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. )
Filed by the Registrant [X]
Filed by a Party other than the
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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))
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[X]
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14A-12
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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)
Payment of Filing Fee (Check the appropriate box):
[X]
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No fee required.
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Fee computed on table below per Exchange Act Rules
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computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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NET 1 UEPS TECHNOLOGIES, INC.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on November 8, 2016
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To the Shareholders of Net 1 UEPS Technologies, Inc.:
NOTICE IS HEREBY GIVEN that the
2016 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 8, 2016 at 16h00, local time (09h00 Eastern Time), for the following
purposes:
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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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To ratify the selection of Deloitte & Touche (South
Africa) as our independent registered public accounting firm for the
fiscal year ending June 30, 2017.
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To hold an advisory vote to approve executive
compensation.
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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 23, 2016, 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, 2016, which is enclosed with
this proxy statement.
The Board of Directors,
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Serge C. P. Belamant
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Chairman and Chief Executive Officer
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Johannesburg, South Africa
September 30, 2016
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 8, 2016.
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/Approved/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 4 of this proxy statement.
TABLE OF CONTENTS
1
NET 1 UEPS TECHNOLOGIES, INC.
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PROXY STATEMENT
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We are furnishing this proxy
statement in connection with the solicitation by our Board of Directors
(Board) of proxies for use at the annual meeting of shareholders to be held at
President Place, 6th Floor, Cnr. Jan Smuts Avenue and Bolton Road, Rosebank,
Johannesburg, South Africa on November 8, 2016 at 16h00, local time (09h00
Eastern Time). Our annual report on Form 10-K and our proxy materials were first
mailed on or about September 30, 2016.
VOTING RIGHTS AND PROCEDURES
Shareholders who owned our common
stock at the close of business on September 23, 2016, the record date, may
attend and vote at the annual meeting. Each share is entitled to one vote. There
were 52,521,345 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. 2
The 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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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.
2
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; and
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FOR the approval of 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 or 3, 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.
The Board recommends:
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a vote
FOR
each of the director
nominees;
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a vote
FOR
ratification of Deloitte as
our independent registered public accounting firm; and
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a vote
FOR
the approval of executive
compensation.
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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/Approved/64107N.
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, Rennie House, 19 Ameshoff Street,
Braamfontein, 2001, South Africa.
3
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
16h00, local time, on November 4, 2016. 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.
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 re-election 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.
4
Information Regarding the Nominees
Serge C. P. Belamant
63 years old
Director
since 1997
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Mr. S.C.P. Belamant founded our Company and has been our
Chief Executive Officer since 2000 and the Chairman of our Board since
2003. Mr. S.C.P. Belamant has more than 30 years of experience in the
fields of operations research, security, biometrics, artificial
intelligence and online and offline transaction processing systems. Mr.
S.C.P. Belamant spent ten years working as a computer scientist for
Control Data Corporation where he won a number of international awards.
Later, he was responsible for the design, development, implementation and
operation of the Saswitch ATM network in South Africa that is still rated
as one of the largest ATM switching systems in the world. Mr. S.C.P.
Belamant has patented a number of inventions in a number of fields,
including biometrics and gaming.
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The Board believes that Mr. S.C.P. Belamants strategic
vision, technological ingenuity and extensive knowledge of the payments
industry makes him an invaluable member of the Board. Mr. S.C.P. Belamant
has been the guiding force behind the development of most of our products
and services.
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Herman G. Kotzé
47 years old
Director since
2004
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Mr. Kotzé has been 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 our Company and deep knowledge of our business
and industry makes him well-suited to serve as a director.
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Christopher S. Seabrooke
63 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, 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
56 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. Between 1994 and 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
62 years old
Director since 2005
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Mr. Edwards is Chairman of Equilibre Bioenergy Production
Limited, Merry 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.
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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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PROPOSAL NO. 2: RATIFICATION OF SELECTION OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee of our Board
has proposed that Deloitte be selected to serve as our independent registered
public accounting firm for the fiscal year ending June 30, 2017. 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, 2017. 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.
6
PROPOSAL NO. 3: AN ADVISORY VOTE TO APPROVE EXECUTIVE
COMPENSATION
We are providing you with the
opportunity to vote to approve, on a non-binding 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, 2016.
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 a non-binding 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.
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, 2016, our Board held a total of six
meetings. All of the directors who served during our 2016 fiscal year attended
100% of the meetings of the Board. All of the directors attended 100% of the
aggregate number of meetings of those committees of the Board on which such
director served during the year. 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
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All of our directors who served
during fiscal 2016 attended last years annual meeting, except Messrs. S.C.P.
Belamant and Edwards. 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 the Company and each of our directors. After this
examination, the Board has concluded that Messrs. Seabrooke, Pein and Edwards
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.
7
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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Serge C.P. Belamant (#)
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Paul Edwards
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Herman G. Kotzé (#)
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Alasdair J.K. Pein
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X*
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Christopher S.
Seabrooke
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X*
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#
Executive
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*
Chairperson
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Audit Committee
The Audit Committee consists of
Messrs. Seabrooke, Pein and Edwards, 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
three members meet Nasdaqs financial literacy criteria. The Audit Committee
held eight meetings during the 2016 fiscal year. See Audit Committee Report on
page 32.
The Audit Committee was
established by the Board for the primary purpose of overseeing or assisting the
Board in overseeing the following:
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the integrity of our financial statements;
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our compliance with legal and regulatory
requirements;
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the qualifications and independence of our
registered public accounting firm;
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the performance of our independent auditors and
of the internal audit function;
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the accounting and financial reporting
processes and the audits of our financial statements; and
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our systems of disclosure controls and
procedures, internal controls over financial reporting, and compliance
with ethical standards adopted by us.
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A copy of our Audit Committee
charter is available without charge on our website, www.net1.com under the
Investor RelationsGovernance section.
Remuneration Committee
The Remuneration Committee
comprises Messrs. Pein, Seabrooke and Edwards, with Mr. Pein acting as the
Chairperson. The Remuneration Committee held five meetings during the 2016
fiscal year. The Remuneration Committee has the following principal
responsibilities, authority and duties:
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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 officers compensation, including
incentive-based and equity- based compensation, based on such evaluation;
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make recommendations to the Board with respect to
incentive and equity-based compensation plans;
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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;
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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;
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review annually and make recommendations to the Board
regarding director compensation;
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assist management in developing and, when appropriate,
recommend to the Board, the design of compensation policies and plans;
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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; and
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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.
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A copy of our Remuneration
Committee charter is available without charge on our website, www.net1.com under
the Investor RelationsGovernance section.
Nominating and Corporate Governance Committee
The Nominating and Corporate
Governance Committee comprises Messrs. Seabrooke, Pein and Edwards, with Mr.
Seabrooke acting as the Chairperson. The Nominating and Corporate Governance
Committee held three meetings during the 2016 fiscal year. The principal duties
and responsibilities of the Nominating and Corporate Governance Committee are as
follows:
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monitor the composition, size and independence of the
Board;
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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;
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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;
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make recommendations regarding proposals submitted by our
shareholders;
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establish and monitor procedures by which the Board will
conduct, at least annually, evaluations of its performance;
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review our Corporate Governance Guidelines annually and
recommend changes, as appropriate, for review and approval by the Board;
and
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make recommendations to the Board regarding management
succession planning and corporate governance best practices.
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A copy of our Nominating and
Corporate Governance Committee charter is available without charge on our
website, www.net1.com under the Investor RelationsGovernance section.
BOARD LEADERSHIP STRUCTURE AND
BOARD OVERSIGHT OF RISK
Board Leadership
Our Board is led by our Chairman,
Mr. S.C.P. Belamant, who is also our Chief Executive Officer. The Board believes
that Mr. S.C.P. Belamants service as both Chairman of the Board and Chief
Executive Officer is in our best interests and the best interests of our
shareholders.
A combined Chairman and Chief
Executive Officer leadership structure is commonly utilized by public companies
in the United States, and our Board believes that this leadership structure has
been effective for us and minimizes the potential for duplication of efforts and
conflict of roles.
9
Mr. S.C.P. Belamant possesses
detailed and in-depth knowledge of the issues, opportunities and challenges
facing us, and is thus better positioned than a non-employee Chairman to focus
the Boards time and attention on the matters that are most critical to us.
Additionally, having one person serve as both Chairman of the Board and Chief
Executive Officer enables decisive leadership, ensures clear accountability and
enhances our ability to communicate our message and strategy clearly and
consistently to our shareholders, employees, customers and suppliers.
While our Amended and Restated
By-Laws do not require that the roles of Chairman of the Board and Chief
Executive Officer be filled by the same person, our Board believes that having
Mr. S.C.P. Belamant fill both positions is the appropriate leadership structure
for us.
We do not have a lead director.
The Board believes that all of our independent directors are active and engaged
Board members and that a number of them fulfill a lead director role at various
times depending upon the particular issues involved. Further, Mr. Seabrooke, who
is the Chairman of both the Nominating and Corporate Governance Committee and
the Audit Committee and is a member of the Remuneration Committee, presides over
all executive sessions of the independent directors.
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 our Chief
Executive Officer (who serves as Chairperson), Chief Financial Officer and Group
Compliance Officer. The Group Compliance Officer 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.
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.
10
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
under the Investor RelationsGovernance section.
11
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 our Chief Executive Officer, our Chief Financial Officer (who also
serves as our principal accounting officer) 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. 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 upon request made either by
mail to our corporate secretary at Net 1 UEPS Technologies, Inc., PO Box 2424,
Parklands 2121, South Africa or by telephone to our Investor Relations
Department at + 1 917-767-6722. A copy of our code of ethics is also available
free of charge on our website at www.net1.com under the Investor
RelationsGovernance section.
COMPENSATION
OF
DIRECTORS
Directors who are also executive
officers do not receive separate compensation for their services as directors.
During fiscal 2016, our non-employee directors received compensation as
described below.
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Fees Earned or
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Stock
Awards
(1)(2)
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Stock Options
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Name
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Paid in Cash ($)
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($)
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($)
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Total ($)
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Paul Edwards
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90,000
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90,000
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|
|
-
|
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180,000
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Alasdair J.K. Pein
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|
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120,000
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|
|
120,000
|
|
|
-
|
|
|
240,000
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Christopher S. Seabrooke
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150,000
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150,000
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|
|
-
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300,000
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(1) As of June 30, 2016, the
number of shares of restricted stock held by each non-employee director is as
follows: Mr. Edwards 8,445 Mr. Pein 11,301; Mr. Seabrooke 14,120.
(2) Represents shares of
restricted stock granted on August 19, 2015, one-third of which vest on August
19, 2016, 2017 and 2018, respectively. Vesting of such shares is conditioned
upon the recipients continuous service as a member of our Board through the
applicable vesting date. The dollar value reflected is based on the closing
price of our common stock on the date of grant. Based on this price, the number
of shares granted was as follows: Mr. Edwards4,489; Mr. Pein5,985 and Mr.
Seabrooke7,481.
In determining fiscal 2016
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.
12
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, 2016:
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Number of
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|
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|
|
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securities
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Number of
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Weighted
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remaining
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securities to
be
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average
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|
available for
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issued upon
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exercise price
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future issuance
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|
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|
|
exercise of
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|
of
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|
under equity
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|
|
|
|
outstanding
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|
|
outstanding
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|
|
compensation
|
|
|
|
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options,
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|
|
options,
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|
|
plans
(excluding
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|
|
|
warrants and
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|
warrants and
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|
securities
reflected
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|
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rights
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rights
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in column (a))
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Plan Category
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(a)
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(b)
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(c)
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Equity compensation plans approved by
security holders
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Stock incentive
plan
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1,979,761
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$
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15.60
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3,236,023
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Equity compensation plans not approved by
security holders
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Stock options
granted to employees of Prism Holdings
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|
|
|
|
|
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Proprietary
Limited group (Prism)
(1)
|
|
|
97,763
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|
$
|
22.51
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|
|
-
|
|
|
|
|
|
|
|
|
|
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Total
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2,077,524
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3,236,023
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(1) In connection
with the acquisition of Prism in July 2006, we granted Prism employees options
to purchase shares of common stock at an exercise price of $22.51 per share,
which was the average of the high and low sale prices of the common stock on the
date of grant. These options expired unexercised on August 24, 2016.
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 2016 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:
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a balanced mix between cash and equity, and
annual and longer-term incentives;
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caps on incentive awards at reasonable levels;
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linear payouts between target levels with
respect to annual cash incentive awards;
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discretion on individual awards, particularly
in special circumstances; and
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long-term incentives.
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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.
13
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
Fiscal 2016 Compensation Summary
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Base salaryBase salary represents a significant portion
of compensation, given the cash generative nature of our business. Mr.
S.C.P. Belamant, our Chief Executive Officer, Mr. Kotzé, our Chief
Financial Officer, Mr. P.M. Belamant, Managing DirectorZAZOO Limited and
Mr. Soma, our Vice PresidentInformation Technology, each received a 3%
base salary increase for fiscal 2016.
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Cash incentive awards for Messrs. S.C.P. Belamant and
KotzéIn August 2015, we established an annual cash incentive award plan
for fiscal 2016 for Messrs. S.C.P. Belamant and Kotzé, as we have done in
prior years. The plan was intended to link payment to the achievement of
specific financial performance (quantitative) goals on a Company-wide
basis, and operational (qualitative) goals. Based on our fiscal 2016
financial performance, Messrs. S.C.P. Belamant and Kotzé did not achieve
the quantitative goal and, accordingly, no payment was made under this
component of the award. Messrs. S.C.P. Belamant and Kotzé each received
83.33% of the potential amount of the qualitative portion of the award for
their achievement of specified goals related to the implementation of
strategic and operating plans, including, in the case of Mr. S.C.P.
Belamant , development of a succession plan for senior management; growth
and geographical expansion of our mobile payments business; and
establishment of our UK presence with appropriate staffing levels to
support our geographic expansion strategy.
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Cash incentive awards for Mr. OhMr. Oh achieved 70% of
the quantitative award and 100% of the qualitative award for fiscal 2016
under his KSNET service agreement. Mr. Oh did not achieve any of his
qualitative targets under his Net1 Korea service agreement for fiscal
2016.
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Bonuses for Messrs. S.C.P. Belamant, Kotzé, P.M. Belamant
and SomaMessrs. S.C.P. Belamant, Kotzé, P.M. Belamant and Soma, received
a bonus of $100,425, $53,148, $66,772 and $113,558, respectively, for
fiscal 2016.
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Stock-based awardsWe made an annual award of restricted
stock with performance and time- based vesting provisions to a group of
employees that included Messrs. S.C.P. Belamant, Kotzé, Oh, P.M. Belamant
and Soma.
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Overview
The goal of our executive
compensation program is the same as our goal for operating the 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. This section of the proxy statement explains how our compensation
program is designed and operates in practice with respect to the five
individuals who comprised our named executive officers at the end of our 2016
fiscal year Messrs. S.C.P. Belamant, Kotzé, Oh, P.M. Belamant and Soma.
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.
14
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 or her contribution to us.
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.-
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.
The chart below illustrates the
mix of the elements of the 2016 compensation program we established for our
named executive officers who are eligible for incentive compensation, using
target levels for the cash incentive component.
Compensation Objectives
Performance
. We reward
excellent performance by our named executive officers and motivate them to
continue to produce superior, long-term results through a combination of cash
bonuses, incentive payments that depend on achievement of pre-defined levels of
financial and operating goals and equity awards in the form of stock options or
restricted stock that derive their value from 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. Equity incentive compensation generally focuses on achievement of
longer term results.
15
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,
stock option awards which increase in value as our stock price increases and
restricted stock awards which vest over time and are granted or become vested
upon the satisfaction of specified performance goals.
Retention
. The long tenure
of our management team, in particular, Messrs. S.C.P. Belamant, Kotzé and Soma,
has made them especially knowledgeable about our business and industry and thus
particularly valuable to us. Mr. S.C.P. Belamant, in particular, has intricate
knowledge of, and has created large parts of the proprietary technology and
software deployed by us in our operations, which is an indispensable part of our
technological advantage in our various operations and future developments in our
growth pipeline. We wish to avoid losing these long-tenured officers and their
invaluable knowledge, particularly given how important they are to our future
performance. Therefore, 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 extended vesting terms of equity
awards have the effect of tying this element of compensation to continued
service with us.
Implementing our Objectives
Process for Determining
Compensation.
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 Remuneration Committee then uses
this knowledge to develop our executive compensation program based on its
judgment of what is appropriate and necessary to fulfill and maintain our
staffing needs. As described in more detail below, it considers internal pay
equity as between the Chief Executive Officer and the Chief Financial Officer
and uses a formulaic approach to set the Chief Financial Officers compensation
relative to the Chief Executive Officers compensation but does not do so for
the other named executive officers.
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.
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
.
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, the relative market capitalizations of the Company
and the members of the peer group. The Remuneration Committee sets the
compensation of Mr. Kotzé based on the total compensation package of Mr. S.C.P.
Belamant. Since the role played by Mr. Kotzé is significantly broader than that
of a typical Chief Financial Officer, the Remuneration Committees goal is to
set this package at approximately 45% to 65% of Mr. S.C.P. Belamants total
compensation package. Because the Remuneration Committee considers international
comparables in its compensation analysis for both Messrs. S.C.P. Belamant and
Kotzé, their total compensation packages are denominated in U.S. dollars
(USD). Because Mr. Somas compensation package is derived from the amount of
compensation we pay to Mr. Kotzé, his compensation package is also denominated
in USD. Our 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.
16
In addition, as a result of Mr.
S.C.P. Belamants relocation to the UK, from December 2015, he is paid his
USD-denominated base salary in USD. 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 for Messrs.
S.C.P. Belamant and Kotzé. 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.
Compensation for fiscal 2016 for
Mr. Oh was determined in accordance with his service agreements. Mr. Ohs
compensation is denominated and paid in Korean won (KRW) in accordance with the
terms of his negotiated service agreements. Under the service agreements, he
receives a base salary and is entitled to receive a cash incentive payment based
upon the achievement of certain targets that are linked to the operating
performance of Net1 Korea and KSNET. We have aligned KSNETs fiscal year end
with ours. However, in order to remain consistent with our Korean peer
competitors, we continue to determine Mr. Ohs cash incentive payment (and our
KSNET staffs remuneration) using KSNETs financial results for the twelve month
period ending December of each year. Accordingly, we determined Mr. Ohs cash
incentive payment for the twelve month period ended December 31, 2015.
Before the Remuneration Committee
makes decisions on compensation for the year, it discusses with Mr. S.C.P.
Belamant each executive officers performance during the year, his or her
accomplishments and specific areas of progress. Mr. S.C.P. Belamant bases his
evaluation on his knowledge of each executive officers performance (with due
regard to the operational environment) and targets that have been set for a
particular performance period. The executive officers are then evaluated based
on their individual performance during the fiscal year. Mr. S.C.P. Belamant
makes a recommendation to the Remuneration Committee on each executive officers
compensation, except for his own and Mr. Kotzés compensation. Executive
officers do not propose or seek approval for their own compensation. Mr. S.C.P.
Belamants and Mr. Kotzés annual performance review is developed by the
Remuneration Committee as a whole.
The Remuneration Committee also
consults with Messrs. S.C.P. Belamant and Kotzé regarding non-executive officer
employee compensation and is responsible for approving all awards under our
stock incentive plan.
Equity Grant
Practices.
We believe that long-term performance of our
Company 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 stock options and restricted stock are a fundamental
element in our executive compensation program because they emphasize long-term
performance, as measured by creation of shareholder value, 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 to permit the grant of stock options and other stock-based
awards to our employees, directors and consultants. Options granted under the
plan vest ratably over a period of three to five years after grant unless
otherwise provided in a particular award agreement and have ten-year terms from
the date of grant.
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.
We record stock-based
compensation charges over the vesting term of the equity award as required under
current accounting standards. 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. We believe that combining grants of
stock options and restricted stock effectively balances our objective of
focusing our employees, including our named executive officers, on delivering
long-term value to our shareholders, with our objective of providing value to
our employees with the equity awards.
17
Stock options have value only to
the extent that our stock price on the date of exercise exceeds the stock price
on the date of grant or any particular minimum share price necessary to vest
such options, and thus are an effective compensation tool only if the stock
price appreciates during the vesting term. In this sense, stock options are a
motivational tool.
Employment Agreements
.
Messrs. S.C.P. Belamant, Kotzé, P.M. Belamant and Soma are employed on an at
will basis, without employment agreements, severance payment arrangements
(except as required by local labor laws), or payment arrangements that would be
triggered by a change in control. The absence of such arrangements enables us to
terminate the employment of these named executive officers with discretion as to
the terms of any severance arrangement that might be provided upon such
termination. This is consistent with our performance-based employment and
compensation philosophy.
We do have restraint of trade
agreements with each of these named executive officers, except P.M. Belamant.
The terms of these agreements provide that upon the termination of the
executives employment, the executive is restricted, for a period of 24 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.
We do from time to time 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. We entered into two service agreements with Mr. Oh in June 2014, in
connection with his roles at Net1 Korea and KSNET. The terms of these two
three-year agreements were based on the original KSNET service agreement with
Mr. Oh that concluded in October 2010, and no peer group comparisons were
performed.
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 the Net1 Korea
service agreement, Mr. Oh is entitled to receive the following cash
compensation: (i) an annual base salary of KRW 10 million and (ii) an annual
bonus of up to KRW 80 million, based on the achievement of qualitative targets
determined by our Chairman. The qualitative target for the 2016 fiscal year was
the successful launch in Korea during the year 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). The other terms of the
Net1 Korea service agreement are substantially similar to the terms of the KSNET
service agreement described below.
Under the KSNET service
agreement, Mr. Oh is entitled to receive: (i) an annual base salary of KRW 405
million and (ii) an annual bonus of up to KRW 440 million, which comprises a
quantitative and qualitative portion.
The quantitative portion of the
annual bonus is capped at a maximum of KRW 338 million and will be based on the
achievement of specified levels of KSNETs free cash flow and profit before
interest and tax and any bonus under the 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.
The qualitative portion of the
annual bonus is capped at a maximum of KRW 102 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.
18
The qualitative targets for the 2016 fiscal year 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; and
(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.
Under the terms of his service
agreements, Mr. Oh is entitled to participate in national health insurance and
the national pension plan provided under the laws of Korea, to receive
reimbursement for annual physical examinations for him and his spouse, education
expenses and to make use of a company provided car and driver for business and
reasonable personal use.
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.
Considerations Regarding Tax
Deductibility of Compensation.
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.
Compensation Consultants.
Neither we nor the Remuneration Committee have any contractual arrangement
with any compensation consultant or used the services of any compensation
consultant who has a role in determining or recommending the amount or form of
executive officer compensation.
Role 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
11, 2015, approximately 73% 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.
Elements of 2016 Compensation
Base Salary.
Salaries for
fiscal 2016 were determined in the first quarter of the 2016 fiscal year after a
review of our peer group companies described above. The annual base salaries of
Messrs. S.C.P. Belamant, Kotzé and Soma were increased by 3% to $1,004,250,
$531,480 and $324,450, respectively. The increase in annual base salary in each
case was effective July 1, 2015. Mr. Oh received base salaries for fiscal 2016
under the terms of his new service agreements. See Implementing our
ObjectivesEmployment Agreements. Mr. P.M. Belamants annual base salary was
increased by 3% to GBP 190,776, effective October 1, 2015.
19
Payments under Cash Incentive
Award Plan for Messrs. S.C.P. Belamant and Kotzé
. During the first quarter
of fiscal 2016, 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 2016 financial
performance and his individual contribution toward the achievement of certain
corporate objectives. The plan provided for a target-level cash incentive award
of 100% of the executives base salary for fiscal 2016, 70% of which was to be
based on a quantitative metric (achievement of specified levels of fundamental
diluted earnings per share) and 30% of which was to be based on the level of
achievement of the qualitative factors described below.
The quantitative portion of the
award provided for threshold, target and maximum amounts of 50%, 100% and 200%
for Mr. S.C.P. Belamant, and 50%, 100% and 150% for Mr. Kotzé, of the
executives respective base salary multiplied by 0.70 (to reflect that 70% of
the target award was based on the quantitative factors). The qualitative portion
of the award was limited to 100% of the executives base salary multiplied by
0.30 (to reflect that 30% of the target award was based on qualitative factors).
Quantitative Portion of the Cash Incentive Award Plan
The quantitative portion of the
cash incentive award plan was based on the achievement of specified levels of
fundamental diluted earnings per share for fiscal 2016. The following levels of
fundamental diluted earnings per share entitle the executive to receive the
following percentages of this portion of the award:
|
|
At or below $ 2.49 (threshold)0%
|
|
|
|
|
|
$ 2.61 (target)100%
|
|
|
|
|
|
At or above $ 2.73 (maximum)200% for Mr.
S.C.P. Belamant and 150% for Mr. Kotzé
|
Fundamental EPS above $2.49 and
below $2.73 is interpolated on a linear basis and rounded to the nearest
percentage.
Quantitative Portion of the Cash
Incentive Award PlanPotential and Actual Payments
The table below presents our
potential and actual payments to Messrs. S.C.P. Belamant and Kotzé related to
the quantitative portion of our cash incentive award plan for fiscal 2016:
|
2016 Quantitative portion of cash incentive award plan
|
|
|
|
|
Serge C.P. Belamant
|
|
|
Herman G. Kotzé
|
|
|
|
|
Chief Executive Officer
|
|
|
Chief Financial Officer
|
|
|
|
|
Potential
|
|
|
|
|
|
Potential
|
|
|
|
|
|
|
|
Payment
|
|
|
Actual
|
|
|
Payment
|
|
|
Actual
|
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Threshold
|
|
0
|
|
|
|
|
|
0
|
|
|
|
|
|
Target
|
|
702,975
|
|
|
|
|
|
372,036
|
|
|
|
|
|
Maximum
|
|
1,405,950
|
|
|
|
|
|
558,054
|
|
|
|
|
|
Actual
|
|
|
|
|
0
|
|
|
|
|
|
0
|
|
After the close of fiscal 2016,
the Remuneration Committee met and determined each element of the Companys
financial performance described above and each executives contribution toward
the progress against the qualitative objectives. Based on fundamental diluted
earnings per share of less than $2.49 per share, the Remuneration Committee
determined to make no award to Messrs. S.C.P. Belamant and Kotzé in respect of
the quantitative portion of the cash incentive award plan for fiscal 2016.
20
Qualitative Portion of the Cash
Incentive Award Plan
Each of Messrs. S.C.P. Belamant
and Kotzé was entitled to receive up to 30% of his annual base salary based on
his individual contribution toward the achievement of the following Company-wide
shareholder enhancing objectives no later than August 2016 (which is the
scheduled time during the year that the Remuneration Committee reviews
performance against the qualitative metrics of our cash incentive award plan):
|
|
implementation of the strategic and operating plans,
including, in the case of Mr. S.C.P. Belamant , development of a
succession plan for senior management;
|
|
|
growth and geographical expansion of mobile payments
business; and
|
|
|
establishment of UK-based presence, with appropriate
staffing levels to support our geographical expansion strategy. In the
case of Mr. S.C.P. Belamant, satisfaction of this portion of the objective
includes spending a significant portion of his time in the UK to oversee
the execution of this strategy.
|
After the close of fiscal 2016,
the Remuneration Committee considered whether to make payments in respect of the
qualitative portion of the cash incentive award plan. The Remuneration Committee
determined to award each of Mr. S.C.P. Belamant and Mr. Kotzé 83.33%, or
$251,063 and $132,870, respectively, of the qualitative portion of the cash
incentive award.
In reaching its conclusion, the
Remuneration Committee considered several factors. First, the Remuneration
Committee identified that succession planning remains a priority issue for our
Board and an ongoing obligation of Mr. S.C.P. Belamant. The Remuneration
Committee acknowledged that a new organizational plan had been produced by Mr.
S.C.P. Belamant as a blueprint for growth of our Company; however, the Board
still has to consider and discuss the organization plan. The Remuneration
Committee therefore determined that there was progress in the succession plan;
however, it had not been finalized at August 25, 2016.
Second, the Remuneration
Committee determined that the targeted growth and geographical expansion of the
mobile payments business had been achieved, including signing an agreement in
India and the acquisition of Transact 24 and Masterpayment.
Lastly, the Remuneration
Committee noted that a fully functioning office had been established in the
United Kingdom during the period and four employees, including Messrs S.C.P.
Belamant and P.M. Belamant, are now based there. The Remuneration Committee
determined that the target had been achieved in light of this progress as well
as the on-going business development activities in Europe and elsewhere.
Bonus for Mr. Oh pursuant to
employment contracts
. The table below presents our potential and actual
payments to Mr. Oh related to the achievement of his quantitative targets for
fiscal 2016:
|
|
Cash flow metric
|
|
|
PBIT metric
|
|
|
Total
|
|
|
|
Potential
|
|
|
|
|
|
Potential
|
|
|
|
|
|
Potential
|
|
|
|
|
|
|
Payment
|
|
|
Actual
|
|
|
Payment
|
|
|
Actual
|
|
|
Payment
|
|
|
Actual
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Threshold
|
|
1,707
|
|
|
|
|
|
92,157
|
|
|
|
|
|
93,864
|
|
|
|
|
Target
|
|
1,707
|
|
|
|
|
|
177,487
|
|
|
|
|
|
179,194
|
|
|
|
|
Maximum
|
|
42,665
|
|
|
|
|
|
245,751
|
|
|
|
|
|
288,416
|
|
|
|
|
Actual
|
|
|
|
|
25,599
|
|
|
|
|
|
177,487
|
|
|
|
|
|
203,086
|
|
For fiscal 2016, the Remuneration
Committee awarded $87,037 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 2016: (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, which was one of his objectives
21
Bonuses for Messrs S.C.P.
Belamant, Kotzé, P.M. Belamant and Soma.
The Remuneration Committee
determined to award a bonus of 10% of fiscal 2016 base salary, or $100,425 and
$53,148, respectively, to Messrs S.C.P. Belamant and Kotzé as recognition for
closing the International Finance Corporation transaction, ongoing negotiations
with SASSA and managing ongoing legal proceedings against our Company. Mr. P.M.
Belamant, our Managing Director ZAZOO Limited received a bonus of $66,772 for
fiscal 2016, as a result of his contribution to the internationalization of our
business and steps to diversify our operations outside of South Africa and his
ongoing oversight of the existing South African businesses in his portfolio,
including our Manje services that have proven to be extremely successful in a
short period of time. Mr. Soma, our Vice-President Information Technology
received a bonus of $113,558 for fiscal 2016, as a result of his ongoing
management of our strategic relationship with MasterCard, World Food Program and
Grindrod Bank Limited and continuing oversight of the information technology
component of our Sarbanes-Oxley compliance. These relationships are 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.
Equity Incentive Awards.
On August 19, 2015, Messrs. S.C.P. Belamant, Kotzé, Oh, P.M. Belamant and Soma
were awarded 100,175, 39,762, 12,000, 11,600 and 12,000 shares of our restricted
stock, respectively. These shares of restricted stock 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 Fundamental EPS we
achieve for the fiscal year ended June 30, 2018 (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.
Other.
From December 2015,
the Remuneration Committee agreed to pay Mr. S.C.P. Belamant a housing
allowance. In addition
,
we provide on-site residential security services
for Mr. S.C.P. Belamant consisting of two armed guards. These services are
provided based on bona fide business-related security concerns and are 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 are 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. We believe that
it is beneficial for Mr. Kotzé to obtain citizenship of a country in the
European Union in order to effectively expand into the European marketplace.We
have agreed to pay all costs related to this process and during fiscal 2016 we
reimbursed certain legal expense incurred. During fiscal 2016, Mr. S.C.P.
Belamant and Mr. Kotzé elected to have unused vacation days paid to them.
Under Mr. Ohs service agreement,
he was paid or reimbursed for the items described under Compensation
Discussion and AnalysisImplementing our ObjectivesEmployment Agreements. As a
result of PM Belamants relocation to the UK, we agreed to pay the monthly
rental fees for his private residence until such time as he purchases a
property, at which time he would be entitled to a housing allowance. This
benefit expires in November 2016. He also participates in a tax equalization
program under which we will reimburse him, in cash, for any additional taxes
paid as a result of his residence in the UK. Finally, we have agreed to
reimburse Mr. P.M. Belamant for two economy class seats per calendar year
between South Africa and the UK.
22
REMUNERATION COMMITTEE REPORT
For the Year Ended June 30, 2016
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
comprises three independent directors, has reviewed and discussed the
Compensation Discussion and Analysis section of this proxy statement with our
Chief Executive Officer, Serge C.P. Belamant, and our Chief Financial Officer,
Herman G. 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
|
EXECUTIVE COMPENSATION TABLES
The following narrative, tables
and footnotes describe the total compensation earned during fiscal years 2016,
2015 and 2014, 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 2016. The actual value
realized by our named executive officers in fiscal 2016 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 2016 are presented in the Grants of Plan-Based Awards table on page
26.
- Remainder of this page left blank -
23
SUMMARY COMPENSATION TABLE
(1)
The following table sets forth
the compensation earned by our named executive officers for services rendered
during fiscal years 2016, 2015 and 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
Plan
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Awards
|
|
|
Compens-
|
|
|
Compens-
|
|
|
|
|
Name and
|
|
|
|
|
Salary ($)
|
|
|
Bonus ($)
|
|
|
Awards
|
|
|
($)
|
|
|
ation ($)
|
|
|
ation
|
|
|
Total
|
|
Principal Position
|
|
Year
|
|
|
(2)
|
|
|
(3)
|
|
|
($)
|
|
|
(4)
|
|
|
(3)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Serge C.P. Belamant, Chief
|
|
2016
|
|
|
1,004,250
|
|
|
100,425
|
|
|
2,008,509
|
(5)
|
|
-
|
|
|
251,063
|
|
|
239,007
|
(6)
|
|
3,603,254
|
|
Executive Officer,
|
|
2015
|
|
|
975,000
|
|
|
-
|
|
|
276,213
|
|
|
379,613
|
|
|
1,657,500
|
|
|
24,810
|
(6)
|
|
3,313,136
|
|
Chairman of the Board and
Director
|
|
2014
|
|
|
937,125
|
|
|
-
|
|
|
-
|
|
|
306,533
|
|
|
1,555,628
|
|
|
27,270
|
(6)
|
|
2,826,556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Herman G. Kotzé, Chief
|
|
2016
|
|
|
531,480
|
|
|
53,148
|
|
|
797,228
|
(5)
|
|
-
|
|
|
132,870
|
|
|
123,931
|
(7)
|
|
1,638,657
|
|
Financial Officer, Treasurer,
|
|
2015
|
|
|
516,000
|
|
|
-
|
|
|
146,229
|
|
|
200,970
|
|
|
696,600
|
|
|
-
|
|
|
1,559,799
|
|
Secretary and Director
|
|
2014
|
|
|
496,125
|
|
|
-
|
|
|
-
|
|
|
162,281
|
|
|
649,924
|
|
|
-
|
|
|
1,308,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
354,121
|
|
|
-
|
|
|
240,600
|
(5)
|
|
-
|
|
|
290,123
|
|
|
70,978
|
(9)
|
|
955,822
|
|
Phil-Hyun Oh, President
|
|
2015
|
|
|
386,856
|
|
|
-
|
|
|
-
|
|
|
122,498
|
|
|
368,212
|
|
|
63,009
|
(9)
|
|
940,575
|
|
KSNET
|
|
2014
|
|
|
357,322
|
|
|
-
|
|
|
97,998
|
(8)
|
|
-
|
|
|
190,572
|
|
|
65,707
|
(9)
|
|
711,599
|
|
Philip M. Belamant,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Managing Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
268,948
|
|
|
|
|
ZAZOO Limited (10)
|
|
2016
|
|
|
189,387
|
|
|
66,772
|
|
|
232,580
|
(5)
|
|
-
|
|
|
-
|
|
|
(11
|
)
|
|
757,687
|
|
|
|
2016
|
|
|
324,450
|
|
|
113,558
|
|
|
240,600
|
(5)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
678.608
|
|
Nitin Soma, Vice-President
|
|
2015
|
|
|
315,000
|
|
|
315,000
|
|
|
77,850
|
|
|
122,498
|
|
|
-
|
|
|
-
|
|
|
830,348
|
|
Information Technology
|
|
2014
|
|
|
302,400
|
|
|
290,304
|
|
|
-
|
|
|
98,913
|
|
|
-
|
|
|
-
|
|
|
691,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes only those columns relating to compensation
awarded to, earned by, or paid to the named executive officers in any of
fiscal 2016, 2015 or 2014. All other columns have been omitted.
|
|
|
(2)
|
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. The applicable amount for Mr. 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
translated 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 translated into USD at the average exchange rate for 2016.
|
|
|
(3)
|
Bonus and non-equity incentive plan compensation
represent amounts earned by Messrs. S.C.P. Belamant, Kotzé and Soma for
the fiscal years ended June 30, and were paid after close of the fiscal
year. The quantitative portion earned of Mr. Ohs 2016 non-equity
incentive plan was paid in February 2016 and the qualitative portion was
paid after close of the fiscal year. The amounts for Messrs. S.C.P.
Belamant, Kotzé and Soma are denominated in USD, the amount for Mr. Oh is
denominated and paid in KRW, and as applicable, translated 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
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, 2016, 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
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, 2016, for the relevant assumptions
used in calculating grant date fair value under FASB ASC Topic
718.
|
|
|
(6)
|
For fiscal 2016, includes a housing allowance of $72,021,
which was paid in GBP and translated into USD at the average exchange rate
for the year, encashment of leave of $145,440, which was paid in ZAR and
translated 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 translated at the average rate for the year. Fiscal 2015
and 2014 amounts represent cost of security guards for Mr. S.C.P. Belamant
and were paid in ZAR and translated at the average exchange rate for the
applicable year.
|
24
(7)
|
Includes reimbursement of costs related to the
application of citizenship in the European Union of $64,285 and the
$57,646 related to the encashment of leave, which was paid in ZAR and
translated at the average exchange rate in the month of payment.
|
|
|
(8)
|
Represents FASB ASC Topic 718 grant date fair value of
shares of restricted stock awarded in August 2013, one-third of which vest
on August 21 of 2014, 2015 and 2016. Vesting of the award shares is
conditioned upon Mr. Ohs continuous service through the applicable
vesting date. See note 18 to the consolidated financial statements
included in our Annual Report on Form 10-K for the year ended June 30,
2016, for the relevant assumptions used in calculating grant date fair
value under FASB ASC Topic 718.
|
|
|
(9)
|
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 translated into USD at
the average exchange rate for the year. The fiscal 2016, 2015 and 2014
amounts include car rental of $33,926, $28,525 and $29,157,
respectively.
|
|
|
(10)
|
Mr. P.M. Belamant was not a named executive officer for
2015 and 2014.
|
|
|
(11)
|
Represents payments made by us to Mr. P.M. Belamants as
tax equalization payments ($120,027), reimbursement for rental of private
residence ($101,948), housing allowance ($38,142) and reimbursement of
private travel to South Africa ($8,831); which are paid in GBP and
translated into USD at the average exchange rate for the
year.
|
ACTUAL 2016 COMPENSATION MIX
The chart below illustrates the
mix of the actual elements of the compensation program paid in fiscal 2016 for
our named executive officers pursuant to our target incentive compensation
program:
25
GRANTS OF PLAN-BASED AWARDS
(1)
The following table provides
information concerning non-equity and equity incentive plan awards granted
during fiscal 2016 to each of our named executive officers
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Date Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future
Payouts Under Non-
|
|
|
of Shares
|
|
|
Stock and
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Incentive
|
|
|
of Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards (2)
|
|
|
or Units
|
|
|
Awards
|
|
|
|
|
|
|
Date of
|
|
|
Type
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant
|
|
|
Committee
|
|
|
of
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
|
|
|
|
|
Name
|
|
Date
|
|
|
Action
|
|
|
Award
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
Serge
|
|
-
|
|
|
08/19/15
|
|
|
AC
|
|
|
35,149
|
|
|
1,004,250
|
|
|
1,707,225
|
|
|
|
|
|
|
|
C.P. Belamant
|
|
08/19/15
|
|
|
08/19/15
|
|
|
RS
|
|
|
|
|
|
|
|
|
|
|
|
100,175
|
|
|
2,008,509
|
|
Herman
|
|
-
|
|
|
08/19/15
|
|
|
AC
|
|
|
18,602
|
|
|
531,480
|
|
|
717,498
|
|
|
|
|
|
|
|
G. Kotzé
|
|
08/19/15
|
|
|
08/19/15
|
|
|
RS
|
|
|
|
|
|
|
|
|
|
|
|
39,762
|
|
|
797,228
|
|
Phil-Hyun
|
|
-
|
|
|
06/30/14
|
|
|
AC
|
|
|
93,863
|
|
|
334,495
|
|
|
443,718
|
|
|
|
|
|
|
|
Oh
|
|
08/19/15
|
|
|
08/19/15
|
|
|
RS
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
240,600
|
|
Philip M. Belamant
|
|
08/19/15
|
|
|
08/19/15
|
|
|
RS
|
|
|
|
|
|
|
|
|
|
|
|
11,600
|
|
|
232,580
|
|
Nitin Soma
|
|
08/19/15
|
|
|
08/19/15
|
|
|
RS
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
240,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
AC (annual cash incentive award); RS (restricted stock).
Includes only those columns relating to grants awarded to the named
executive officers in fiscal 2016. All other columns have been
omitted.
|
|
|
(2)
|
On August 19, 2015, the Remuneration Committee approved a
fiscal 2016 cash incentive award plan for Messrs. S.C.P. Belamant and
Kotzé. The plan and the actual payments made there under are described in
detail under Compensation Discussion and AnalysisElements of 2016
CompensationPayments under Cash Incentive Award Plan for Messrs. S.C.P.
Belamant and Kotzé. 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 fundamental diluted earnings
per share of $2.49, no amounts would have been paid. Target and maximum
payouts were to be made at fundamental diluted earnings per share of $2.61
and $2.73, respectively, with awards to be interpolated on a linear basis
relative to $2.61 at levels of fundamental diluted earnings per share
between $2.49 and $2.73. 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 2016 CompensationBonus for Mr. Oh pursuant to employment
contracts. The threshold, target and maximum amounts for Mr. Oh are
denominated in KRW and have been translated to USD using the average
exchange rate for fiscal 2016.
|
- Remainder of this page left blank -
26
OUTSTANDING EQUITY AWARDS AT 2016 FISCAL YEAR-END
(1)
The following table shows all
outstanding equity awards held by our named executive officers at the end of
fiscal 2016. 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 $9.99 of our common stock on June 30, 2016, the last trading day of the
fiscal year.
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number
|
|
|
Number
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
of
|
|
|
of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
|
Equity Incentive
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Plan Awards:
|
|
|
|
Under-
|
|
|
Under-
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Number of
|
|
|
Market or
|
|
|
|
lying
|
|
|
lying
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
Unearned
|
|
|
Payout Value of
|
|
|
|
Unexer-
|
|
|
Unexer-
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
Shares, Units
|
|
|
Unearned
|
|
|
|
cised
|
|
|
cised
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
or Other
|
|
|
Shares, Units or
|
|
|
|
Options
|
|
|
Options
|
|
|
Option
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
Rights That
|
|
|
Other Rights
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Have Not
|
|
|
That Have Not
|
|
|
|
Exer-
|
|
|
Unexer-
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
|
Vested
|
|
|
Vested
|
|
Name
|
|
cisable
|
|
|
cisable
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
Serge C.P.
|
|
80,000
|
|
|
-
|
|
$
|
22.51
|
|
|
8/24/2016
|
|
|
83,448
|
(3)
|
|
833,646
|
|
|
|
|
|
|
|
Belamant
|
|
200,000
|
|
|
-
|
|
$
|
24.46
|
|
|
8/24/2018
|
|
|
100,175
|
(4)
|
|
1,000,748
|
|
|
|
|
|
|
|
|
|
130,000
|
|
|
-
|
|
$
|
13.16
|
|
|
5/20/2019
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
-
|
|
$
|
10.59
|
|
|
11/10/2020
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
37,334
|
|
|
-
|
|
$
|
7.98
|
|
|
10/28/2021
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
34,000
|
|
|
-
|
|
$
|
8.75
|
|
|
08/22/2022
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
40,476
|
|
|
40,476
|
(1)
|
$
|
7.35
|
|
|
08/21/2023
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
27,816
|
|
|
55,632
|
(2)
|
$
|
11.23
|
|
|
08/27/2024
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
Herman G.
|
|
35,000
|
|
|
-
|
|
$
|
22.51
|
|
|
8/24/2016
|
|
|
44,178
|
(3)
|
|
441,338
|
|
|
|
|
|
|
|
Kotzé
|
|
100,000
|
|
|
-
|
|
$
|
24.46
|
|
|
8/24/2018
|
|
|
39,762
|
(4)
|
|
397,222
|
|
|
|
|
|
|
|
|
|
110,000
|
|
|
-
|
|
$
|
13.16
|
|
|
5/20/2019
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
67,000
|
|
|
-
|
|
$
|
10.59
|
|
|
11/10/2020
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
-
|
|
$
|
7.98
|
|
|
10/28/2021
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
18000
|
|
|
-
|
|
$
|
8.75
|
|
|
08/22/2022
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
21,428
|
|
|
21,428
|
(1)
|
$
|
7.35
|
|
|
08/21/2023
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
14,726
|
|
|
29,452
|
(2)
|
$
|
11.23
|
|
|
08/27/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phil-Hyun Oh
|
|
8,976
|
|
|
17,952
|
(2)
|
$
|
11.23
|
|
|
08/27/2024
|
|
|
4,445
|
(5)
|
|
44,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
(4)
|
|
119,880
|
|
|
|
|
|
|
|
Philip M.
|
|
14,726
|
|
|
29,452
|
(2)
|
$
|
11.23
|
|
|
08/27/2024
|
|
|
3,334
|
(5)
|
|
33,307
|
|
|
|
|
|
|
|
Belamant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,035
|
(6)
|
|
110,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,600
|
(4)
|
|
115,884
|
|
|
|
|
|
|
|
Nitin Soma
|
|
20,000
|
|
|
-
|
|
$
|
22.51
|
|
|
8/24/2016
|
|
|
24,328
|
(6)
|
|
243,037
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
-
|
|
$
|
24.46
|
|
|
8/24/2018
|
|
|
12,000
|
(4)
|
|
119,880
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
-
|
|
$
|
13.16
|
|
|
5/20/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,666
|
|
|
-
|
|
$
|
8.75
|
|
|
08/22/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,061
|
|
|
13,061
|
(1)
|
$
|
7.35
|
|
|
08/21/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,976
|
|
|
17,952
|
(2)
|
$
|
11.23
|
|
|
08/27/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
These options vested on August 21, 2016.
|
|
|
(2)
|
Fifty percent of these options vested and will vest on
August 27, 2016 and 2017, respectively.
|
|
|
(3)
|
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.
|
|
|
(4)
|
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.
|
|
|
(5)
|
These shares of restricted stock were awarded in August
2013, and vested on August 21, 2016.
|
27
(6)
|
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
$19.41 (subject to adjustments for any stock splits and/ or stock
dividends) for a period of 30 consecutive trading days during a period
commencing on the date when we file our Annual Report on Form 10-K for the
fiscal year ended 2017 and ending on December 31, 2017 and (2) the
recipient is employed by us on a full-time basis when the condition in (1)
is met.
|
OPTION EXERCISES AND STOCK VESTED
(1)
There were no stock options
exercised by our named executive officers during fiscal 2016. The following
table shows all stock awards that vested during fiscal 2016.
|
|
Stock Awards
|
|
|
|
Number of shares
|
|
|
Value Realized
|
|
|
|
acquired on vesting
|
|
|
on Vesting
|
|
Name
|
|
(#)
|
|
|
($)(2)
|
|
Serge C.P. Belamant
|
|
-
|
|
|
-
|
|
Herman G. Kotzé
|
|
-
|
|
|
-
|
|
Phil-Hyun Oh
|
|
4,444
|
|
|
88,791
|
|
Philip M. Belamant
|
|
3,333
|
|
|
66,593
|
|
Nitin Soma
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
(1)
|
Includes only those columns relating to stock awards held
by our named executive officers that vested in fiscal 2016. Since none of
our named executive officers exercised stock options during fiscal 2016,
all other columns have been omitted.
|
|
|
(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.
|
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 2016, i.e., June 30, 2016, Mr. Oh would have been
entitled to receive a cash severance equal to his achieved qualitative awards,
or $93,863, 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, 2016, and eight years of completed service at KSNET and two years of
completed service at Net1 Korea, Mr. Oh would be entitled to a severance payment
of $695,443.
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, 2016.
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
Mr. P.M. Belamant, Managing
DirectorZAZOO Limited, is the son of Mr. S.C.P. Belamant, our 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 in South Africa,
including his bonus, was denominated in ZAR and translated into USD at the
average exchange rate for fiscal 2016. All compensation for services performed
in the UK is denominated and paid in GBP and has been translated into USD at the
average exchange rate for fiscal 2016. Mr. van Wyk received a salary and bonus
of $119,853 and $20,165, respectively, during fiscal 2016. He was also granted
4,800 shares of our restricted stock on August 19, 2015, on the same terms and
conditions as those awarded to our named executive officers, which are described
on page 27 of this proxy statement under Equity Incentive Awards. In
connection with his secondment to the UK, Mr. van Wyk received housing and
school fee allowances which aggregated $88,164 and $24,056, respectively, during
fiscal 2016. He also received tax equalization payments and payment of UK health
insurance contributions of $14,393 and $3,255, respectively.
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 this company. We have recorded revenue of
approximately $1.9 million related to this relationship during fiscal 2016. As
of June 30, 2016, $0.4 million is due to us related to the service provided by
Transact24. Ms. Lam also received a salary of $150,801 from Transact 24 during
fiscal 2016. Transact24 also paid her Hong Kong Mandatory Provident Fund
contributions and medical and travel insurance of $2,320 and $941, respectively.
Pursuant to the Policy Agreement,
dated April 11, 2016, between the IFC Investors and us, the IFC Investors are
entitled to designate one nominee to our Board. The IFC Investors are currently
not exercising that right. 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.
29
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.
Finally, 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.
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. Our Chief Executive Officer and Chief
Financial Officer are 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.
- Remainder of this page left blank -
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, 2016 and 2015.
|
|
|
2016
|
|
|
2015
|
|
|
|
|
$ 000
|
|
|
$ 000
|
|
Audit Fees
|
|
|
1,631
|
|
|
1,844
|
|
Audit-Related Fees
|
|
|
-
|
|
|
-
|
|
Tax Fees
|
|
|
-
|
|
|
-
|
|
All
Other Fees
|
|
|
-
|
|
|
-
|
|
Audit Fees This category
includes the audit of our annual consolidated financial statements, 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, 2016 or 2015.
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, 2016 or 2015.
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,
2016 or 2015.
Pre-Approval of 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
2016 and 2015, all of the services provided by Deloitte with respect to fiscal
years 2016 and 2015 were pre-approved by the Audit Committee.
31
AUDIT COMMITTEE REPORT
The Audit Committee of the Board
consists of three 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 under the Investor
RelationsGovernance section. 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 and Edwards. 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. Our Chief
Executive Officer and Chief Financial Officer 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 our
Chief Executive Officer and Chief Financial Officer 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. The Audit Committee further considered whether the provision by
Deloitte of the non-audit services described above is compatible with
maintaining the auditors 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, 2016, for filing with the SEC.
|
Audit Committee
|
|
Christopher S. Seabrooke, Chairman
|
|
Alasdair J.K. Pein
|
|
Paul Edwards
|
32
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND
MANAGEMENT
The following table presents, as
of September 23, 2016, 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 52,521,345 shares
of common stock outstanding as of September 23, 2016. All shares of common
stock, including that common stock underlying stock options that are presently
exercisable or exercisable within 60 days after September 23, 2016 (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
|
|
Name
|
|
Stock Beneficially Owned
|
|
|
|
Number
|
|
|
%
|
|
Serge C.P. Belamant(1)
|
|
1,839,006
|
|
|
3.46%
|
|
Philip M. Belamant(2)
|
|
35,969
|
|
|
*
|
|
Paul Edwards(3)
|
|
14,161
|
|
|
*
|
|
Herman G. Kotzé(4)
|
|
676,248
|
|
|
1.28%
|
|
Phil-Hyun Oh (5)
|
|
29,952
|
|
|
*
|
|
Alasdair J.K. Pein(6)
|
|
74,680
|
|
|
*
|
|
Christopher S. Seabrooke(7)
|
|
21,946
|
|
|
*
|
|
Nitin Soma(8)
|
|
235,401
|
|
|
*
|
|
IFC Investors(9)
|
|
9,984,311
|
|
|
19.01%
|
|
Allan Gray Proprietary Limited(10)
|
|
8,605,256
|
|
|
16.38%
|
|
International Value Advisers,
LLC(11)
|
|
7,433,785
|
|
|
14.15%
|
|
Directors and Executive Officers as a
group(12)
|
|
3,397,210
|
|
|
6.32%
|
|
|
|
|
|
|
|
|
*Less than one percent
(1)
|
Comprises (i) 91,666 shares of unrestricted stock; (ii)
383,623 shares of restricted stock, the vesting of which is subject to the
satisfaction of certain financial performance and other conditions
described elsewhere in this proxy statement; (iii) options to purchase
637,918 shares of common stock, all of which are currently exercisable;
and (iv) 725,799 shares of common stock owned by CI Law Trustees Limited
for the San Roque Trust dated 8/18/92. Mr. S.C.P. Belamant as proxy of CI
Law Trustees has the power to vote all of CI Law Trustees shares. Does
not include options to purchase 27,816 shares of common stock which are
currently not exercisable by Mr. S.C.P. Belamant.
|
|
|
(2)
|
Comprises (i) 22,635 shares of restricted stock, the
vesting of which is subject to the satisfaction of certain financial
performance and other conditions described elsewhere in this proxy
statement; and (ii) options to purchase 13,334 shares of common stock, all
of which are currently exercisable. Does not include options to purchase
6,666 shares of common stock which are currently not exercisable by Mr.
P.M. Belamant.
|
33
(3)
|
Comprises 14,161 shares of restricted stock which vest
over time and are subject to forfeiture. Vesting of the restricted stock
is conditioned on Mr. Edwards continued service as a member of our Board
on the applicable vesting date.
|
|
|
(4)
|
Comprises (i) 55,000 shares of unrestricted stock; (ii)
233,940 shares of restricted stock, the vesting of which is subject to the
satisfaction of certain financial performance and other conditions
described elsewhere in this proxy statement; and (iii) options to purchase
387,308 shares of common stock, all of which are currently exercisable.
Does not include options to purchase 14,726 shares of common stock which
are currently not exercisable by Mr. Kotzé.
|
|
|
(5)
|
Comprises (i) 12,000 shares of restricted stock, the
vesting of which is subject to the satisfaction of certain financial
performance and other conditions described elsewhere in this proxy
statement; and (ii) options to purchase 17,952 shares of common stock, all
of which are currently exercisable. Does not include options to purchase
8,976 shares of common stock which are currently not exercisable by Mr.
Oh.
|
|
|
(6)
|
Comprises (i) 5,743 shares of unrestricted stock; (ii)
17,558 shares of restricted stock which vest over time 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 the applicable vesting date.
|
|
|
(7)
|
Comprises 21,946 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 the applicable vesting date.
|
|
|
(8)
|
Comprises (i) 18,333 shares of unrestricted stock; (ii)
36,328 shares of restricted stock, the vesting of which is subject to the
satisfaction of certain financial performance and other conditions
described elsewhere in this proxy statement; and (iii) options to purchase
180,740 shares of common stock, all of which are currently exercisable.
Does not include options to purchase 8,976 shares of common stock which
are currently not exercisable by Mr. Soma.
|
|
|
(9)
|
Based solely on Schedule 13D, dated May 24, 2016, filed
by (i) International Finance Corporation (IFC); (ii) IFC African, Latin
American and Caribbean Fund, LP (ALAC); (iii) IFC African, Latin
American and Caribbean Fund (GP) LLC (ALAC GP); (iv) IFC Financial
Institutions Growth Fund, LP (FIG); (v) IFC FIG Fund (GP), LLP (FIG
GP); and (vi) Africa Capitalization Fund Ltd. (AFCAP and together with
IFC, ALAC, ALAC GP, FIG and FIG GP). The business address of the IFC
Investors is 2121 Pennsylvania Avenue, Washington, D.C. 20433.
|
|
|
(10)
|
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. 5 to Schedule
13G, dated February 12, 2016, 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.
|
|
|
(11)
|
Based solely on Schedule 13F, dated August 12, 2016,
filed by International Value Advisers, LLC. The business address of
International Value Advisers, LLC is 717 Fifth Avenue, 10th Floor, New
York, NY 10022.
|
|
|
(12)
|
Represents shares beneficially owned by the directors and
executive officers. Includes shares issuable upon exercise of options to
purchase 1,286,228 shares of common stock, all of which are currently
exercisable and 768,750 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 2016.
34
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, 2016, 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 2017
Annual Meeting
Qualified shareholders who wish
to have proposals presented at the 2017 annual meeting of shareholders must
deliver them to us by June 2, 2017, 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 2017 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, 2017, 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, 2017, 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.
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.
35
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By Order of the Board of Directors,
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Serge C. P. Belamant
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Chairman and Chief Executive Officer
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September 30, 2016
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.
36
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