECOMMENDATIONS
The following is a summary of proposals to be voted on at
the annual meeting. This is only a summary, and it may not contain all of the
information that is important to you. For more complete information, please
review the proxy statement as well as our annual report on Form 10-K.
Proposal 1
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Proposal 2
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Election of Directors
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Ratification of Independent Registered Public
Accounting
Firm
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The Board has nominated our current five directors for
re- election at the annual meeting to hold office until the 2018 annual
meeting. More information about this proposal can be found on pages 6-7.
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The Board is asking shareholders to ratify the selection
of Deloitte & Touche (South Africa) as our independent registered
public accounting firm for the fiscal year ending June 30, 2018. More
information about this proposal can be found on page 7.
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Recommendation:
Our Board recommends a vote
FOR
each of the director nominees.
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Recommendation:
Our Board recommends a vote
FOR
the ratification of the selection of Deloitte& Touche as our
independent registered public accounting firm.
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Proposal 3
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Proposal 4
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Advisory Vote to Approve Executive Compensation
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Advisory Vote on Frequency of Say-on-Pay Votes
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The Board is providing shareholders with the opportunity
to vote to approve, on an advisory basis, the compensation of our
executive officers named in the Summary Compensation Table under
Executive Compensation. More information about this proposal can be
found on pages 7.
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The Board is providing shareholders with the opportunity
to cast an advisory vote regarding the frequency of future executive
compensation advisory votes. Shareholders may vote for a frequency of
every one, two or three years, or you may abstain on the proposal. More
information about this proposal can be found on pages 7-8.
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Recommendation:
Our Board recommends a vote
FOR
the approval of executive compensation.
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Recommendation:
Our Board recommends a vote for
ONE
YEAR
as the desired frequency of the advisory vote on
executive compensation.
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2
CORPORATE GOVERNANCE
Our Board is committed to excellence in corporate
governance. We believe that principled and ethical governance benefits you, our
shareholders, as well as our customers, employees and communities, and we
maintain a governance profile that aligns with industry-leading standards. We
believe that our governance structure will have a direct impact on the strength
of our business. The following table presents a brief summary of highlights of
our governance profile.
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Board Conduct and Oversight
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Independence and Participation
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Shareholder Rights
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Regular risk assessment
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Independent Chairman
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Special
meeting right for shareholders of an aggregate of 10% of voting stock
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Standards of ethics, applied to all directors,
executive officers and employees
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Four of five directors are independent by SEC
and Nasdaq standards
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All
directors annually elected; no staggered Board
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Significant time devoted to succession planning
and leadership development efforts
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Executive sessions of non- management directors
generally held at each Board and committee meeting
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No
Poison Pill
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Annual evaluations of Board and its committees
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Audit Committee, Remuneration Committee, and
Nominating and Corporate Governance Committee are each made up entirely of
independent directors
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No
supermajority voting requirements to change organizational documents
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Separate Chairman of the Board and Chief Executive Officer
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VOTING RIGHTS AND PROCEDURES
Shareholders as of the close of
business on September 22, 2017, the record date, may attend and vote at the
annual meeting. Each share is entitled to one vote. There were 56,927,696 shares
of common stock outstanding on the record date.
A majority of the total number of
outstanding shares of common stock, present either in person or by proxy, will
constitute a quorum for the transaction of business at the annual meeting.
Shareholders who are present at the annual meeting in person or by proxy and who
abstain, and proxies relating to shares held by a bank or broker on your behalf
(that is, in street name), that are not voted (referred to as broker
non-votes) will be treated as present for purposes of determining whether a
quorum is present. In the event that there are not sufficient votes to approve
any proposal at the annual meeting, the annual meeting may be adjourned in order
to permit the further solicitation of proxies. The inspector of election
appointed for the annual meeting will tabulate all votes and will separately
tabulate affirmative and negative votes, abstentions and broker non-votes.
The following describes how you may
vote on each proposal and the votes required for approval of each proposal:
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Proposal No 1
Our five director nominees will be
elected by a plurality of votes. You may vote for each director nominee or
withhold your vote from one or more of the nominees. Withholding a vote as
to any director nominee is the equivalent of abstaining. In an uncontested
election such as this, abstentions and broker non-votes have no effect,
since approval by a specific percentage of the shares present or
outstanding is not required.
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Proposal No. 2The ratification of the selection of
Deloitte & Touche (South Africa) (Deloitte) to act as our
independent registered public accounting firm will be approved if the
votes cast in favor of the proposal exceed the number of votes cast
against the proposal. You may vote for or against the proposal or you may
abstain from voting. Abstentions and broker non- votes will not affect the
outcome of the vote.
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Proposal No. 3
The advisory vote to approve
executive compensation will be approved if the votes cast in favor of the
proposal exceed the number of votes cast against the proposal. You may
vote for or against the proposal or you may abstain from voting.
Abstentions and broker non-votes will not affect the outcome of the vote.
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Proposal No. 4
With respect to the advisory vote
on the frequency of the advisory vote on executive compensation,
shareholders will be considered to have expressed a frequency preference
for the alternative that receives the most votes. You may vote for a
frequency of every one year, two years or three years. Abstentions and
broker non-votes will not affect the outcome of the vote.
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If you provide your voting
instructions on your proxy, your shares will be voted as you instruct, and
according to the best judgment of the persons named in the proxy if a proposal
comes up for a vote at the annual meeting that is not on the proxy.
If you do not indicate a specific
choice on a proxy that you sign and submit, your shares will be voted:
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FOR each of the director nominees;
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FOR the ratification of the selection of
Deloitte as our independent registered public accounting firm;
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FOR the approval of executive compensation; and
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for ONE YEAR as the desired frequency of the
advisory vote on executive compensation.
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If your shares are held in
street name, and you do not instruct the bank or broker as to how to vote your
shares on Proposals 1, 3 or 4, the bank or broker may not exercise discretion to
vote for or against those proposals. This would be a broker non-vote and these
shares will not be counted as having been voted on the applicable proposal. With
respect to Proposal 2, the bank or broker may exercise its discretion to vote
for or against that proposal in the absence of your instruction.
Please
instruct your bank or broker so your vote can be counted
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Revocability of Proxies
You may revoke your proxy at any
time prior to exercise of the proxy by delivering a written notice of revocation
or a duly executed proxy with a later date by mail to our corporate secretary at
Net 1 UEPS Technologies, Inc., PO Box 2424, Parklands 2121, South Africa, or by
attending the meeting and voting in person. If you hold shares through a bank or
brokerage firm, you must contact that firm to revoke any prior voting
instructions.
Internet Availability of Proxy Materials and Annual Report
A complete set of proxy materials
relating to our annual meeting is available on the internet. These materials,
consisting of the Notice of Annual Meeting of Shareholders and Proxy Statement,
including proxy card, and annual report, may be viewed and downloaded at
https://materials.proxyvote.com/64107N.
4
Market Information
Our common stock is listed on The
Nasdaq Global Select Market (Nasdaq) in the United States under the symbol
UEPS and, via a secondary listing, on the Johannesburg Stock Exchange (JSE),
in South Africa under the symbol NT1. Nasdaq is our principal market for the
trading of our common stock. Our transfer agent in the United States is
Computershare Shareowner Services LLC, 480 Washington Blvd., Jersey City, New
Jersey 07310. Our transfer agent in South Africa is Link Market Services South
Africa (Pty) Ltd (Link Market), 13th Floor, 19 Ameshoff Street, Braamfontein,
2001, South Africa.
Special Instructions to South African Shareholders
We are required to comply with
certain South African regulations related to the circulation and tabulation of
proxies issued to our South African Shareholders. The proxy form marked Net 1
UEPS Technologies, Inc. Proxy for Shareholders Registered on South African
Branch Register must be used by South African Shareholders. The South African
proxy must be lodged, posted or faxed to Link Market so as to reach them by
16:00, local time, on November 10, 2017. South African Shareholders that have
already dematerialized their shares through a Central Securities Depository
Participant (CSDP) or broker, other than with own-name registration, should
not complete the South African proxy. Instead they should provide their CSDP or
broker with their voting instructions or, alternatively, they should inform
their CSDP or broker of their intention to attend the annual meeting in order
for their CSDP or broker to be able to issue them with the necessary
authorization to enable them to attend such meeting. South African Shareholders
that hold their shares in certificated form or dematerialized own-name
registration should complete the South African proxy and return it to Link
Market.
Solicitation
We will bear the entire cost of
the solicitation, including the preparation, assembly, printing and mailing of
this proxy statement, including the proxy card and any additional solicitation
materials furnished to our shareholders. Copies of solicitation materials will
be furnished to brokerage houses, fiduciaries and custodians holding shares in
their names that are beneficially owned by others so that they may forward this
solicitation material to such beneficial owners. We may reimburse these persons
for their reasonable expenses in forwarding solicitation materials to beneficial
owners. The original solicitation of proxies by mail may be supplemented by a
solicitation by personal contacts, telephone, facsimile, electronic mail or any
other means by our directors, officers or employees. No additional compensation
will be paid to our directors, officers or employees for performing these
services. Except as described above, we do not presently intend to solicit
proxies other than by mail.
5
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL NO. 1: ELECTION OF DIRECTORS
The terms of office of each of
our current directors will expire at the annual meeting. The Board has nominated
for reelection each of our current directors (see Information Regarding the
Nominees for information on all directors) for a one-year term.
The persons named in the enclosed
proxy intend to vote properly executed and returned proxies
FOR
the
election of all nominees proposed by the Board unless authority to vote is
withheld. In the event that any nominee is unable or unwilling to serve, the
persons named in the proxy will vote for such substitute nominee or nominees as
they, in their discretion, shall determine. The Board has no reason to believe
that any nominee named herein will be unable or unwilling to serve.
The Board recommends that you vote FOR election of each of
the director nominees.
Information Regarding the Nominees
Herman G. Kotzé
48 years old
Director since
2004
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Mr. Kotzé has been our Chief Executive Officer since June
2017 and our Chief Financial Officer, Secretary and Treasurer since 2004.
From January 2000 until June 2004, he served on the board of Aplitec as
Group Financial Director. Mr. Kotzé joined Aplitec in November 1998 as a
strategic financial analyst. Prior to joining Aplitec, Mr. Kotzé was a
business analyst at the Industrial Development Corporation of South
Africa. Mr. Kotzé is a qualified South African chartered accountant.
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The Board believes that Mr. Kotzés financial, accounting
and taxation expertise and experience with corporate transactions, as well
as his long history with us and deep knowledge of our business and
industry makes him well-suited to serve as a director.
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Christopher S.
Seabrooke
64 years old
Director since 2005
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Mr. Seabrooke is Chief Executive Officer and a director
of Sabvest Limited, an investment holding company which is listed on the
JSE. Mr. Seabrooke also serves as a non-employee director of the following
JSE listed companies: Brait SE, Datatec Limited, Massmart Holdings
Limited, Metrofile Holdings Limited, Rolfes Holdings Limited, Torre
Industries Limited and Transaction Capital Limited. In the past five years
he was also a non-employee director of JSE listed Chrometco Limited. Mr.
Seabrooke is a member of The Institute of Directors in South Africa.
Formerly, he was the Chairman of the South African State Theater and the
Deputy Chairman of each of the National Arts Council and the Board of
Business and Arts South Africa. Mr. Seabrooke has degrees in Economics and
Accounting from the University of Natal and an MBA from the University of
Witwatersrand.
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The Board believes that Mr. Seabrookes expertise in
finance, accounting and corporate governance and broad experience as a
director of several publicly-traded companies covering a broad range of
industries makes him a valuable member of our Board.
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Alasdair J.K. Pein
57 years old
Director
since 2005
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Mr. Pein is currently CEO of Ascension Partners Limited,
a Cayman-based provider of investment services to high net worth clients.
Mr. Pein is a director of Mundane International Limited, a Guernsey-based
financial investment fund. Mr. Pein also serves as a director of Ecolutia
Services AG, a global provider of water, wastewater and environmental
treatment solutions. From 1994 until March 2009, Mr. Pein served as the
CEO of the Oppenheimer familys private equity business. During this
period of time Mr. Pein held directorships of a number of private
companies. Mr. Pein is a qualified South African chartered accountant.
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The Board believes that Mr. Peins financial and
accounting expertise, as well as his private equity experience and skills
in dealing with compensation, human resources and corporate governance
issues, makes him a valuable member of our Board.
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Paul Edwards
63 years old
Director since
2005
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Mr. Edwards is Chairman of Equilibre Bioenergy Production
Limited, Merryn Financial Services (Pty) Ltd and Integrated Pipeline
Solutions (Pty) Ltd. He is also a director of Emerging Markets Payments
Holdings, an Africa and Middle East payments business. Previously, Mr.
Edwards was a non-employee director of Starcomms Limited, a Nigerian
telecommunications operator; Executive Chairman of Chartwell Capital, a
corporate finance house; Chief Executive Officer of MTN Group, a
pan-African mobile operator; and Group Chief Executive of Johnnic Holdings
Ltd, a diversified holding company. Mr. Edwards has a BSc and an MBA from
the University of Cape Town.
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The Board believes that Mr. Edwards knowledge and
experience of the payments and telecommunications industries, especially
in Africa, provides us with valuable insight into the potential
opportunities to expand our business internationally and makes him a
valuable member of our Board.
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Alfred T. Mockett
68 years old
Director
since 2017
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Mr. Mockett has served as the non-executive chairman of
Hibu Group Limited since 2013 and as a non- executive director of
Corporate Risk Holdings LLC since 2014. From 2010 until 2013, he served as
the chief executive officer of Dex One Corporation, a NASDAQ-listed
provider of online, mobile and print marketing solutions.
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The Board believes that Mr. Mocketts expertise in
finance, accounting and corporate governance and broad experience as an
officer and director of several publicly-traded companies covering a broad
range of industries makes him a valuable member of our Board.
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PROPOSAL NO. 2: RATIFICATION OF SELECTION OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee of our Board
has selected Deloitte to serve as our independent registered public accounting
firm for the fiscal year ending June 30, 2018. A representative of Deloitte is
expected to be present at the annual meeting. Such representative will have an
opportunity to make a statement if he or she desires to do so and is expected to
be available to respond to appropriate questions from shareholders. Deloitte
currently serves as our independent registered public accounting firm.
We are asking our shareholders to
ratify the selection of Deloitte as our independent registered public accounting
firm for the fiscal year ending June 30, 2018. Although ratification is not
required by our Amended and Restated By-Laws or otherwise, the Board is
submitting the selection of Deloitte to our shareholders for ratification as a
matter of good corporate practice. In the event our shareholders fail to ratify
the appointment, the Audit Committee may reconsider this selection. Even if the
selection is ratified, the Audit Committee in its discretion may select a
different registered public accounting firm at any time during the year if it
determines that such a change would be in our best interests and the best
interests of our shareholders.
The Board recommends a vote FOR ratification of the selection
of Deloitte.
PROPOSAL NO. 3: AN ADVISORY VOTE TO APPROVE EXECUTIVE
COMPENSATION
We are providing you with the
opportunity to vote to approve, on an advisory basis, the compensation of our
executive officers named in the Summary Compensation Table under Executive
Compensation, whom we refer to as our named executive officers or NEOs. This
proposal, which is commonly referred to as say on pay, is required by Section
14A of the U.S. Securities Exchange Act of 1934, as amended (the Exchange
Act).
The philosophy of our executive
compensation program is to link compensation to the achievement of our key
strategic and financial goals. Therefore, we reward our executives for their
contributions to our annual and long-term performance by tying a significant
portion of their total compensation to key drivers of increased shareholder
value. At the same time, we believe our program does not encourage excessive
risk-taking by management. The Executive Compensation section of this proxy
statement beginning on page 13, including the Compensation Discussion and
Analysis, describes in detail our executive compensation program and the
decisions made by the Remuneration Committee with respect to our fiscal year
ended June 30, 2017.
The Board is asking shareholders
to cast a non-binding advisory vote on the following resolution:
Resolved, that the
compensation paid to the Companys named executive officers, as disclosed
pursuant to the disclosure rules of the U.S. Securities and Exchange Commission,
including the Compensation Discussion and Analysis, compensation tables and
narrative discussions, is approved on an advisory basis.
Because your vote is advisory, it
will not be binding upon the Board or the Remuneration Committee. However, the
Board and the Remuneration Committee value the opinions expressed by our
shareholders and will consider the outcome of the vote when considering future
executive compensation decisions.
The Board recommends a
vote FOR approval of the compensation of our named executive officers.
PROPOSAL NO. 4: AN ADVISORY VOTE REGARDING WHETHER AN
ADVISORY VOTE ON EXECUTIVE COMPENSATION WILL OCCUR EVERY ONE, TWO OR THREE YEARS
In Proposal No. 3, we are
providing you with the opportunity to vote to approve, on an advisory basis, the
compensation of our NEOs. In this Proposal No. 4, we are asking you to cast an
advisory vote regarding the frequency of future executive compensation advisory
votes. You may vote for a frequency of every one, two or three years, or you may
abstain on the proposal.
7
After careful consideration, our
Board currently believes that an executive compensation advisory vote should be
held every year, and therefore, our Board recommends that you vote for a
frequency of every ONE YEAR for future executive compensation advisory votes.
The Board believes that an annual executive compensation advisory vote will
allow our shareholders to provide us with their direct input on our compensation
philosophy, policies and practices as disclosed in the proxy statement on a
regular and frequent basis. It is also consistent with our policy of reviewing
our executive compensation program annually.
Because this vote is advisory, it
will not be binding upon the Board or Remuneration Committee. However, the Board
will take into account the outcome of the vote when considering when to hold the
next shareholder advisory vote on executive compensation.
The Board recommends a frequency vote of every ONE YEAR for
future executive compensation advisory votes.
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
MEETINGS OF THE BOARD AND DIRECTOR INDEPENDENCE
Our Board typically holds a
regular meeting once every quarter and holds special meetings when necessary.
During the fiscal year ended June 30, 2017, our Board held a total of nine
meetings. Each of our incumbent directors attended 100% of the total number of
meetings of the Board and the total number of meetings held by all committees of
the Board on which each such director served, during the period for which each
such director served. We encourage each member of the Board to attend the annual
meeting of shareholders, but have not adopted a formal policy with respect to
such attendance.
All of our directors who served
during fiscal 2017 attended last years annual meeting, except Messrs. S.C.P.
Belamant, Edwards and Pein (and Mr. Mockett, who joined the Board after our
annual meeting). The non-employee directors meet regularly without any
management directors or employees present. These meetings are held on the day of
or the day preceding other Board or committee meetings.
The Board annually examines the
relationships between us and each of our directors. After this examination, the
Board has concluded that Messrs. Seabrooke, Pein, Edwards and Mockett are
independent as defined under Nasdaq Rule 5605(a)(2) and under Rule 10A-3(b)(1)
under the Exchange Act, as that term relates to membership on the Board and the
various Board committees.
COMMITTEES OF THE BOARD
The Board has established an
Audit Committee, a Remuneration Committee and a Nominating and Corporate
Governance Committee. The members of our Board Committees are presented in the
table below:
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Nominating and
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Corporate
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Audit
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Remuneration
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Governance
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Director
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Committee
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Committee
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Committee
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Paul Edwards
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X
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X
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Herman G. Kotzé (#)
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Alfred T. Mockett
|
|
X
|
|
X
|
|
X
|
Alasdair J.K. Pein
|
|
X
|
|
X*
|
|
X
|
Christopher S. Seabrooke
|
|
X*
|
|
X
|
|
X*
|
# Executive
* Chairperson
Audit Committee
The Audit Committee consists of
Messrs. Seabrooke, Pein, Edwards and Mockett, with Mr. Seabrooke acting as the
Chairperson. The Board has determined that Mr. Seabrooke is an audit committee
financial expert as that term is defined in applicable SEC rules, and that all
members meet Nasdaqs financial literacy criteria. The Audit Committee held nine
meetings during the 2017 fiscal year. See Audit Committee Report on page 32.
8
The Audit Committee was
established by the Board for the primary purpose of overseeing or assisting the
Board in overseeing the following:
Audit
|
|
Compliance Processes
|
the qualifications,
independence and performance of our independent auditors
|
|
our
compliance with SEC and other legal and regulatory requirements
|
|
|
|
the organization and
performance of our internal audit function
|
|
compliance
with ethical standards adopted by us
|
|
|
|
the qualifications and
independence of our registered public accounting firm
|
|
review of
related party transactions
|
|
|
|
Financial Reporting
|
|
Risk Management
|
|
|
|
the integrity of our
financial statements
|
|
review of our
risk assessment and enterprise risk management process
|
|
|
|
the accounting and
financial reporting processes and the audits of our financial statements
|
|
|
|
|
|
our systems of disclosure
controls and procedures and internal control over financial reporting
|
|
|
A copy of our Audit Committee
charter is available without charge on our website, www.net1.com.
Remuneration Committee
The Remuneration Committee
consists of Messrs. Pein, Seabrooke, Edwards and Mockett, with Mr. Pein acting
as the Chairperson. The Remuneration Committee held four meetings during the
2017 fiscal year.
The Remuneration Committee has
the following principal responsibilities, authority and duties:
Compensation Structure & Strategy
|
|
Human Resources &
|
|
|
Workforce Management
|
review and approve performance
goals and objectives relevant to the compensation of all our executive
officers, evaluate the performance of each executive officer in light of
those goals and objectives, and set each executive officer's compensation,
including incentive-based and equity-based compensation, based on such
evaluation
|
|
generally oversee our human
resources and workforce management programs
|
|
|
|
make recommendations to the
Board with respect to incentive and equity-based compensation plans
|
|
|
|
|
|
review and make recommendations
to the Board regarding compensation-related matters outside the ordinary
course, including, but not limited to, employment contracts, change-
in-control provisions and severance arrangements
|
|
|
|
|
|
administer our stock option,
stock incentive, and other stock compensation plans, including the
function of making and approving all grants of options and other awards to
all executive officers and directors, and all other eligible individuals,
under such plans
|
|
|
|
|
|
review annually and make
recommendations to the Board regarding director compensation
|
|
|
|
|
|
assist management in developing and,
when appropriate, recommend to the Board, the design of compensation
policies and plans
|
|
|
|
|
|
review and discuss with
management the disclosures in our "Compensation Discussion and Analysis"
and any other disclosures regarding executive compensation to be included
in our public filings or shareholder reports
|
|
|
|
|
|
recommend to the Board whether
the Compensation Discussion and Analysis should be included in our proxy
statement, Form 10-K, or information statement, as applicable, and prepare
the related report required by the rules of the SEC
|
|
|
A copy of our Remuneration
Committee charter is available without charge on our website, www.net1.com.
9
Nominating and Corporate Governance Committee
The Nominating and Corporate
Governance Committee comprises Messrs. Seabrooke, Pein, Edwards and Mockett,
with Mr. Seabrooke acting as the Chairperson. The Nominating and Corporate
Governance Committee held four meetings during the 2017 fiscal year.
The principal duties and
responsibilities of the Nominating and Corporate Governance Committee are as
follows:
Corporate Governance
|
|
Board Composition
|
|
|
|
review our Corporate
Governance Guidelines annually and recommend changes, as appropriate, for
review and approval by the Board
|
|
monitor the
composition, size and independence of the Board
|
establish criteria
for Board and committee membership and recommend to our Board proposed
nominees for election to the Board and for membership on each committee of
the Board
|
|
|
|
make recommendations regarding
proposals submitted by our shareholders
|
|
monitor our
procedures for the receipt and consideration of director nominations by
shareholders and other persons and for the receipt of shareholder
communications directed to our Board
|
|
|
|
establish and monitor
procedures by which the Board will conduct, at least annually, evaluations
of its performance
|
|
make
recommendations to the Board regarding management succession planning and
corporate governance best practices
|
A copy of our Nominating and
Corporate Governance Committee charter is available without charge on our
website, www.net1.com.
BOARD LEADERSHIP STRUCTURE AND BOARD OVERSIGHT OF RISK
Board Leadership
Our Board is led by an
independent director, Mr. Seabrooke, who is also our Chairman. Our Board
believes this leadership structure effectively allocates authority,
responsibility, and oversight between management and the independent members of
our Board. It gives primary responsibility for our operational leadership and
strategic direction to our Chief Executive Officer, while the Chairman
facilitates our Boards independent oversight of management, promotes
communication between senior management and our Board about issues such as
management development and succession planning, executive compensation, and our
performance, engages with shareholders, and leads our Boards consideration of
key governance matters.
The Boards Role in Risk Oversight
Managing risk is an ongoing
process inherent in all decisions made by management. The Board discusses risk
throughout the year, particularly at Board meetings when specific actions are
considered for approval. The Board has ultimate responsibility to oversee our
enterprise risk management program. This oversight is conducted primarily
through various committees of the Board as described below.
Our Enterprise Risk Management
Committee is responsible for identifying, assessing, prioritizing and developing
action plans to mitigate the material business, operational and strategic risks
affecting us. The Enterprise Risk Management Committee comprises Mr. Kotzé, our
Chief Executive Officer (who serves as Chairperson) and Warren E. Segall, our
Group Compliance Officer. Mr. Segall meets semi-annually with the leaders of our
various business units and his findings are reported to and discussed by the
Enterprise Risk Management Committee. The Enterprise Risk Management Committee
meets and reports to the Audit Committee semi-annually.
The Audit Committee directly
provides oversight of risks relating to the integrity of our consolidated
financial statements, internal control over financial reporting and the internal
audit function. The Remuneration Committee oversees the management of risks
related to our executive compensation program. The Nominating and Corporate
Governance Committee oversees the management of risks related to management
succession planning.
REMUNERATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of our
Remuneration Committee has at any time been one of our officers or employees.
None of our executive officers serves or in the past has served as a member of
the Board or Remuneration Committee of any entity that has one or more of its
executive officers serving on our Board or our Remuneration Committee.
10
NOMINATIONS PROCESS AND DIRECTOR QUALIFICATIONS
The Nominating and Corporate
Governance Committee reviews with the Board the skills and characteristics
required of Board members. Our Corporate Governance Guidelines provide that the
Nominating and Corporate Governance Committee consider a candidates
independence, as well as the perceived needs of the Board and the candidates
background, skills, business experience and expected contributions. At a
minimum, members of the Board must possess the highest professional ethics,
integrity and values, and be committed to representing the long-term interests
of our shareholders. They must also have an inquisitive and objective
perspective, practical wisdom and mature judgment.
The Nominating and Corporate
Governance Committee may also take into account the benefits of diversity in
candidates viewpoints, background and experience, as well as the benefits of
constructive working relationships among directors. Other than as set forth in
our Corporate Governance Guidelines, the Nominating and Corporate Governance
Committee does not have a formal policy with respect to diversity.
The Nominating and Corporate
Governance Committee also reviews and determines whether existing members of the
Board should stand for re-election, taking into consideration matters relating
to the number of terms served by individual directors, the ability of an
individual director to devote the appropriate level of time and attention to
Board duties in light of other positions he holds (including other
directorships) and the changing needs of the Board. We do not have a limit on
the number of terms an individual may serve as a director on our Board.
The Nominating and Corporate
Governance Committee utilizes a variety of methods for identifying and
evaluating nominees for director. The Nominating and Corporate Governance
Committee regularly assesses the appropriate composition, size and independence
of the Board, and whether any vacancies are expected due to change in employment
or otherwise. In the event that vacancies are anticipated, or otherwise arise,
the Nominating and Corporate Governance Committee considers various potential
candidates for director. Candidates are evaluated at regular or special meetings
of the Nominating and Corporate Governance Committee, and may be considered at
any point during the year. The Nominating and Corporate Governance Committee
will consider shareholder recommendations for candidates for the Board that are
properly submitted in accordance with Section 4.16 of our Amended and Restated
By-Laws in the same manner it considers nominees from other sources. In
evaluating such recommendations, the Nominating and Corporate Governance
Committee will use the qualifications standards described above and will seek to
achieve a balance of knowledge, experience and capability on the Board.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD
Any shareholder who wishes to
communicate directly with the Board may do so via mail or facsimile, addressed
as follows:
Net 1 UEPS Technologies, Inc.
Board of Directors
PO Box
2424
Parklands, 2121, South Africa
Fax: +27 11 880 7080
The corporate secretary shall
transmit any communication to the Board, or individual director(s), as
applicable, as soon as practicable upon receipt. Absent safety or security
concerns, the corporate secretary shall relay all communications, without any
other screening for content.
CORPORATE GOVERNANCE GUIDELINES
The Board has adopted a set of
Corporate Governance Guidelines. We will continue to monitor our Corporate
Governance Guidelines and adopt changes as necessary to comply with rules
adopted by the SEC and Nasdaq, and to conform to best industry practice. This
monitoring will include comparing our existing policies and practices to
policies and practices suggested by various groups or authorities active in
corporate governance and the practices of other public companies. A copy of our
Corporate Governance Guidelines is available on our website at www.net1.com.
CODE OF ETHICS
The Board has adopted a written
code of ethics, as defined in the regulations of the SEC. We require all of our
directors, officers, employees, contractors, consultants and temporary staff,
including Mr. Kotzé, and other senior personnel performing similar functions, to
adhere to this code in addressing the legal and ethical issues encountered in
conducting their work. Our code of ethics requires avoidance of conflicts of
interest, compliance with all laws and other legal requirements, conduct of
business in an honest and ethical manner, integrity and actions in our best
interest. Directors, officers and employees are required to report any conduct
that they believe in good faith to be an actual or apparent violation of the
code.
11
The Sarbanes-Oxley Act of 2002
requires companies to have procedures to receive, retain and treat complaints
received regarding accounting, internal accounting controls or auditing matters
and to allow for the confidential and anonymous submission by employees of
concerns regarding questionable accounting or auditing matters. We currently
have such procedures in place. A copy of our code of ethics is available free of
charge on our website at www.net1.com.
COMPENSATION OF DIRECTORS
Directors who are also executive
officers do not receive separate compensation for their services as directors.
During fiscal 2017, our non-employee directors received compensation as
described below.
|
|
Fees Earned or
|
|
|
Stock
Awards
(2)(3)(4)
|
|
|
Stock Options
|
|
|
|
|
Name
|
|
Paid in Cash ($)
(1)
|
|
|
($)
|
|
|
($)
|
|
|
Total ($)
|
|
Paul Edwards
|
|
100,000
|
|
|
107,100
|
|
|
-
|
|
|
207,100
|
|
Alfred T. Mockett
|
|
8,334
|
|
|
-
|
|
|
-
|
|
|
8,334
|
|
Alasdair J.K. Pein
|
|
120,000
|
|
|
128,520
|
|
|
-
|
|
|
248,520
|
|
Christopher S. Seabrooke
|
|
229,571
|
|
|
188,150
|
|
|
-
|
|
|
417,721
|
|
(1)
|
Fees earned or paid in cash ($) includes $50,000 paid to
Mr. Seabrooke in recognition of the considerable extra time and effort
spent by him in fiscal 2017 as Chairman of the Nominating and Corporate
Governance Committee but outside of normal Board and Nominating and
Corporate Governance Committee forums, in particular with regard to the
change in Chief Executive Officer, the management and corporate
restructure, shareholder and media communications during the SASSA
contract extension period and the non-executive director search.
|
|
|
(2)
|
As of June 30, 2017, the number of shares of restricted
stock held by each non-employee director is as follows: Mr. Edwards
14,161; Mr. Mockett 0 Mr. Pein 23,301; Mr. Seabrooke
24,533.
|
|
|
(3)
|
For Messrs. Edwards and Pein, represents 10,000 and
12,000 shares, respectively, of restricted stock granted on August 25,
2016. The dollar value reflected is based on the closing price of our
common stock on the date of grant.
|
|
|
(4)
|
For Mr. Seabrooke, includes 15,000 shares of restricted
stock granted on August 25, 2016 and 2,587 shares of restricted stock
granted on May 3, 2017. The dollar value reflected is based on the closing
price of our common stock on the dates of grant.
|
In determining fiscal 2017
compensation, the Board analyzed the annual compensation of non-employee
directors of U.S.- and UK-listed transaction processor companies with a range of
market equity capitalizations above, below and comparable to ours. The peer
group comprised: Heartland Payment Systems, Inc., Global Payments Inc., WEX
Inc., Euronet Worldwide, Inc., Total System Services, Inc., Verifone Systems,
Inc., Jack Henry & Associates, Inc., Sage Group plc and Green Dot
Corporation. In addition, the Board considered the various roles of the
non-employee directors. Directors receive a base fee for membership on the
Board. Directors who serve on Board committees and/or serve as Chairperson of
Board committees receive additional compensation in recognition of the
additional time they are required to spend on committee matters.
Grants of restricted stock made
during 2017, as well those grants made in prior years, originally vested over a
three-year period. After the end of fiscal 2017, the Board consulted with Pay
Governance, an independent compensation consultant, and determined that one-year
vesting of restricted stock grants is a more common compensation practice for
independent directors and therefore, amended the terms of outstanding awards to
vest one-year after grant. As a result of this amendment, all shares held at
June 30, 2017 were fully-vested.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth
information regarding our compensation plans under which our equity securities
are authorized for issuance as of June 30, 2017:
|
|
|
|
|
|
|
|
Number of
securities
|
|
|
|
|
|
|
|
|
|
remaining
available
|
|
|
|
|
|
|
|
|
|
for future
issuance
|
|
|
|
Number of
securities
|
|
|
|
|
|
under equity
|
|
|
|
to be issued upon
|
|
|
Weighted average
|
|
|
compensation
plans
|
|
|
|
exercise of
|
|
|
exercise price of
|
|
|
(excluding
securities
|
|
|
|
outstanding
options,
|
|
|
outstanding
options,
|
|
|
reflected in
column
|
|
|
|
warrants and
rights
|
|
|
warrants and
rights
|
|
|
(a))
|
|
Plan Category
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Equity compensation plans approved by
security holders
|
|
|
|
|
|
|
|
|
|
Stock incentive plan
|
|
846,607
|
|
$
|
13.88
|
|
|
3,864,034
|
|
12
EXECUTIVE COMPENSATION
ANALYSIS OF RISK IN OUR COMPENSATION STRUCTURE
As part of its responsibilities
to annually review all incentive compensation and equity-based plans, and
evaluate whether the compensation arrangements of our employees incentivize
unnecessary and excessive risk-taking, the Remuneration Committee evaluated the
risk profile of our compensation policies and practices for fiscal 2017 and
concluded that they do not motivate imprudent risk taking. In its evaluation,
the Remuneration Committee reviewed our employee compensation structures, and
noted numerous design elements that manage and mitigate risk without diminishing
the incentive nature of the compensation, including:
|
a balanced mix between cash and equity, and
annual and longer-term incentives;
|
|
caps on incentive awards at reasonable levels;
|
|
linear payouts between target levels with
respect to annual cash incentive awards;
|
|
discretion on individual awards, particularly
in special circumstances; and
|
|
long-term incentives.
|
The Remuneration Committee also
reviewed our compensation programs for certain design features that may have the
potential to encourage excessive risk-taking, including: over-weighting towards
annual incentives, highly leveraged payout curves, unreasonable thresholds, and
steep payout cliffs at certain performance levels that may encourage short-term
business decisions to meet payout thresholds. The Remuneration Committee
concluded that our compensation programs do not include such elements.
In addition, the Remuneration
Committee analyzed our overall enterprise risks and how compensation programs
may impact individual behavior in a manner that could exacerbate these
enterprise risks. For this purpose, the Remuneration Committee considered our
growth and return performance, volatility and leverage. In light of these
analyses, the Remuneration Committee concluded that it has a balanced pay and
performance program that does not encourage excessive risk-taking that is
reasonably likely to have a material adverse effect on us. We believe our
compensation programs encourage and reward prudent business judgment and
appropriate risk-taking over the long term.
COMPENSATION DISCUSSION AND ANALYSIS
EXECUTIVE SUMMARY
In this Compensation Discussion and Analysis, we:
|
Outline our compensation philosophy and discuss
how the Remuneration Committee determines executive pay.
|
|
Describe each element of executive pay,
including base salaries, short-term and long-term incentives and executive
benefits.
|
As discussed below, our former
Chief Executive Officer, Mr. S.C.P. Belamant retired near the end of fiscal
2017. We anticipate that there may be changes to our compensation programs and
rewards in fiscal 2018 as we continue to develop and revise our philosophy
regarding how best to motivate our executives to drive towards our short-term
and long-term growth.
Pay for Performance
The Remuneration Committee
considered the absolute and relative alignment of executive compensation when it
considered the appropriateness of the level and form of compensation and found
executive compensation and our performance to be aligned.
Results of Shareholder Say-on-Pay Votes
We provide our shareholders with
the opportunity to cast an annual, nonbinding advisory vote to approve executive
compensation (a say-on-pay proposal). At our annual meeting of shareholders
held on November 8, 2016, approximately 82% of the votes cast on the say-on-pay
proposal at that meeting were voted in favor of the proposal. The Remuneration
Committee considered the outcome of that advisory vote to be an endorsement of
the Remuneration Committees compensation philosophy and implementation. The
Remuneration Committee will continue to consider the outcome of say-on-pay votes
when making future compensation decisions for our named executive officers.
Highlighted Compensation Policies and Practices
Our executive compensation and
corporate governance policies are structured to closely link executive
compensation to our performance and increase long-term shareholder value.
13
To achieve our objectives, we
have incorporated the following policies and practices:
WHAT WE DO:
|
WHAT WE DONT DO:
|
|
Utilize performance-based programs, including annual and
long-term incentives to link executive compensation to our performance and
increase long- term shareholder value (100% of FY2017 long-term incentives
were performance-based and could only be earned if certain performance
metrics are achieved)
|
|
No employment, severance or change of control agreements
with named executive officers, other than our service agreements with Mr.
Oh
|
|
Structured total direct compensation for our named
executive officers such that a significant portion is at risk
|
|
No change-in-control severance gross-up payments
|
|
Utilize mostly objective performance metrics in incentive
plans that drive shareholder value creation
|
|
No routine or excessive perquisites for our named
executive officers
|
|
Adopted a clawback policy in February 2017 that applies
to our incentive programs
|
|
No backdating or repricing of stock options
|
|
The Remuneration Committee hired an independent
consultant in June 2017 to advise the Committee on executive compensation
issues
|
|
No excessive incentive payments. Incentive payments are
capped to discourage inappropriate risk taking
|
|
Conduct annual say-on-pay advisory votes
|
|
|
|
The Remuneration Committee awards severance at its
discretion given that there are no formal severance arrangements
|
|
|
Our named executive officers for
fiscal 2017 are set forth in the following table:
Name of Executive Officer
|
Title
|
Herman G. Kotzé
|
Chief Executive Officer, Chief Financial
Officer, Treasurer, Secretary and Director
|
Phil-Hyun Oh
|
President, KSNET
|
Nitin Soma
|
Vice President Information Technology
|
Serge C.P. Belamant
|
Former Chief Executive Officer, Chairman of the
Board, and Director
|
Philip M. Belamant
|
Former Managing Director ZAZOO Limited
|
Fiscal 2017 Compensation Summary
|
Base Salary.
Messrs. Kotzé, Soma, S.C.P. Belamant and P.
M. Belamant received base salary increases during fiscal 2017. Mr. Oh did not
receive a base salary increase.
Performance-Based Annual Cash Incentive.
Messrs. S.C.P.
Belamant and Kotzé did not receive any payments under the cash incentive award
plan because none of the performance measures were achieved. Mr. Oh received 99%
and 56%, respectively, of the potential quantitative and qualitative portions of
his cash incentive award for fiscal 2017.
Discretionary Bonus.
Mr. Kotzé received a bonus of
$195,000 for fiscal 2017 in recognition of his assumption of additional
responsibilities during our leadership change as well as the successful
transition of the duties of Mr. S.C.P. Belamant. Mr. Soma received a bonus of
$90,000.
Special Bonus.
Mr. Soma received a special bonus of ZAR
1.5 million as compensation for the additional internal management, workload and
other pressures arising from the separation of S.C.P. Belamant from our company.
Long-Term Equity Based Incentives.
In August 2016, we
made an annual award of restricted stock to Mr. S.C.P. Belamant and Mr. Kotzé
with vesting based on our growth in earnings per share over a three year period
with targets achieved at compounded growth at 10%, 12% and 15%. The Remuneration
Committee considers these growth rates to be challenging. 100% of FY 2017
long-term equity awards were performance based.
DEVELOPMENTS DURING AND POST FISCAL 2017
As a result of Mr. S.C.P.
Belamants retirement effective May 31, 2017, Mr. Kotzé assumed the role of both
Chief Executive Officer and Chief Financial Officer (along with his other
roles). In addition, during August 2017, Mr. P. M. Belamants employment was
terminated.
14
We retained the services of an
independent compensation consultant, Pay Governance, in June 2017.
COMPENSATION PROGRAM OVERVIEW FOR FISCAL 2017
The goal of our executive
compensation program is the same as our goal for operating our Companyto create
long-term value for our shareholders. To achieve this goal, we seek to reward
our named executive officers for sustained financial and operating performance
and leadership excellence, to align their interests with those of our
shareholders and to encourage them to remain with us for long and rewarding
careers.
Each element of our executive
compensation program is designed to fulfill one or more of our performance,
alignment and retention objectives. These elements consist of salary, bonus and
both equity and non-equity incentive compensation. Each named executive officer
receives one or more, but not necessarily all, of these elements.
Compensation Components
In determining the type and
amount of compensation for each executive officer, we focus on both current pay
and the opportunity for future compensation and seek to combine compensation
elements so as to optimize his contribution to us.
Pay Mix
We consider the mix of our
compensation components from year to year based on our overall performance, an
executives individual contributions, and compensation practices of other
U.S.-based and UK-based public companies including companies in our peer group
described below. We do not have an exact formula for allocating between cash and
non-cash compensation. We do, nonetheless, provide for a balanced mix of
compensation components that are designed to encourage and reward behavior that
promotes shareholder value in both the short and long term.
Our executive compensation
program is designed to attract, motivate and retain key executive talent and
promote strong, sustainable long-term performance. The three components of total
direct compensation delivered in our program are 1) base salary; 2)
performance-based cash annual incentive and/or annual bonus; and 3)
performance-based long-term equity-based incentives. We place an emphasis on
variable performance-based pay, with approximately 74% percent of total target
compensation for fiscal 2017 established for Mr. S.C.P. Belamant based on
achievement of performance objectives. Each component promotes value creation
and aligns our management teams compensation with our long-term strategic
objectives.
Fixed/ Variable
|
Component
|
Form
|
Key Characteristics
|
|
Base
Salary
|
Cash
|
Base
Salary increases are
|
|
|
|
determined based on market
|
Fixed
|
|
|
considerations and not
|
|
|
|
necessarily increased each year
|
|
Bonus
|
Cash
|
Bonus is
discretionary and
|
|
|
|
dependent upon individual
|
|
|
|
performance
|
|
Performance-Based Cash
|
Cash
|
Awards
are based on
|
|
Annual
Incentive
|
|
qualitative and quantitative
|
|
|
|
factors
|
|
Performance-Based Long-
|
Equity
|
Equity
grants are subject to
|
Variable Compensation
|
Term
Equity-Based Incentives
|
|
continued service and defined
|
|
|
|
fundamental earnings per share
|
|
|
|
milestones
|
|
Other
benefits
|
Cash
|
Benefits
based on territory-
|
|
|
|
specific
employment benefits
|
|
|
|
available to peer company
|
|
|
|
executives in similar position,
|
|
|
|
as negotiated.
|
15
The chart below illustrates the
mix of the elements of the fiscal 2017 compensation program we established for
our named executive officers using target levels for the cash incentive
component, Bonus of 100% of base salary and Other representing a housing
allowance paid to and group life payments paid on behalf of certain named
executive officers:
Compensation Objectives
Performance
. We seek to
motivate our named executive officers through a combination of cash bonuses,
incentive payments and grants of restricted stock that vest based on the
achievement of pre-defined levels of financial and operating goals and increases
in our share price and/or satisfaction of other financial and strategic
performance goals. Base salary, bonus and non-equity incentive compensation are
designed to reward annual achievements and be commensurate with each executive
officers scope of responsibility, demonstrated ingenuity, dedication,
leadership and management effectiveness.
Alignment
. We seek to
align the interests of our named executive officers with our shareholders by
evaluating them on the basis of financial and non-financial measurements that we
believe ultimately drive long-term shareholder value. The elements of our
compensation package that we believe align these interests most closely are a
combination of annual quantitative and qualitative cash compensation awards and
restricted stock awards which vest over time and become vested upon the
satisfaction of specified performance goals.
Retention
. The long tenure
of our management team, in particular, Messrs. Kotzé and Soma, has made them
especially knowledgeable about our business and industry and thus particularly
valuable to us. Retention is a key objective of our executive compensation
program. We attempt to retain our named executive officers by seeking to provide
a competitive pay package and using continued service as a condition to receipt
of full compensation. The time-based vesting terms of equity awards have the
effect of tying this element of compensation to continued service with us.
Implementing our Objectives
Organization of the
Remuneration Committee
The Remuneration Committee
typically holds four regularly scheduled meetings each year, with additional
meetings scheduled when required. There are currently four directors on the
committee. Each member of the committee is required to be:
|
|
An independent director under independence
standards established by the NASDAQ.
|
|
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A non-employee director under Rule 16b-3 of the
Securities Exchange Act of 1934, as amended.
|
|
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An outside director under Section 162(m) of the
Internal Revenue Code.
|
16
Process and General
Industry Benchmarking
The Remuneration Committee
analyzes compensation data of companies that it selects as a peer group to
better understand how our pay package compares with those companies. The peer
group selected by the Remuneration Committee comprises a broad spectrum of
companies, which range significantly in size from a revenue, profitability and
enterprise value perspective. The peer group consists of payment processing
companies generally considered comparable to us in terms of their businesses
(such as being a payment systems provider) as well as other companies within
other parts of the information technology sector and those operating in or
providing services in emerging markets. In the early part of each fiscal year,
the Remuneration Committee establishes base salaries and sets the short-term
cash incentive award plan remuneration targets and payment criteria. Following
the end of each fiscal year, the Remuneration Committee determines the annual
incentive cash payments and bonuses, if any, to be made to each executive
officer based on their and our performance during the fiscal year.
The Remuneration Committees
process for determining compensation includes an analysis of all elements of
compensation. The Remuneration Committee compares these compensation components
separately and in total to compensation at the peer group companies, taking into
account, among other things, our relative market capitalization against the
members of the peer group. For fiscal 2017, the Remuneration Committee set the
compensation of Mr. Kotzé based on the total compensation package of Mr. S.C.P.
Belamant. Since the role played by Mr. Kotzé was significantly broader than that
of a typical Chief Financial Officer, the Remuneration Committees goal was to
set this package at approximately 45% to 65% of Mr. S.C.P. Belamants total
compensation package. The compensation of other named executive officers was
determined based on specific performance criteria established by the Mr. S.C.P.
Belamant and approved by the Remuneration Committee.
Our peer group, which includes
both U.S. and UK listed companies, consists of the following companies:
Heartland Payment Systems, Inc., Global Payments Inc., WEX Inc., Euronet
Worldwide, Inc., Total System Services, Inc., Verifone Systems, Inc., Jack Henry
& Associates, Inc., Sage Group plc and Green Dot Corporation.
Because the Remuneration
Committee considered international comparables in its compensation analysis for
both Messrs. S.C.P. Belamant and Kotzé, their total compensation packages were
denominated in U.S. dollars (USD). Because Mr. Somas compensation package was
derived from the amount of compensation we paid to Mr. Kotzé, his compensation
package was also denominated in USD. Our other executive officers based in South
Africa may elect to be paid in a currency other than USD, in which case the U.S.
dollar amount is converted into South African Rand (ZAR) at the exchange rate
in effect at the time of payment
Compensation for fiscal 2017 for
Mr. Oh was determined in accordance with his service agreements. Mr. Ohs
compensation was denominated and paid in Korean won (KRW) in accordance with the
terms of his negotiated service agreements. Compensation for the other
executives (except Mr. Kotzé) was based on recommendations and input from Mr.
S.C.P. Belamant with final approval by the Remuneration Committee.
Employment Agreements
From time to time, we enter into
employment agreements with senior executives of companies that we acquire in
connection with the acquisition. Compensation under such employment agreements
would not ordinarily be determined by reference to peer group comparisons. In
June 2014, we entered into two service agreements with Mr. Oh in connection with
his roles at Net1 Korea and KSNET. For more information about Mr. Ohs service
agreements, see Performance-Based Annual BonusesMr. Oh below.
Equity Grant
Practices
We believe that our long-term
performance is achieved through a culture that encourages long-term performance
by our executive officers through the use of stock and stock-based awards.
Accordingly, awards of restricted stock are a fundamental element in our
executive compensation program because they emphasize long-term performance, and
help align the interests of our shareholders and employees.
We have granted equity awards
through our stock incentive plan which was adopted by our Board and approved by
our shareholders. In determining the size of an equity award to an executive
officer, the Remuneration Committee considers the executives then current cash
total compensation package (which includes salary, potential bonus and cash
incentive award plan compensation), any previously received equity awards, the
value of the grant at the time of award and the number of shares available for
grants pursuant to our stock incentive plan. When awarding equity compensation,
management and the Remuneration Committee seek to weigh the cost of these grants
with their potential benefits as a compensation tool.
17
ELEMENTS OF 2017 COMPENSATION
Base Salaries
Our executive compensation
programs emphasize performance-based pay. This includes annual bonuses and
equity based long term incentive awards. However, base salaries remain a
necessary and typical part of compensation for attracting and retaining
outstanding employees at all levels.
|
Factors
Considered in Determining Base Salaries
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|
|
|
[ ] Individual contributions and performance
|
[ ] Internal equity
|
|
|
|
|
[ ] Retention needs
|
[ ] Experience
|
|
|
|
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[ ] Complexity of roles and
responsibilities
|
[ ] Succession planning
|
Adjustments to Base
Salary
Salaries for fiscal 2017 for all
named executive officers except Mr. Oh were determined in the first quarter of
fiscal 2017 after a review of our peer group companies described above. Messrs.
Kotzé, P.M. Belamant, Soma and S.C.P. Belamant received base salary increases of
22%, 4%, 11% and 10%, respectively during fiscal 2017. Mr. Oh did not receive
base salary adjustments for fiscal 2017 under the terms of his service
agreements. No other adjustments were made.
Performance-Based Annual Bonuses
Messrs. S.C.P.
Belamant and Kotzé
For fiscal 2017, the Remuneration
Committee established a cash incentive award plan for Messrs. S.C.P. Belamant
and Kotzé pursuant to which each of them would be eligible to earn a cash
incentive award based on our fiscal 2017 financial performance and each
individuals contribution toward the achievement of certain corporate
objectives. The 2017 plan provided for a target-level cash incentive award of
100% of the executives base salary for fiscal 2017, 60% of which was to be
based on a quantitative metric (achievement of specified levels of profitability
before tax (PBT)) and 40% of which was to be based on the level of achievement
of the qualitative factors described below.
Quantitative Portion of the
Cash Incentive Award Plan
The quantitative portion of the
award provided for threshold, target and maximum amounts of 0%, 100% and 200%
for Mr. S.C.P. Belamant, and 0%, 100% and 150% for Mr. Kotzé, respectively.
The quantitative portion of the
cash incentive award plan was based on the achievement of specified levels of
PBT for fiscal 2017. The following levels of PBT would entitle the executive to
receive the following percentages of this portion of the award:
PBT
|
Achievement Percentage
|
At or below $130 million (threshold)
|
0%
|
$140 million
|
100%
|
$150 million or above (maximum)
|
200% (for Mr. Belamant)
150%
for Mr. Kotzé
|
The achievement percentage was
subject to interpolation relative to the $140 million target on a linear basis.
18
Potential and Actual Payments
The table below presents our
potential and actual payments to Messrs. S.C.P. Belamant and Kotzé related to
the quantitative portion of our cash incentive award plan for fiscal 2017:
2017 Quantitative portion of cash incentive
award plan
|
|
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Serge C.P.
Belamant
|
|
|
Herman G.
Kotzé
|
|
|
|
Chief Executive Officer
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|
Chief Financial Officer
|
|
|
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Potential
|
|
|
|
|
|
Potential
|
|
|
|
|
|
|
Payment
|
|
|
Actual
|
|
|
Payment
|
|
|
Actual
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Threshold
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
Target
|
$
|
660,000
|
|
|
0
|
|
$
|
390,000
|
|
|
0
|
|
Maximum
|
$
|
1,320,000
|
|
|
0
|
|
$
|
585,000
|
|
|
0
|
|
Actual
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
In August 2017, the Remuneration
Committee met and determined each element of our financial performance described
above. The Remuneration Committee concluded that no payment would be made
because our income before income taxes for fiscal 2017 of $114.5 million was
below the threshold PBT target of $130 million.
Qualitative Portion of the
Cash Incentive Award Plan
Each of Messrs. S.C.P. Belamant
and Kotzé was entitled to receive up to 40% of his annual base salary based on
his individual contribution toward the achievement of the following performance
criteria:
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Succession planning;
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Meetings with shareholders (US visits);
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Resolution of SASSA extension;
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Group restructuring and recruitment of vacation
positions;
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Development of a strategic plan and way forward
for the Net1 Group;
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Evaluation of the integration of acquisitions
and platform development;
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Emerging market geographic wins for
establishing UEPS platform with system implementation; and
|
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Developing and setting KPI targets for next
tier executive officers.
|
In August 2017, the Remuneration
Committee considered whether to make payments in respect of the qualitative
portion of the cash incentive award plan. The Remuneration Committee concluded
that no payment would be made because none of the performance criteria has been
achieved for fiscal 2017 by Messrs. S.C.P. Belamant or Kotzé, respectively.
In reaching its conclusion, the
Remuneration Committee determined after a careful review of each factor that
either the performance criteria had not been met or was still in progress.
Discretionary Bonus for Mr.
Kotzé
The Remuneration Committee
determined to award a bonus of 30% of fiscal 2017 base salary, or $195,000, to
Mr. Kotzé. Although Mr. Kotzé had not met the performance measures set out in
August 2016, the Remuneration Committee acknowledged Mr. Kotzés commitment and
resolve through our leadership change. Mr. Kotzé successfully transitioned the
duties of Mr. S.C.P. Belamant and ensured as little disruption as possible to
our operations. He successfully assumed additional responsibilities and the
Remuneration Committee determined that this additional workload should be
recognized in order to continue incentivizing Mr. Kotzé.
19
The chart below illustrates the
mix of the elements of the fiscal 2017 compensation program we established for
Mr. Kotzé who was eligible for incentive compensation, using target levels for
the cash incentive component.
Mr. Oh
For fiscal year 2017, Mr. Ohs
base salary was determined in accordance with the terms of his service
agreements. We entered into two such service agreements with Mr. Oh in June
2014, in connection with his roles at Net1 Korea and KSNET. We appointed Mr. Oh
as a representative director of Net1 Korea and entered into a three-year service
agreement with him in conjunction with such appointment. Under these service
agreements, Mr. Oh is entitled to receive annual base salary, an annual bonus
(comprising quantitative and qualitative performance measures) and other
benefits, including participation in national health insurance and the national
pension plan provided under the laws of Korea, reimbursement for annual physical
examinations for him and his spouse, education expenses and the use of a
Company-provided car and driver for business and reasonable personal use.
We have aligned KSNETs fiscal
year end with ours. However, in order to remain consistent with our Korean peer
competitors, we continue to determine the quantitative portion of Mr. Ohs
annual bonus (and our KSNET staffs remuneration) using KSNETs financial
results for the twelve month period ending December 31 of each year.
Accordingly, we determined Mr. Ohs cash incentive payment for the twelve month
period ended December 31, 2016.
Similar to the restraint of trade
agreements that we have with our other named executive officers, Mr. Ohs
service agreement provides that upon the termination of his services with us, he
is restricted, for a period of 36 months, from soliciting business from certain
customers, working for or holding interests in our competitors or participating
in a competitive activity within the territories where we do business. The
service agreement also provides for certain payments upon his termination of
service by us without just cause, which payments are described below under
Potential Payments Upon Termination or Change-in-Control on page 28.
Quantitative Metrics
The quantitative portion of Mr.
Ohs annual bonus is capped at a maximum of KRW 338 million and is calculated
based on the achievement of specified levels of KSNETs free cash flow and
profit before interest and tax and any bonus under his service agreement
(PBIT) during any calendar year during the term of the service agreement, as
described below.
Mr. Oh is entitled to receive KRW
2 million for every KRW 1 billion of free cash flow (defined as operating cash
flow, minus tax and capital expenditures) during the year. The maximum payable
in respect of the free cash flow metric is KRW 50 million.
If PBIT is at least 90% but less
than 100% of the previous years PBIT, then Mr. Oh is entitled to receive (i)
KRW 208 million, minus (ii) KRW 10 million for each 1% by which current PBIT is
less than the previous years PBIT. If PBIT is equal to or greater than the
previous years PBIT, then Mr. Oh is entitled to receive KRW 208 million, plus
KRW 3,333,333 for each 1% increase in PBIT when compared to the previous year
(up to a maximum of KRW 80 million in respect of the excess), for a total
maximum of KRW 288 million.
20
The table below presents our
potential and actual payments to Mr. Oh related to the achievement of his
quantitative targets for fiscal 2017:
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Cash flow metric
|
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PBIT metric
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Total
|
|
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|
Potential
|
|
|
|
|
|
Potential
|
|
|
|
|
|
Potential
|
|
|
|
|
|
|
Payment
|
|
|
Actual
|
|
|
Payment
|
|
|
Actual
|
|
|
Payment
|
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|
Actual
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
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Threshold
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1,746
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|
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94,263
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|
|
|
|
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96,009
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|
|
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Target
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1,746
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|
|
|
|
|
181,543
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|
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183,289
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Maximum
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|
43,640
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|
|
|
|
|
251,367
|
|
|
|
|
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295,007
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|
|
|
|
Actual
|
|
|
|
|
43,640
|
|
|
|
|
|
137,903
|
|
|
|
|
|
181,543
|
|
Qualitative Metrics
The qualitative portion of the
annual bonus is capped at a maximum of KRW 182 million and is based on the
achievement of certain key objectives to be determined annually by our Chairman.
Each item comprising the qualitative portion is based on performance during our
fiscal year ending June 30. Achievement of the qualitative targets will be
determined by our Remuneration Committee each year.
The qualitative targets for
fiscal 2017 were:
|
(i)
|
If KSNET maintains or improves its market position in the
Korean card value-added network (VAN) market, or if KSNET internally
improves the relative contribution of the banking VAN, payment gateway
(PG), and purchase business unit compared to the core VAN business unit
(i.e. if banking VAN, PG, and purchase business unit contribute more than
the current 14% of gross profit), Mr. Oh is entitled to receive KRW 50
million;
|
|
|
|
|
(ii)
|
If KSNET is not the subject of any adverse regulatory
findings, fines, or penalties during the relevant period, Mr. Oh is
entitled to receive KRW 52 million; and
|
|
|
|
|
(iii)
|
The successful launch of any of our products that are not
currently marketed by Net1 Korea in the Korean market (e.g., Virtual
Credit Card, Variable PIN, Money transfers, and bill
payments).
|
For fiscal 2017, the Remuneration
Committee awarded $89,026 to Mr. Oh for the qualitative portion of his bonus. In
reaching its award determination, the Remuneration Committee concluded that Mr.
Oh had met two of his qualitative objectives for fiscal 2017: (1) maintaining or
improving our market position in the Korean card VAN market and (2) KSNET not
being subject to any adverse regulatory findings, fines or penalties. The
Remuneration Committee determined that Mr. Oh had not successfully launched any
of our products in Korea.
Other Executives
Bonuses for other
Executives
. The Remuneration Committee determined to award a bonus of 25%,
or $90,000, of fiscal 2017 base salary to Mr. Soma, in recognition of his
ongoing management of our strategic relationship with MasterCard and Grindrod
Bank Limited and continuing oversight of the information technology component of
our Sarbanes-Oxley compliance. These MasterCard and Grindrod Bank relationships
continue to be vital to our South African businesses, including social welfare
distribution and EasyPay Everywhere, as well as to our international expansion
plans where a worldwide MasterCard agreement may provide us with competitive
pricing and result in accelerated implementations The Remuneration Committee
also determined to award Mr. Soma a special bonus of ZAR 1.5 million as
compensation for the additional internal management, workload and other
pressures arising from the separation of our former Chief Executive Officer.
Equity grants
Equity Incentive Awards
On August 25, 2016, we granted
restricted stock to Messrs. S.C.P. Belamant and Kotzé that would vest based on
our growth in earnings per share over a three year period with targets achieved
at compounded growth at 10%, 12% and 15%. S.C.P. Belamant was granted 200,000
shares of restricted stock and Mr. Kotzé was granted 150,000 shares of
restricted stock representing approximately 200% of their current base salaries,
respectively. The values of these grants are presented in the Summary
Compensation Table below. These shares of restricted stock will vest in full
only on the date, if any, both of the following conditions are satisfied (except
with respect to Mr. S.C.P. Belamants grant as noted below):
|
(i)
|
the recipient is employed by us on a full-time basis on
the date that we file our Annual Report on Form 10-K for the fiscal year
ended June 30, 2019; and
|
21
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(ii)
|
the applicable fundamental earnings per share is achieve
for the fiscal year ended June 30, 2019 (2019 FEPS) as described
below.
|
2019 FEPS
|
Vesting
|
Below $2.60 (threshold)
|
0%
|
At or above $2.60 but below $2.80
|
33.33%
|
At or above $2.80 but below $3.00
|
66.67%
|
Above $3.00
|
100%
|
The vesting percentage is subject
to a linear interpolation between $2.60 and $3.00 relative to 2019 Fundamental
EPS of $2.80.
As a result of his retirement in
May 2017, the performance conditions applicable to Mr. S.C.P. Belamants 2016
restricted stock grant were waived.
Other Compensation Items
The Remuneration Committee agreed
to pay Mr. S.C.P. Belamant group life insurance premiums as well as provide him
with a housing allowance. In addition, during fiscal 2017, we provided on-site
residential security services for Mr. S.C.P. Belamant consisting of two armed
guards up until the end of January 2017. These services were provided based on
bona fide business-related security concerns and were an integral part of our
overall risk management program. The Board believes that provision of these
security services is a necessary and appropriate business expense because Mr.
S.C.P. Belamants personal safety and security were of the utmost importance to
us and our shareholders. These security services may be viewed as conveying a
personal benefit to Mr. S.C.P. Belamant during fiscal 2017.
The Remuneration Committee agreed
to pay Mr. P.M. Belamants group life insurance premiums and his participation
in a tax equalization program under which we was reimburse, in cash, for any
additional taxes paid as a result of his residence in the UK. The Remuneration
Committee agreed to reimburse Mr. P.M. Belamant for two economy class seats per
calendar year between South Africa and the UK.
RETIREMENT OF MR. S.C.P. BELAMANT
On May 31, 2017, our founder, Mr.
S.C.P. Belamant, retired from his positions as our Chief Executive Officer and a
member of our Board. In connection with his retirement,, we paid to Mr. S.C.P.
Belamant a severance payment of US$1,000,000, representing compensation for 27
years of service with us, less applicable withholdings and deductions and a
payment of US$7,000,000, less applicable withholdings and deductions, as an
additional amount in part for his cooperative resignation. We also accelerated
vesting of his 200,000 shares of restricted stock granted in August 2016 and
repurchased his 1,017,465 shares of our common stock at a price of US$10.80 per
share and his 252,286 in-the money stock options at a price per option equal to
(i) US$10.80 minus (B) the applicable exercise price per option. See Certain
Relationships and Related Transactions below.
MR. P.M. BELAMANTS TERMINATION OF EMPLOYMENT
Effective August 10, 2017, ZAZOO
Limited and Mr. Philip M. Belamant mutually agreed to terminate his employment.
OTHER CONSIDERATIONS
Section 162(m)
Section 162(m) of the Code places
a limit of $1 million on the amount of compensation that we may deduct in any
one year with respect to our Chief Executive Officer and each of the three most
highly compensated executive officers other than our Chief Executive Officer or
Chief Financial Officer. Certain qualified performance-based compensation is not
subject to this deduction limit. To maintain flexibility in compensating our
named executive officers in a manner designed to promote our various corporate
goals, it is not a policy of the Remuneration Committee that all executive
compensation must be tax-deductible. The Remuneration Committee believes that
the importance of retaining this flexibility outweighs the benefits of tax
deductibility.
22
The Remuneration Committees Advisors
In June 2017, the Remuneration
Committee retained Pay Governance, an independent advisor, to assist with its
executive compensation matters. The committee has the sole authority to select,
compensate and terminate its external advisors.
The Remuneration Committee has
assessed Pay Governances independence pursuant to SEC rules and concluded that
there are no conflicts of interest. Pay Governance is a nationally recognized
independent advisor of executive compensation advisor services.
Clawback Policy
The Remuneration Committee
adopted a clawback policy in February 2017 which applies to named executive
officers who receive incentive compensation. For purposes of the Clawback
Policy incentive compensation means any cash compensation or the portion of an
award of cash compensation that is granted, earned or vested based wholly upon
the attainment of a performance measure that is determine and presented in
accordance with the accounting principles used in preparing our financial
statements or derived wholly or in part from such measure and share price or
total shareholder return. The policy requires the forfeiture, recovery or
reimbursement of the incentive compensation earned within the two-year period
preceding the date on which we are required to prepare an accounting restatement
under the applicable plans as:
|
|
required by applicable law; or
|
|
|
due to material noncompliance with any financial
reporting requirement under the U.S. securities laws that is caused by any
current or former named executive officers fraud or intentional
misconduct that caused or substantially caused the need for such
restatement.
|
Anti-hedging Policy
We maintain an anti-hedging
policy, which prohibits employees and directors from trading in puts, calls,
options or other future rights to purchase or sell shares of our common stock.
Officers and directors are also prohibited from pledging their shares. An
exception to this prohibition may be granted where a person wishes to pledge
shares as collateral for a loan (not including margin debt) and clearly
demonstrates the financial capacity to repay the loan without resort to the
pledged securities. Any person wishing to enter into such an arrangement must
first receive pre-approval for the proposed transaction from our Group
Compliance Officer.
REMUNERATION COMMITTEE REPORT
For the Year Ended June 30, 2017
The information contained in
this report shall not be deemed to be soliciting material or filed with the
SEC or subject to the liabilities of Section 18 of the Exchange Act, except to
the extent that Net 1 UEPS Technologies, Inc. specifically incorporates it by
reference into a document filed under the Exchange Act.
The Remuneration Committee, which
consists of four independent directors, has reviewed and discussed the
Compensation Discussion and Analysis section of this proxy statement with Mr.
Kotzé. Based on this review and discussion, the Remuneration Committee
recommended to our Board that the Compensation Discussion and Analysis section
be included in our Annual Report on Form 10-K and this proxy statement.
Remuneration Committee
Alasdair J.K. Pein, Chairman
Christopher S. Seabrooke
Paul Edwards
Alfred T. Mockett
EXECUTIVE COMPENSATION TABLES
The following narrative, tables
and footnotes describe the total compensation earned during fiscal years 2017,
2016 and 2015, as applicable, by our named executive officers. The total
compensation presented below in the Summary Compensation Table does not reflect
the actual compensation received by our named executive officers or the target
compensation of our named executive officers in fiscal 2017. The actual value
realized by our named executive officers in fiscal 2017 from long-term equity
incentives (options and restricted stock) is presented in the Option Exercises
and Stock Vested Table on page 28.
Target annual incentive awards
for fiscal 2017 are presented in the Grants of Plan-Based Awards table on page
26.
23
SUMMARY COMPENSATION TABLE
(1)
The following table sets forth
the compensation earned by our named executive officers for services rendered
during fiscal years 2017, 2016 and 2015.
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Stock
|
|
|
Option
|
|
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Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
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Bonus
|
|
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Awards
|
|
|
Awards
|
|
|
Incentive Plan
|
|
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All Other
|
|
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(2)
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(3)
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(4)
|
|
|
(5)
|
|
|
Compensation
(3)
|
|
|
Compensation
|
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Herman G. Kotzé, Chief
Executive
|
|
2017
|
|
|
650,000
|
|
|
195,000
|
|
|
1,606,500
|
|
|
-
|
|
|
-
|
|
|
68,757
|
(6)
|
|
2,520,257
|
|
Officer, Chief Financial Officer,
|
|
2016
|
|
|
531,480
|
|
|
53,148
|
|
|
797,228
|
|
|
-
|
|
|
132,870
|
|
|
123,931
|
(6)
|
|
1,638,657
|
|
Treasurer, Secretary and
Director
|
|
2015
|
|
|
516,000
|
|
|
-
|
|
|
146,229
|
|
|
200,970
|
|
|
696,600
|
|
|
-
|
|
|
1,559,799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phil-Hyun Oh,
|
|
2017
|
|
|
362,213
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
270,569
|
|
|
72,890
|
(7)
|
|
705,672
|
|
President
|
|
2016
|
|
|
354,121
|
|
|
-
|
|
|
240,600
|
|
|
-
|
|
|
290,123
|
|
|
70,978
|
(7)
|
|
955,822
|
|
KSNET
|
|
2015
|
|
|
386,856
|
|
|
-
|
|
|
-
|
|
|
122,498
|
|
|
368,212
|
|
|
63,009
|
(7)
|
|
940,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nitin Soma, Vice-President-
|
|
2017
|
|
|
360,000
|
|
|
200,147
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
560,147
|
|
Information
|
|
2016
|
|
|
324,450
|
|
|
113,558
|
|
|
240,600
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
678,608
|
|
Technology
|
|
2015
|
|
|
315,000
|
|
|
315,000
|
|
|
77,850
|
|
|
122,498
|
|
|
-
|
|
|
-
|
|
|
830,348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Serge C.P. Belamant, Former Chief
|
|
2017
|
|
|
1,008,333
|
|
|
-
|
|
|
2,142,000
|
|
|
-
|
|
|
-
|
|
|
8,442,836
|
(9)
|
|
11,593,169
|
|
Executive Officer, Chairman
of the Board
|
|
2016
|
|
|
1,004,250
|
|
|
100,425
|
|
|
2,008,509
|
|
|
-
|
|
|
251,063
|
|
|
239,007
|
(9)
|
|
3,603,254
|
|
and Director(8)
|
|
2015
|
|
|
975,000
|
|
|
-
|
|
|
276,213
|
|
|
379,613
|
|
|
1,657,500
|
|
|
24,810
|
(9)
|
|
3,313,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip M. Belamant, Managing
Director
|
|
2017
|
|
|
168,130
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
167,468
|
(11)
|
|
335,598
|
|
ZAZOO Limited(10)
|
|
2016
|
|
|
189,387
|
|
|
66,772
|
|
|
232,580
|
|
|
-
|
|
|
-
|
|
|
268,948
|
(11)
|
|
757,687
|
|
(1)
|
Includes only those columns relating to compensation
awarded to, earned by, or paid to the named executive officers in any of
fiscal 2017, 2016 or 2015. All other columns have been omitted.
|
|
|
(2)
|
The applicable amount for Messrs. Kotzé and Mr. Soma is
denominated in USD and paid in ZAR at the exchange rate in effect at the
time of payment. Mr. Ohs salary is denominated and paid in Korean won
(KRW) and has been converted into USD at the average exchange rate for
the applicable fiscal year. Mr. P.M. Belamants salary is denominated and
paid in GBP and has been converted into USD at the average exchange rate
for 2017. The applicable amount for Mr. S.C.P. Belamant is denominated in
USD and paid in ZAR at the exchange rate in effect at the time of payment
through November 2015, and from December 2015, paid in USD.
|
|
|
(3)
|
Bonus and non-equity incentive plan compensation
represent amounts earned by Messrs. Kotzé, P.M. Belamant, Soma and S.C.P.
Belamant for the fiscal years ended June 30, and were paid after close of
the fiscal year. The quantitative portion earned of Mr. Ohs 2017
non-equity incentive plan was paid in February 2017 and the qualitative
portion was paid after close of the fiscal year. The amounts for Messrs.
Kotzé, Soma and S.C.P. Belamant are denominated in USD, the amount for Mr.
Oh is denominated and paid in KRW, and as applicable, converted into USD
at the average exchange rate for the year in which amount was earned, and
the amount for Mr. P.M. Belamant is denominated and paid in GBP.
|
|
|
(4)
|
Represents FASB ASC Topic 718 grant date fair value of
restricted stock granted under our stock incentive plan. See note 18 to
the consolidated financial statements included in our Annual Report on
Form 10-K for the year ended June 30, 2017, for the relevant assumptions
used in calculating grant date fair value under FASB ASC Topic
718.
|
|
|
(5)
|
Represents FASB ASC Topic 718 grant date fair value of
stock options granted under our stock incentive plan. See note 18 to the
consolidated financial statements included in our Annual Report on Form
10-K for the year ended June 30, 2017, for the relevant assumptions used
in calculating grant date fair value under FASB ASC Topic 718.
|
|
|
(6)
|
Includes reimbursement of costs related to the
application of citizenship in the European Union of $42,416 (2016:
$64,285) and $26,341 (2016: $57,646) related to the encashment of leave,
which was paid in ZAR and converted at the average exchange rate in the
month of payment.
|
|
|
(7)
|
Represents payments made by us for Mr. Ohs Korea
mandatory employee national health insurance, national pension, school
fees and automobile expenses, which are paid in KRW converted into USD at
the average exchange rate for the year. The fiscal 2017, 2016 and 2015
amounts include car rental of $37,072, $33,926 and $28,525,
respectively.
|
|
|
(8)
|
Mr. S.C.P. Belamant retired from his position as Chief
Executive Officer and as a member of the Board, effective as of May 31,
2017. For more information, see Certain Relationships and Related
TransactionsRetirement of Serge C.P. Belamant and Separation
Arrangements.
|
|
|
(9)
|
For fiscal 2017, includes $8,000,000 separation payment,
encashment of leave of $298,193, a housing allowance of $100,269, which
was paid in GBP and converted into USD at the average exchange rate for
the year, $32,230 for group life insurance paid on Mr. S.C.P. Belamants
behalf and $21,546 for costs of security guards for Mr. S.C.P. Belamant,
which are both paid in ZAR and converted at the average exchange rate for
the year. For fiscal 2016, includes a housing allowance of $72,021, which
was paid in GBP and converted into USD at the average exchange rate for
the year, encashment of leave of $145,440, which was paid in ZAR and
converted at the average exchange rate in the month of payment and $21,546
for costs of security guards for Mr. S.C.P. Belamant, which are paid in
ZAR and converted at the average exchange rate for the year. For fiscal
2015, includes cost of security guards for Mr. S.C.P. Belamant, which were
paid in ZAR and converted at the average exchange rate for the
year.
|
|
|
(10)
|
Mr. P.M. Belamant was not a named executive officer for
2015. Mr. P. M. Belamants employment terminated effective August 10,
2017.
|
|
|
(11)
|
Represents payments made by us to Mr. P.M. Belamants as
housing allowance $109,689 (2016: $38,142), tax equalization payments
$41,394 (2016: $120,027), encashment of leave $10,775 and reimbursement of
private travel to South Africa $49 (2016: $8,831), and in 2016 only,
reimbursement for rental of private residence $$101,948; which are paid in
GBP and converted into USD at the average exchange rate for the
year.
|
24
ACTUAL 2017 COMPENSATION MIX
The chart below illustrates the
mix of the actual elements of the compensation program paid in fiscal 2017 for
our named executive officers pursuant to our target incentive compensation
program:
25
GRANTS OF PLAN-BASED AWARDS
(1)
The following table provides
information concerning non-equity and equity incentive plan awards granted
during fiscal 2017 to each of our named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
Future Payouts Under Non-
|
|
|
Shares of
|
|
|
of Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Incentive
|
|
|
Stock or
|
|
|
and Option
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards (2
)
|
|
|
Units
|
|
|
Awards
|
|
|
|
|
|
|
Date of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant
|
|
|
Committee
|
|
|
Type of
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
|
|
|
|
|
Name
|
|
Date
|
|
|
Action
|
|
|
Award
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
|
-
|
|
|
08/25/16
|
|
|
AC
|
|
|
22,750
|
|
|
650,000
|
|
|
845,000
|
|
|
|
|
|
|
|
Herman G. Kotzé
|
|
08/19/15
|
|
|
08/25/16
|
|
|
RS
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
1,606,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phil-Hyun Oh
|
|
|
|
|
06/30/14
|
|
|
AC
|
|
|
96,008
|
|
|
342,139
|
|
|
453,858
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
08/25/16
|
|
|
AC
|
|
|
38,500
|
|
|
1,100,000
|
|
|
1,760,000
|
|
|
|
|
|
|
|
Serge C.P. Belamant(3)
|
|
08/19/15
|
|
|
08/25/16
|
|
|
RS
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
2,142,000
|
|
(1)
|
AC (annual cash incentive award); RS (restricted stock).
Includes only those columns relating to grants awarded to the named
executive officers in fiscal 2017. All other columns have been
omitted.
|
|
|
(2)
|
On August 25, 2016, the Remuneration Committee approved a
fiscal 2017 cash incentive award plan for Messrs. Kotzé and S.C.P.
Belamant. The plan and the actual payments made there under are described
in detail under Compensation Discussion and AnalysisElements of 2017
CompensationPerformance-Based Annual BonusesMessrs. S.C.P. Belamant and
Kotzé-Potential and Actual Payments. There was no threshold for the
qualitative portion of the award plan and therefore the amount presented
includes only the quantitative portion of the plan. At or below profit
before tax of $130,000,000, no amounts would have been paid. Target and
maximum payouts were to be made at profit before tax of $140,000,000 and
$150,000,000, respectively, with awards to be interpolated on a linear
basis relative to $140,000,000 at levels of profit before tax between
$130,000,000 and $150,000,000. A cash incentive plan for Mr. Oh is set
forth in his service agreement. The plan and the actual payments made
there under are described in detail under Compensation Discussion and
Analysis Elements of 2017 CompensationBonus for Mr. Oh pursuant to his
employment contracts. The threshold, target and maximum amounts for Mr. Oh
are denominated in KRW and have been converted to USD using the average
exchange rate for fiscal 2017.
|
|
|
(3)
|
Mr. S.C.P. Belamant retired from his position as Chief
Executive Officer and as a member of the Board, effective as of May 31,
2017. For more information, see Certain Relationships and Related
TransactionsRetirement of Serge C.P. Belamant and Separation
Arrangements.
|
26
OUTSTANDING EQUITY AWARDS AT 2017 FISCAL YEAR-END
The following table shows all
outstanding equity awards held by our named executive officers at the end of
fiscal 2017. The market value of unvested shares reflected in this table is
calculated by multiplying the number of unvested shares by the per share closing
price of $9.86 of our common stock on June 30, 2017, the last trading day of the
fiscal year.
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Equity
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Incentive Plan
|
|
|
|
Number
|
|
|
of
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Plan Awards:
|
|
|
Awards:
|
|
|
|
of
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Number
|
|
|
Value of
|
|
|
Number of
|
|
|
Market or
|
|
|
|
Securities
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
of Shares
|
|
|
Shares or
|
|
|
Unearned
|
|
|
Payout Value of
|
|
|
|
Underlying
|
|
|
Unexer-
|
|
|
|
|
|
|
|
|
or Units
|
|
|
Units of
|
|
|
Shares, Units
|
|
|
Unearned
|
|
|
|
Unexer-
|
|
|
cised
|
|
|
|
|
|
|
|
|
of Stock
|
|
|
Stock
|
|
|
or Other
|
|
|
Shares, Units or
|
|
|
|
cised
|
|
|
Options
|
|
|
Option
|
|
|
|
|
|
That
|
|
|
That
|
|
|
Rights That
|
|
|
Other Rights
|
|
|
|
Options
|
|
|
(#)
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Have Not
|
|
|
That Have Not
|
|
|
|
(#)
|
|
|
Unexer-
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
|
Vested
|
|
|
Vested
|
|
Name
|
|
Exercisable
|
|
|
cisable
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
|
100,000
|
|
|
-
|
|
$
|
24.46
|
|
|
8/24/2018
|
|
|
44,178
|
(2)
|
|
435,595
|
|
|
|
|
|
|
|
|
|
110,000
|
|
|
-
|
|
$
|
13.16
|
|
|
5/20/2019
|
|
|
39,762
|
(3)
|
|
392,053
|
|
|
|
|
|
|
|
|
|
67,000
|
|
|
-
|
|
$
|
10.59
|
|
|
11/10/2020
|
|
|
150,000
|
(4)
|
|
1,479,000
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
-
|
|
$
|
7.98
|
|
|
10/28/2021
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
18,000
|
|
|
-
|
|
$
|
8.75
|
|
|
08/22/2022
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
42,856
|
|
|
-
|
|
$
|
7.35
|
|
|
08/21/2023
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
Herman G. Kotzé.
|
|
29,452
|
|
|
14,726
|
(1)
|
$
|
11.23
|
|
|
08/27/2024
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phil-Hyun Oh.
|
|
17,952
|
|
|
8,976
|
(1)
|
$
|
11.23
|
|
|
08/27/2024
|
|
|
12,000
|
(4)
|
|
118,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
-
|
|
$
|
24.46
|
|
|
8/24/2018
|
|
|
24,328
|
(5)
|
|
239,874
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
-
|
|
$
|
13.16
|
|
|
5/20/2019
|
|
|
12,000
|
(4)
|
|
118,320
|
|
|
|
|
|
|
|
Nitin Soma
|
|
-
|
|
|
8,976
|
(1)
|
$
|
11.23
|
|
|
08/27/2024
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Serge C.P. Belamant(6)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,333
|
|
|
6,667
|
|
$
|
11.23
|
|
|
08/27/2024
|
|
|
11,035
|
(5)
|
|
108,805
|
|
|
|
|
|
|
|
Philip M. Belamant(7) .
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
11,600
|
(4)
|
|
114,376
|
|
|
|
|
|
|
|
(1)
|
These options vested on August 27, 2017.
|
|
|
(2)
|
These shares of restricted stock were awarded in August
2014, and will vest in full only on the date, if any, the following
conditions are satisfied: (1) the closing price of our common stock equals
or exceeds $19.41 (subject to appropriate adjustment for any stock split
or stock dividend) for a period of 30 consecutive trading days during a
measurement period commencing on the date that we file our Annual Report
on Form 10-K for the fiscal year ended 2017 and ending on December 31,
2017 and (2) the recipient is employed by us on a full- time basis when
the condition in (1) is met.
|
|
|
(3)
|
These shares of restricted stock were awarded in August
2015, and will vest in full only on the date, if any, the following
conditions are satisfied: (1) the recipient is employed by us on a
full-time basis on the date that we file our Annual Report on Form 10-K
for the fiscal year ended June 30, 2018 and (2) if that condition is
satisfied, then the shares will vest based on the level of 2018
Fundamental EPS, as follows (i) one-third of the shares will vest if we
achieve 2018 Fundamental EPS of $2.88; (ii) two-thirds of the shares will
vest if we achieve 2018 Fundamental EPS of $3.30; and (iii) all of the
shares will vest if we achieve 2018 Fundamental EPS of $3.76. At levels of
2018 Fundamental EPS greater $2.88 and less than $3.76, the number of
shares that will vest will be determined by linear interpolation relative
to 2018 Fundamental EPS of $3.30.
|
|
|
(4)
|
These shares of restricted stock were awarded in August
2016, and will vest in full only on the date, if any, the following
conditions are satisfied: (1) the recipient is employed by us on a
full-time basis on the date that we file our Annual Report on Form 10-K
for the fiscal year ended June 30, 2019 and (2) if that condition is
satisfied, then the shares will vest based on the level of 2019
Fundamental EPS, as follows (i) one-third of the shares will vest if we
achieve 2019 Fundamental EPS of $2.60; (ii) two-thirds of the shares will
vest if we achieve 2019 Fundamental EPS of $2.80; and (iii) all of the
shares will vest if we achieve 2019 Fundamental EPS of $3.00. At levels of
2019 Fundamental EPS greater $2.60 and less than $3.00, the number of
shares that will vest will be determined by linear interpolation relative
to 2019 Fundamental EPS of $2.80.
|
|
|
(5)
|
These shares of restricted stock were awarded in November
2014, and will vest in full on the date, if any, the following conditions
are satisfied: (1) the closing price of our common stock equals or exceeds
$19.41 (subject to adjustments for any stock splits and/ or stock
dividends) for a period of 30 consecutive trading days during a period
commencing on the date when we file our Annual Report on Form 10-K for the
fiscal year ended 2017 and ending on December 31, 2017 and (2) the
recipient is employed by us on a full-time basis when the condition in (1)
is met.
|
|
|
(6)
|
Mr. S.C.P. Belamant retired from his position as Chief
Executive Officer and as a member of the Board, effective as of May 31,
2017. For more information, see Certain Relationships and Related
TransactionsRetirement of Serge C.P. Belamant and Separation
Arrangements.
|
|
|
(7)
|
Mr. P. M. Belamants employment terminated effective
August 10, 2017 and he forfeited all unexercised options and unvested
stock awards.
|
27
OPTION EXERCISES AND STOCK VESTED
The following table shows all
stock options exercised and value realized upon exercise as well as all stock
awards that vested and the value realized on vesting during fiscal 2017.
|
|
Stock Options
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
|
Number of
|
|
|
Value
|
|
|
of shares
|
|
|
|
|
|
|
shares
|
|
|
Realized
|
|
|
acquired
|
|
|
Value
|
|
|
|
acquired on
|
|
|
on
|
|
|
on
|
|
|
Realized
|
|
|
|
Exercise
|
|
|
Exercise
|
|
|
vesting
|
|
|
on Vesting
|
|
Name
|
|
(#)
|
|
|
($)(1)
|
|
|
(#)
|
|
|
($)(2)
|
|
Herman G. Kotzé
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phil-Hyun Oh
|
|
-
|
|
|
-
|
|
|
4,445
|
|
|
42,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,666
|
(3)
|
|
215,129
|
|
|
18,333
|
|
|
248,045
|
|
|
|
26,122
|
(4)
|
|
338,478
|
|
|
-
|
|
|
-
|
|
Nitin Soma
|
|
17,952
|
(5)
|
|
231,909
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Serge C.P. Belamant(6)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip Belamant(7)
|
|
-
|
|
|
-
|
|
|
3,333
|
|
|
32,163
|
|
(1)
|
The value realized on exercise is calculated as the
closing price of our common stock on the exercise date multiplied by the
number of stock options that were exercised on the exercise
date.
|
|
|
(2)
|
The value realized on vesting is calculated as the
closing price of our common stock on the vesting date multiplied by the
number of common shares of restricted stock that vested.
|
|
|
(3)
|
Represents the exercise of stock options with an exercise
price of $8.75.
|
|
|
(4)
|
Represents the exercise of stock options with an exercise
price of $7.35.
|
|
|
(5)
|
Represents the exercise of stock options with an exercise
price of $11.23.
|
|
|
(6)
|
Mr. S.C.P. Belamant retired from his position as Chief
Executive Officer and as a member of the Board, effective as of May 31,
2017. For more information, see Certain Relationships and Related
TransactionsRetirement of Serge C.P. Belamant and Separation
Arrangements.
|
|
|
(7)
|
Mr. P. M. Belamants employment terminated effective
August 10, 2017.
|
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
As described above under
Compensation Discussion and Analysis, we do not have employment, severance or
change of control agreements with named executive officers, other than the
service agreements with Mr. Oh. In addition, none of our outstanding equity
awards include provisions for accelerated vesting upon a change in control of
our company or termination of employment following such a change in control.
Under the terms of Mr. Ohs
service agreements, if he is removed from office as a director of KSNET or Net1
Korea without justifiable cause, he is entitled to receive the amounts of base
salary and the bonus (if any) that would have been due and payable to him if he
was fully employed with us for the remainder of the then-current fiscal year.
The term justifiable cause includes any of the following circumstances, as
well as any other circumstances permitted under applicable law:
|
Mr. Oh has breached the provisions on non-competition or
confidentiality of the service agreements;
|
|
Mr. Oh has taken actions that are likely to result in a
material loss of or harm to the business, reputation or goodwill of KSNET
or Net1 Korea;
|
|
Mr. Oh has misappropriated funds or assets of KSNET or
Net1 Korea;
|
|
Mr. Oh has concealed from or falsely disclosed to KSNET
or Net1 Korea his name, age, education, experience, or other personal
information;
|
|
Mr. Oh has failed to show performance results or job
capacity;
|
|
Mr. Oh has committed a crime or offense which will
adversely affect the interest or reputation of KSNET or Net1 Korea; or
|
|
Mr. Oh has committed gross negligence, willful misconduct
or any violation of laws in performance of his duties.
|
28
Assuming that Mr. Oh was removed
from office as a director of KSNET or Net1 Korea without justifiable cause on
the last day of fiscal 2017, i.e., June 30, 2017, Mr. Oh would have been
entitled to receive a cash severance equal to his achieved qualitative awards,
or $89,026, for the fiscal year.
Mr. Oh is also entitled to a
severance payment equal to 300% of his monthly base salary for each completed
year of service at KSNET and Net1 Korea. Using exchange rates applicable as of
June 30, 2017, and nine years of completed service at KSNET and three years of
completed service at Net1 Korea, Mr. Oh would be entitled to a severance payment
of $801,888.
Except as described above with
respect to Mr. Oh, there would be no compensation, other than that prescribed by
local labor laws in the case of unfair dismissal or retrenchment, that would
become payable under the existing plans and arrangements if the employment of
any of our named executive officers had terminated on June 30, 2017.
Other than as described under
Certain Relationships and Related TransactionsRetirement of Serge C.P.
Belamant and Separation Arrangements, we do not have any ongoing obligation to
provide post-termination benefits to our named executive officers after
termination of employment.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Familial Relationships
Mr. P.M. Belamant, our former
Managing DirectorZAZOO Limited, is the son of Mr. S.C.P. Belamant, our former
Chairman and Chief Executive Officer. See Executive Compensation for
information about Mr. P.M. Belamants compensation.
Grant van Wyk, Chief Operating
OfficerZAZOO Limited, is the son-in-law of Mr. S.C.P. Belamant. Mr. van Wyk was
based in South Africa until August 2015, and was seconded to the UK from
September 2015. All compensation for services performed by Mr. van Wyk in fiscal
2017 was denominated and paid in GBP and has been converted into USD at the
average exchange rate for fiscal 2017. Mr. van Wyk received a salary and bonus
of $132,271 and $16,052, respectively, during fiscal 2017. During fiscal 2017,
Mr. van Wyk received $19,883 related to the encashment of leave. In connection
with his secondment to the UK, Mr. van Wyk received housing and school fee
allowances which aggregated $128,201 and $28,034, respectively, during fiscal
2017. He also received tax equalization payments and payment of UK health
insurance contributions of $42,348 and $4,450, respectively paid group life
premiums on his behalf of $3,565. In August 2017, Mr. van Wyks employment was
terminated by mutual consent.
Philippus Stefanus Meyer,
Managing DirectorTransact24, is one of our executive officers. Mr. Meyers
wife, Lam Hiu Kwan, is employed by Transact24 and controls a company that
performs transaction processing services and Transact24 provides technical and
administration services to us. We have recorded revenue of approximately $4.2
million related to this relationship during fiscal 2017. As of June 30, 2017,
$0.4 million is due to us related to the service provided by Transact24. Ms. Lam
also received a salary of $168,000 and a performance bonus of $58,000 from
Transact 24 during fiscal 2017. Transact24 also paid her Hong Kong Mandatory
Provident Fund contributions and medical and travel insurance of $2,300 and
$832, respectively.
Policy Agreement
Pursuant to the Policy Agreement,
dated April 11, 2016 (the Policy Agreement), between International Finance
Corporation, IFC African, Latin American and Caribbean Fund, LP, IFC Financial
Institutions Growth Fund, LP, and Africa Capitalization Fund, Ltd.
(collectively, the IFC Investors) and us, the IFC Investors are entitled to
designate one nominee to our Board. The IFC Investors have advised us that the
IFC Investors regard Mr. Mockett as the independent director nominated by the
IFC Investors under the terms of the Policy Agreement. In addition, pursuant to
the Policy Agreement, the IFC Investors have been granted certain rights,
including the right to require us to repurchase any shares we have sold to them
upon the occurrence of specified triggering events, which we refer to as a put
right.
Events triggering the put right
relate to (1) us being the subject of a governmental complaint alleging, a court
judgment finding or an indictment alleging that we (a) engaged in specified
corrupt, fraudulent, coercive, collusive or obstructive practices; (b) entered
into transactions with targets of economic sanctions; or (c) failed to operate
our business in compliance with anti-money laundering or anti-terrorism laws; or
(2) we reject a bona fide offer to acquire all of our outstanding shares at a
time when we have in place or implement a shareholder rights plan, or adopt a
shareholder rights plan triggered by a beneficial ownership threshold of less
than twenty percent. The put price per share will be the higher of the price per
share paid to us by the IFC Investors and the volume-weighted average price per
share prevailing for the 60 trading days preceding the triggering event, except
that with respect a put right triggered by rejection of a bona fide offer, the
put price per share will be the highest price offered by the offeror.
Independent Director Agreements
We have entered into independent
director agreement with each of our independent directors, providing for, among
other things, the terms of each directors service, compensation and liability.
29
Indemnification Agreements
We have entered into
indemnification agreements with each of our directors. These agreements require
us to indemnify them, to the fullest extent authorized or permitted by
applicable law, including the Florida Business Corporation Act, for certain
liabilities to which they may become subject as a result of their affiliation
with us.
Retirement of Serge C.P. Belamant and Separation
Arrangements
Mr. S.C.P. Belamant retired from
his position as Chief Executive Officer and as a member of our Board, effective
as of May 31, 2017. Mr. Kotzé succeeded Mr. S.C.P. Belamant as Chief Executive
Officer, effective immediately upon Mr. S.C.P. Belamants retirement. Mr. Kotzé
had been our Chief Financial Officer, Secretary and Treasurer since 2004. Mr.
S.C.P. Belamants resignation was not due to any dispute or disagreement with us
over any matter relating to our operations, policies or practices.
On May 24, 2017, we entered into
a Separation and Release of Claims Agreement with Mr. S.C.P. Belamant (the
Separation Agreement). The Separation Agreement provided for certain payments
and other benefits to Mr. Mr. S.C.P. Belamant, including without limitation, the
following: (a) a severance payment of US$1,000,000, representing compensation
for 27 years of service with us, less applicable withholdings and deductions;
(b) a payment of US$7,000,000, less applicable withholdings and deductions, as
an additional amount in part for Mr. S.C.P. Belamants cooperative resignation;
(c) accelerated vesting of 200,000 shares of restricted stock granted to Mr.
S.C.P. Belamant in August 2016, (d) the repurchase from Mr. S.C.P. Belamant by
us of his shares of our common stock pursuant to a stock repurchase agreement
(as described below), and (e) the repurchase of 252,286 of Mr. S.C.P. Belamants
in-the-money stock options at a price per option equal to (i) US$10.80 minus (B)
the applicable exercise price per option. In addition, the Separation Agreement
included a general release and waiver of claims by Mr. S.C.P. Belamant related
to Mr. S.C.P. Belamants employment with us.
On May 24, 2017, as contemplated
by the Separation Agreement, we entered into a Stock Repurchase Agreement with
Mr. S.C.P. Belamant pursuant to which we agreed to repurchase from Mr. S.C.P.
Belamant, at a price of US$10.80 per share, 1,017,465 shares of our common stock
owned by Mr. S.C.P. Belamant within 10 days after the separation date. To
effectuate the repurchase of the options pursuant to the Separation Agreement,
the options were exercised by Mr. S.C.P. Belamant and the shares issued pursuant
to such options were repurchased by us. The Remuneration Committee met on May 3,
2017, to discuss Mr. S.C.P. Belamants early retirement, and proposed a
repurchase price of $10.80 per share, which was 6 cents lower than the closing
price on May 2, 2017.
On May 24, 2017, as contemplated
by the Separation Agreement, we entered into a Consulting Agreement with Mr.
S.C.P. Belamant (the Consulting Agreement). Under the Consulting Agreement,
Mr. S.C.P. Belamant would provide consulting services to us as an independent
contractor as requested by us for a period of up to two years following his
departure, subject to termination by us or Mr. S.C.P. Belamant with a minimum 90
day notice period. On July 31, 2017, our board of directors issued Mr. S.C.P.
Belamant a 90-day written notice to terminate his two-year consulting agreement
with us. We will not be making any termination payments to Mr. Belamant beyond
the 90-day notice period. We paid Mr. S.C.P. Belamant US$50,000 per month plus
any applicable value-added tax, prorated for a partial month, for such
services.
Review, Approval or Ratification of Related Person
Transactions
We review all relationships and
transactions in which we and our directors and named executive officers or their
immediate family members are participants to determine whether such persons have
a direct or indirect material interest. Mr. Kotzé is primarily responsible for
the development and implementation of processes and controls to obtain
information from the directors and named executive officers with respect to
related person transactions and for then determining, based on the facts and
circumstances, whether we or a related person has a direct or indirect material
interest in the transaction. As required under SEC rules, transactions that are
determined to be directly or indirectly material to us or a related person are
disclosed in our proxy statement. In addition, our Audit Committee reviews and
approves or ratifies any related person transaction that is required to be
disclosed. In the course of its review and approval or ratification of a
disclosable related party transaction, our Audit Committee considers:
|
the nature of the related persons interest in
the transaction;
|
|
the material terms of the transaction,
including, without limitation, the amount and type of transaction;
|
|
the importance of the transaction to the
related person;
|
|
the importance of the transaction to us;
|
|
whether the transaction would impair the
judgment of a director or executive officer to act in our best interest;
and
|
|
any other matters the Audit Committee deems
appropriate.
|
Any member of the Audit Committee
who is a related person with respect to a transaction under review may not
participate in the deliberations or vote respecting approval or ratification of
the transaction, provided, however, that such director may be counted in
determining the presence of a quorum at a meeting of the Audit Committee that
considers the transaction.
30
AUDIT AND NON-AUDIT FEES
The following table shows the
fees that we paid or accrued for the audit and other services provided by
Deloitte for the fiscal years ended June 30, 2017 and 2016.
|
|
2017
|
|
|
2016
|
|
|
|
$ 000
|
|
|
$ 000
|
|
Audit Fees
|
|
2,056
|
|
|
1,631
|
|
Audit-Related Fees
|
|
-
|
|
|
-
|
|
Tax Fees
|
|
-
|
|
|
-
|
|
All Other Fees
|
|
-
|
|
|
-
|
|
Audit Fees This category
includes the audit of our annual consolidated financial statements on Form 10-K,
review of financial statements included in our quarterly reports on Form 10-Q,
the required audit of managements assessment of the effectiveness of our
internal control over financial reporting and the auditors independent audit of
internal control over financial reporting, and the services that an independent
auditor would customarily provide in connection with subsidiary audits,
statutory requirements, regulatory filings, and similar engagements for the
fiscal year, such as comfort letters, attest services, consents, and assistance
with review of documents filed with the SEC. This category also includes advice
on audit and accounting matters that arose during, or as a result of, the audit
or the review of interim financial statements.
Audit-Related Fees This
category consists of assurance and related services by the independent
registered public accounting firm that are reasonably related to the performance
of the audit or review of our financial statements and are not reported above
under Audit Fees. There were no such fees paid in the fiscal years ended June
30, 2017 or 2016.
Tax Fees This category consists
of professional services rendered by Deloitte for tax compliance and tax advice.
The services for the fees disclosed under this category include tax return
review and technical tax advice. There were no such fees paid in the fiscal
years ended June 30, 2017 or 2016.
All Other Fees This category
consists of miscellaneous fees that are not otherwise included in the previous
four categories. There were no such fees paid in the fiscal years ended June 30,
2017 or 2016.
Pre-Approval of Audit and Non-Audit Services
Pursuant to our Audit Committee
charter, our Audit Committee reviews and pre-approves both audit and non-audit
services to be provided by our independent auditors. The authority to grant
pre-approvals of non-audit services may be delegated to one or more designated
members of the Audit Committee whose decisions will be presented to the full
Audit Committee at its next regularly scheduled meeting. During fiscal years
2017 and 2016, all of the services provided by Deloitte with respect to fiscal
years 2017 and 2016 were pre-approved by the Audit Committee.
31
AUDIT COMMITTEE REPORT
The Audit Committee of the Board
consists of four independent directors, as required by Nasdaq listing standards.
The Audit Committee operates under a written charter adopted by the Board and
available on our website at www.net1.com. The Audit Committee is responsible for
overseeing our financial reporting process on behalf of the Board. The members
of the Audit Committee are Messrs. Seabrooke, Pein, Edwards and Mockett. The
Audit Committee selects, subject to shareholder ratification, our independent
registered public accounting firm.
Management is responsible for our
financial statements and the financial reporting process, including internal
controls. The independent registered public accounting firm is responsible for
performing an independent audit of our consolidated financial statements in
accordance with auditing standards generally accepted in the United States and
of our internal control over financial reporting and for issuing a report
thereon. The Audit Committees responsibility is to monitor and oversee these
processes.
In this context, the Audit
Committee has met and held discussions with management and Deloitte. Mr. Kotzé
represented to the Audit Committee that the consolidated financial statements
were prepared in accordance with accounting principles generally accepted in the
United States, and the Audit Committee reviewed and discussed the consolidated
financial statements with Mr. Kotzé and Deloitte. The Audit Committee discussed
with Deloitte the matters required to be discussed by the Statement on Auditing
Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU §380),
as adopted by the Public Company Accounting Oversight Board in Rule 3200T. These
matters included a discussion of Deloittes judgments about the quality (not
just the acceptability) of our accounting principles as applied to our financial
reporting.
Deloitte also provided the Audit
Committee with the written disclosures and letter required by the PCAOB
regarding Deloittes communications with the Audit Committee concerning
independence, and the Audit Committee discussed with Deloitte the firms
independence.
Based upon the Audit Committees
discussion with management and Deloitte and the Audit Committees review of the
representations of management and the disclosures by Deloitte to the Audit
Committee, the Audit Committee recommended to the Board that our audited
consolidated financial statements be included in our Annual Report on Form 10-K
for the year ended June 30, 2017, for filing with the SEC.
Audit Committee
Christopher
S. Seabrooke, Chairman
Alasdair J.K. Pein
Paul Edwards
Alfred T.
Mockett
32
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table presents, as
of September 22, 2017, information about beneficial ownership of our common
stock by:
|
each person or group of affiliated persons who
or which, to our knowledge, owns beneficially more than 5% of our
outstanding shares of common stock;
|
|
each of our directors and named executive
officers; and
|
|
all of our directors and executive officers as
a group.
|
Beneficial ownership of shares is
determined in accordance with SEC rules and generally includes any shares over
which a person exercises sole or shared voting or investment power. The
beneficial ownership percentages set forth below are based on 56,927,696 shares
of common stock outstanding as of September 22, 2017. All shares of common
stock, including that common stock underlying stock options that are presently
exercisable or exercisable within 60 days after September 22, 2017 (which we
refer to as being currently exercisable) by each person are deemed to be
outstanding and beneficially owned by that person for the purpose of computing
the ownership percentage of that person, but are not considered outstanding for
the purpose of computing the percentage ownership of any other person. Unless
otherwise indicated, to our knowledge, each person listed in the table below has
sole voting and investment power with respect to the shares shown as
beneficially owned by such person, except to the extent applicable law gives
spouses shared authority.
Except as otherwise noted, each
shareholders address is c/o Net 1 UEPS Technologies, Inc., President Place, 4th
Floor, Corner of Jan Smuts Avenue and Bolton Road, Rosebank, Johannesburg, South
Africa.
|
|
Shares of
Common Stock
|
|
Name
|
|
Beneficially Owned
|
|
|
|
Number
|
|
|
%
|
|
Paul Edwards(1)
|
|
19,822
|
|
|
*
|
|
Herman G. Kotzé(2)
|
|
890,974
|
|
|
1.55%
|
|
Alfred T. Mockett (3)
|
|
11,549
|
|
|
*
|
|
Phil-Hyun Oh (4)
|
|
53,928
|
|
|
*
|
|
Alasdair J.K. Pein(5)
|
|
86,940
|
|
|
*
|
|
Christopher S. Seabrooke(6)
|
|
18,124
|
|
|
*
|
|
Nitin Soma(7)
|
|
210,304
|
|
|
*
|
|
IFC Investors(8)
|
|
9,984,311
|
|
|
17.54%
|
|
Allan Gray Proprietary
Limited(9)
|
|
8,974,284
|
|
|
15.76%
|
|
International Value Advisers, LLC(10)
|
|
7,017,754
|
|
|
12.33%
|
|
Directors and Executive
Officers as a group(11)
|
|
1,830,464
|
|
|
3.18%
|
|
_____________________
*Less than one percent
(1)
|
Comprises (i) 9,161 shares of unrestricted stock; and
(ii) 10,661 shares of restricted stock which vest on August 23, 2018, and
are subject to forfeiture. Vesting of the restricted stock is conditioned
on Mr. Edwards continued service as a member of our Board on August 23,
2018.
|
|
|
(2)
|
Comprises (i) 55,000 shares of unrestricted stock; (ii)
433,940 shares of restricted stock, the vesting of which is subject to the
satisfaction of certain financial performance and other conditions; and
(iii) options to purchase 402,034 shares of common stock, all of which are
currently exercisable.
|
|
|
(3)
|
Comprises 11,549 shares of restricted stock which vest on
August 23, 2018, and are subject to forfeiture. Vesting of the restricted
stock is conditioned on Mr. Mocketts continued service as a member of our
Board on August 23, 2018.
|
|
|
(4)
|
Comprises (i) 27,000 shares of restricted stock, the
vesting of which is subject to the satisfaction of certain financial
performance and other conditions; and (ii) options to purchase 26,928
shares of common stock, all of which are currently exercisable.
|
|
|
(5)
|
Comprises (i) 23,301 shares of unrestricted stock; (ii)
12,260 shares of restricted stock which vest on August 23, 2018 and are
subject to forfeiture; and (iii) 51,379 shares of common stock held by a
trust, settled by Mr. Pein and of which he is a beneficiary. Vesting of
the restricted stock is conditioned on Mr. Peins continued service as a
member of our Board on August 23, 2018.
|
|
|
(6)
|
Comprises 18,124 shares of restricted stock which vest
over time and are subject to forfeiture. Vesting of the restricted stock
is conditioned on Mr. Seabrookes continued service as a member of our
Board on August 23, 2018.
|
|
|
(7)
|
Comprises (i) 81,328 shares of restricted stock, the
vesting of which is subject to the satisfaction of certain financial
performance and other conditions; and (ii) options to purchase 128,976
shares of common stock, all of which are currently exercisable.
|
|
|
(8)
|
Based solely on Schedule 13D, dated May 24, 2016, filed
by the IFC Investors. The business address of the IFC Investors is 2121
Pennsylvania Avenue, Washington, D.C. 20433.
|
33
(9)
|
Except as set forth in the last sentence of this
footnote, the number of shares presented and all of the information
contained in this footnote is based solely on Amendment No. 6 to Schedule
13G, dated February 9, 2017, filed by Allan Gray Proprietary Limited
(Allan Gray), a corporation organized under the laws of the Republic of
South Africa. The address of Allan Gray is 1 Silo Square, V&A
Waterfront, Cape Town, 8001. Allan Gray has advised us that it has
reported its beneficial ownership on Schedule 13G as a result of its sole
dispositive power related to these shares and that all of such shares are
owned by clients of entities wholly-owned by Allan Gray, and not by the
Allan Gray entities themselves.
|
|
|
(10)
|
Based solely on Amendment No. 11 to Schedule 13G, dated
February 13, 2017, filed by International Value Advisers, LLC. The
business address of International Value Advisers, LLC is 717 Fifth Avenue,
10th Floor, New York, NY 10022.
|
|
|
(11)
|
Represents shares beneficially owned by the directors and
executive officers. Includes shares issuable upon exercise of options to
purchase 615,890 shares of common stock, all of which are currently
exercisable and 681,421 shares of restricted stock, the vesting of which
is subject to certain conditions discussed above.
|
ADDITIONAL INFORMATION
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act
requires that our executive officers and directors, and persons who own more
than 10% of a registered class of our equity securities, file reports of
ownership and changes in ownership with the SEC and provide us with copies of
such reports. We have reviewed such reports received by us and written
representations from our directors and executive officers. Based solely on such
review and representations, we believe that all filings requirements applicable
to our executive officers, directors and more than 10% shareholders were
complied with during fiscal year 2017.
Annual Report on Form 10-K
A copy of our annual report on
Form 10-K (without exhibits) for the fiscal year ended June 30, 2017, is being
distributed along with this proxy statement. We refer you to such report for
financial and other information about us, but such report is not incorporated in
this proxy statement and is not deemed to be a part of the proxy solicitation
material. It is also available on our website (www.net1.com). In addition, the
annual report (with exhibits) is available at the SECs website
(
www.sec.gov
).
Shareholder Proposals and Director Nominations for the 2018
Annual Meeting
Qualified shareholders who wish
to have proposals presented at the 2018 annual meeting of shareholders must
deliver them to us by June 2, 2018, in order to be considered for inclusion in
next years proxy statement and proxy pursuant to Rule 14a-8 under the Exchange
Act. Shareholders who intend to present an item of business for our 2018 annual
meeting of shareholders (other than a proposal presented for inclusion in next
years proxy statement and proxy pursuant to Rule 14a-8) must provide notice of
such business to us by June 2, 2018, as set forth more fully in Sections 2.08
and 4.16 of our Amended and Restated By-Laws. Shareholders who wish to nominate
one or more persons for election as directors must provide notice of such
nominations to us by June 2, 2018, as set forth more fully in Sections 2.08 and
4.16 of our Amended and Restated By-Laws. All proposals and nominations must be
delivered to us at our principal executive offices at PO Box 2424, Parklands
2121, South Africa.
Householding of Proxy Materials
We have adopted a procedure
approved by the SEC called householding. Under this procedure, multiple
shareholders who share the same last name and address will receive only one copy
of the annual proxy materials, unless they notify us that they wish to continue
receiving multiple copies. We have undertaken householding to reduce our
printing costs and postage fees.
If you wish to opt-out of
householding and receive multiple copies of the proxy materials at the same
address, you may do so at any time prior to 30 days before the mailing of proxy
materials, which typically are mailed at the end of October of each year, by
notifying us in writing at: Net 1 UEPS Technologies, Inc., PO Box 2424,
Parklands 2121, South Africa, Attention: Net 1 UEPS Technologies, Inc. Corporate
Secretary. You also may request additional copies of the proxy materials by
notifying us in writing at the same address.
If you share an address with
another shareholder and currently are receiving multiple copies of the proxy
materials, you may request householding by notifying us at the above-referenced
address.
34
Other Matters
The Board knows of no other
matters that will be presented for consideration at the annual meeting. Return
of a valid proxy, however, confers on the designated proxy holders the
discretionary authority to vote the shares in accordance with their best
judgment on such other business, if any, that may properly come before the
meeting or any adjournment or postponement thereof.
By Order of the Board of Directors,
|
|
|
|
|
|
Christopher S. Seabrooke
|
|
Chairman
|
September 29, 2017
THE BOARD HOPES THAT YOU WILL
ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE PROMPTLY COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY.
35
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