Report of the remuneration committee

Scope of report
This report, compiled in accordance with King IV practices, reviews the activities of the remuneration committee and the remuneration principles and policy that guide its decisions and discloses directors’ and prescribed officers’ remuneration.

Role and key functions

The remuneration committee is a formal committee of the board that assists in determining and recommending remuneration policy. The role and key functions of the remuneration committee are defined in the remuneration committee terms of reference, approved by the board in 2014 and reviewed annually.

The committee independently reviews, advises on and makes recommendations relating to all remuneration matters to promote an environment that is conducive to the achievement of strategic objectives and encourages individual performance. The committee also monitors the outcomes of the implementation of the remuneration policy to measure whether or not its objectives have been met.

Composition and committee meetings

The committee comprises three independent non-executive directors. During the year under review, directors serving on the committee included Pieter Uys (chairman, appointed 27 May 2016), Hassen Adams (appointed 1 November 2017), Mike Hankinson (appointed May 2010, resigned on 1 November 2017 further to his appointment as the executive chairman) and Nkululeko Sowazi (appointed 25 November 2014). More details of these directors are given in the directorate and executive committee section.

Committee members meet at scheduled meetings twice a year and unscheduled meetings when the committee is required to address urgent matters in its scope of responsibility. A total of three unscheduled meetings were held in 2017.

Attendance of committee members at the meetings of the committee during the year is listed in the directorate and executive committee of this integrated report.

Fees paid to the committee members are reflected in the report of the remuneration committee in this report and the proposed fees for 2018 are detailed in special resolution 3.1 in the notice of the annual general meeting.

Key activities

In terms of its mandate, matters considered by the remuneration committee based on its annual work plan for 2017 included:

  • monitoring the company’s remuneration policy;
  • evaluating and recommending fees for non‑executive directors based on industry benchmarks;
  • reviewing and approving the criteria against which executive directors are remunerated and evaluated;
  • reviewing the performance of executive directors against predetermined financial and operational targets;
  • reviewing and approving the remuneration packages and incentives, including annual bonuses, for executive directors;
  • approving the overall divisional allocations for senior-management bonuses;
  • approving annual remuneration increases for employees outside the bargaining unit;
  • reviewing the performance of the primary pension and provident funds;
  • reviewing legislative and regulatory compliance within the scope of its mandate;
  • reviewing the remuneration report for inclusion in the 2017 integrated annual report; and
  • approving the annual work plan for 2018.

Performance evaluation

During the year, the committee considered the performance of the executive chairman, the group financial director, other executive directors, non‑executive directors and board committees in determining their respective remuneration. The primary performance indicators are set here.

Integrated annual report

The committee reviewed the accuracy, completeness and transparency of this remuneration report, including the details of emoluments paid to directors and incentive schemes included here, and recommended the inclusion of its report in the Grindrod integrated annual report for the year ended 31 December 2017 to the board.

On behalf of the remuneration committee

Pieter Uys

Chairman

26 February 2018

Directors’ interests in the company

At 31 December 2017, the directors held interests in the company as follows:

Ordinary shares 2017 2016
    Beneficial
indirect
Beneficial
direct
Non-beneficial
indirect
  Beneficial
indirect
Beneficial
direct
Non-beneficial
indirect
MJ Hankinson   27 000 8 000   27 000 8 000
B Ntuli   10 000  
AK Olivier1         2 434 250
DA Polkinghorne   128 929   78 929
MR Wade   350 000   200 000
AG Waller   357 858   207 858
SDM Zungu   4 228   4 228
    878 015 8 000   2 952 265 8 000
1. Retired as executive director and CEO on 31 July 2017, therefore 2017 interests have been excluded from the table above.

Further to vesting in terms of the forfeitable share plan, the beneficial direct shareholdings increased by 283 333.

None of the directors had any material interest in any contracts with the group during the year under review. There were no changes in the directors’ interest in shares between 31 December 2017 and the date of this report.

Background statement

2017 focus

In 2017, the remuneration committee focused on addressing two challenges, being the fair treatment of staff employed in discontinued operations and the retention of specialist skills. Both these challenges relate to the cyclical markets in which Freight Services and Shipping operate.

During the year it became clear that Grindrod had survived the recent downturn and was well positioned as a sustainable business. It was recognised that the implementation of the Grindrod strategy and decisions taken by key management in recent years were integral to this positioning. However, the impact of the contracting macro environment, which had already resulted in a reduction of staff training benefits, left the group with limited scope to reward exceptional performance in the execution of mitigation plans.

Market uncertainty, the stressed business and the divisional consolidations, which included retrenchments, were negatively impacting staff retention. In mid-2017, the retirement of the CEO and the board decision to investigate the Spin-off of Shipping as a separate business and reposition the remaining businesses added to uncertainty.

The committee, being cognisant of the need to retain specialist skills to promote the successful implementation of Grindrod’s strategies, prioritised staff retention as a key focus.

To endorse decisions recommended by the committee, it sourced the assistance of a number of independent and objective remuneration specialists in the formulation of the incentive targets, which included retention contracts, and bench-marking the remuneration packages of executive committee members and certain senior divisional executives.

Recommendations to ensure the successful implementation of Grindrod’s strategy included:

  • Entering into eighteen-month retention contracts with all executive committee members, expiring at the end of 2018 after the projected completion of the strategic reorganisation.
  • Incentivising the executive committee and key senior employees to stimulate the successful achievement of the Spin-off of the Shipping division and the repositioning of remaining businesses.
  • Rewarding retained employees on merit for work output notwithstanding low levels of profitability and even losses.
  • Negotiating settlements with union employees providing for above-inflation increases.

An additional measure to ensure continuity was that, as an interim measure, the CEO would not be replaced, but that the chairman of the board would oversee the transition process as executive chairman. This was supported by the appointment of Nkululeko Sowazi as lead independent director.

Advisory vote

The outcome of the shareholder non-binding advisory vote on the remuneration policy at the annual general meeting on 24 May 2017 was 72.47 percent.

The main objection to the remuneration policy, raised by the Public Investment Corporation and the shareholding voting service used by a number of shareholders, is the lack of measurable participation criteria, including profit targets, in the share-price-linked option scheme and the forfeitable share plan.

  • The share-price-linked scheme has been amended to include vesting conditions.
  • The remuneration committee reiterated previous feedback, namely that, in line with shareholder approval of the forfeitable share plan in 2012, profit targets do not necessarily form part of the criteria. This is because the scheme has been designed to reward and retain key staff through market cycles over which participants have no control and which would, at times, not trigger the payment of short-term cash bonuses.

Future focus

Our future focus will remain on ensuring that employees across all spectrums are fairly, responsibly and transparently remunerated and that critical skills are retained to promote the achievement of strategic objectives and positive outcomes in the short, medium and long term.

Confirmation

The remuneration committee is of the view that Grindrod’s remuneration philosophy and policies continue to support the group’s strategy and promote fair, responsible and transparent remuneration.

The committee is satisfied that its decisions taken in 2017 further contributed to meeting the objectives of Grindrod’s remuneration policies, to fairly reward individual performance measured against objective structures, organisational sustainability, a high-performance culture and the retention of scarce and specialised skills.

The actions taken by the committee to ensure the fair compensation of all staff and the retention of key staff in a period of uncertainty and transition achieved the desired results. The committee is satisfied that Grindrod’s core skills complement is intact and capable of successfully driving the Spin-off of the Shipping division and the repositioning of Freight Services and Financial Services to the benefit of all stakeholders.

Remuneration policy

The Grindrod remuneration philosophy, available on the company website, is to fairly reward individual performance, measured against objective structures, to support organisational sustainability, a high-performance culture and the retention of scarce and specialised skills.

Remuneration policies are designed to attract, motivate, reward and retain human capital and to promote the achievement of strategic objectives within approved risk appetite and tolerance levels, positive outcomes, an ethical culture and responsible corporate citizenship. They are structured to achieve value-based management, which stimulates performance at organisational level and optimises employed capital and shareholder returns. Policy frameworks adhere to legislation and sound governance criteria and are aligned with the business strategy and objectives.

The remuneration committee is mandated to assist the board to compensate employees fairly and responsibly for specific roles. The evaluation of specific roles within a formal job-grading system provides for an objective measurement against benchmarks and an informed consideration of the gap between all levels of pay. The policies provide a basis for the structured grading of jobs and formulation of role descriptions, with regular evaluations supporting fair reward for employees based also on their individual skills and performance.

Individual performance is measured against individually tailored, predetermined KPIs, including non-financial sustainability measures that incrementally trigger rewards. To achieve performance continuity and the desired retention levels, some policies factor out conditions over which operations and individuals have no control, such as adverse market conditions.

Human-resources officers and management regularly engage with recognised unions to ensure all objectives are addressed over time.

The remuneration of executive management is monitored in terms of the overall remuneration across the group. Monitoring criteria include levels and trends in salary, collective bargaining outcomes and bonus participation. At the time that salary increases are considered, the committee receives a report on the approach management proposes to adopt for general staff increases.

Sign-on, retention and restraint payments are not part of normal remuneration, unless the remuneration committee determines otherwise in specific cases.

Payment made on termination of office in relation to good leavers include, severance and leave pay. Payments made in respect of the long term incentives if applicable, include pro-rata vesting on the forfeitable share plan and payment based on the current share price on outstanding options with reference to the share priced linked option scheme, unless the board determines otherwise.

If an employees employment terminates due to resignation or dismissal on grounds of misconduct, poor performance or proven dishonest or fraudulent conduct, long-terms incentives are forfeited.

Remuneration structure

Executives, prescribed officers and key managers receive remuneration comprising a guaranteed total cost of employment (TCOE) and a variable portion which incorporates short- and long-term incentives which are linked to performance and sustainability achievements. Some rewards are based on share-price appreciation, which promotes a long-term commitment to creating shareholder value.

The short- and long-term incentive schemes reward an individual’s contribution to company performance to align the focus of executives with the expectations of stakeholders and promote executive retention through share ownership. The forfeitable share plan and share option scheme, reflected here – provide for awarding a total of 5 025 667 shares as incentives.

Executive remuneration is annually reviewed and approved by the committee, against each individual’s level of experience, responsibilities and performance, the scarcity of the person’s knowledge and skills and the premium placed on such a resource in the market. Current levels of remuneration are benchmarked at the median of the relevant global grades and/or comparator group, which include large local and international companies.

Executives’ guaranteed remuneration considers the complexity of the role of each executive, their level of experience and their contribution to the group’s overall performance. Increases in guaranteed remuneration are awarded based on performance and updated responsibilities.

Executive remuneration is benchmarked with the “TASK” grading methodology in consultation with independent compensation consultants, to grade the level of responsibility with consideration of factors such as sales volumes, profits, number of employees, assets managed and salary/wage account.

Employment contracts of executive committee members contain a six-month notice period to ensure continuity in top management.

Non-executive director fees are reviewed annually by the committee in consultation with independent and objective remuneration specialists. The proposed fees, aligned with the remuneration levels of comparable listed companies, are referred to the board for approval at the annual general meeting. Non-executive directors are excluded from participation in the short- and long-term incentive schemes.

Incentive schemes – Short-term

Performance bonuses are based on the achievement of stretch profit targets and specified strategic and non-specified value-added objectives approved by the remuneration committee annually. Short-term incentives for executives are capped at 100 percent of TCOE.

KPIs are grouped according to the following three elements:

  • The stretch profit element (capped at 50 percent of TCOE), which is based on both targeted divisional and group profits. Factors including market conditions, return on equity and financial performance are considered in determining such targets.
  • The specific strategic element (capped at 30 percent of TCOE), aimed at ensuring attainment of key initiatives from the three-year strategic plan, which is directly aligned to the delivery of shareholder value.
  • Non-specified value-added component (with a 20-per-cent cap), comprising objectives that include transformation, SHERQ and operational and commercial imperatives that add both long‑and short-term value to the group.

The total executive committee remuneration for 2017, excluding the benefits accruing on the vesting of long-term incentive schemes, would, in the case of minimum-target achievement, have been equal to the total package as reflected in the emoluments table included in the implementation report here. The maximum remuneration, exclusive of vesting, would have been equivalent to 200 percent of the total package.

Key managers within all divisions receive bonuses based on a structure similar to that for executives. Performance is measured against pre-agreed key objectives and financial results. All bonuses are reviewed by the executive chairman and bonus information is tabled for approval by the remuneration committee.

Incentive schemes – Long-term

Grindrod Limited and Grindrod Bank’s primary performance incentive, the share-price-linked option schemes, aim to reward and retain executives and key managers.

In consideration of the cyclical nature of shipping and commodity markets, shareholders approved a pure retention incentive, the Grindrod Limited forfeitable share plan, used in periods of market distress when share price appreciation is unlikely. The incentive, capped at six million shares (0.7 percent of share capital) in accordance with shareholder approval at the 2012 annual general meeting, is designed to be a small but critical part of the long-term incentives and is utilised in limited circumstances to retain key management. The board, due to extended poor commodity and shipping markets, has awarded a total of 4 625 667 shares to retain key management.

The schemes are set out in more detail below.

Grindrod Limited share-price-linked option scheme

The share-price-linked option scheme was introduced in 2007 as a retention incentive for executives and key managers. Key strategic managers are nominated for participation in the scheme during the annual staff-appraisal period, based on their performance and contribution to the success of the divisional business plan in that year. The merit of each nomination is debated at meetings between divisional executives and the executive chairman and qualifying candidates are nominated to the remuneration committee for its review and subsequent approval by the board.

The options, which are linked to the Grindrod ordinary share price, are settled in cash and therefore not classified as equity-settled in terms of the JSE Listings Requirements. Vesting effects in three one-third tranches on the third, fourth and fifth anniversaries of the grant date and do not have an expiry date beyond the vesting date. The cash settlement, paid net of tax, is based on the difference between the grant and settlement prices, being the weighted average of the closing price for the seven trading days preceding the vesting date.

Vesting of awards in the scheme is subject to:

  • the participant’s achievement of key performance criteria;
  • appreciation of the Grindrod Limited share price, measured against increased shareholder value over the vesting period; and
  • the total award at a divisional level in any period being limited to ten percent of the division’s attributable profit.

Vesting settlements may not exceed ten percent of the net after-tax profit of a division. No settlement is paid if the share price does not rise between grant and vesting dates, if an employee resigns, is dismissed, has interrupted service or has rendered unsatisfactory performance as determined by the remuneration committee or executive chairman.

Grindrod Limited forfeitable share plan

The forfeitable share plan was introduced and approved by shareholders in 2012 to support the recruitment and long-term retention of executives and key managers during times that the Grindrod ordinary share price is stagnant or decreasing due to circumstances over which the company and participants have no control. As such, vesting is not subject to profit targets, but participants must remain in their positions in the group for an award to vest.

Shares, awarded to executives and qualifying managers who meet strategic objectives in the business plan, normally vest in three equal tranches at the end of years three, four and five after the award date. Prior to vesting, participants receive dividends paid and may vote in respect of the shares awarded, but they cannot sell or encumber their allocation until delivery date. Unvested awards are forfeited on termination of employment by the company or the participant. The value granted is recognised in the income statement at the awarded price over the vesting period.

To ensure the retention of key managers critical to the Spin-off process and strategy execution, shares awarded in June 2017 were subject to the five-year vesting period or an earlier date as determined by the remuneration committee. The scheme is capped at six million shares.

Grindrod Bank share-price-linked option scheme

The Grindrod Bank share-price-linked option scheme was introduced in 2009 for Grindrod Bank executives and key employees. The scheme operates according to the same performance requirements as the Grindrod Limited share-price-linked option scheme, except that the share-price element is calculated as the greater of the net asset value of Grindrod Bank or an agreed price-earnings value, that payments are limited to ten percent of the division’s attributable profit and that vesting dates are the dates of Grindrod Bank remuneration committee meetings. Vesting may, in exceptional circumstances and subject to the approval of the remuneration committee, occur earlier than the five-year vesting period.

Implementation report

Emoluments paid to directors and prescribed officers

The tables below provide an analysis of the emoluments, split between local and offshore remuneration package approvals, paid to executive and non-executive directors and prescribed officers of the company in relation to the 2017 and 2016 financial years.

Current directors – local

Local Directors’
fees
R000
Committee
fees
R000
Basic
remune-
ration
R000
Retirement
medical
and other
benefits
R000
Total
package
R000
Bonus1
R000
  2017
Total
R000
  % increase
from 2016
excluding
bonus7
Executive directors                    
MJ Hankinson2 940 455 3 500 4 895 4 895   9 790    
B Ntuli 3 081 1 413 4 494 2 517   7 011   6.92
DA Polkinghorne 3 350 827 4 177 2 881   7 058   7.85
AG Waller 4 057 743 4 800 2 400   7 200   6.22
Sub-total 940 455 13 988 2 983 18 366 12 693   31 059  
Non-executive directors                
H Adams 302 90 392   392
MR Faku 302 302   302
WD Geach 380 286 666   666
G Gelink 302 242 544   544
G Kotze  
Z Malinga 384 93 477   477
R Ndlovu3 112 481 593   593
NL Sowazi4 302 237 539   539
PJ Uys5 433 391 824   824
SDM Zungu 302 302   302
Sub-total 2 819 1 820 4 639   4 639
Total emoluments local 3 759 2 275 13 988 2 983 23 005 12 693   35 698    

Prescribed officer – offshore

Offshore Currency Directors’
fees
000
Committee
fees
000
Basic
remune-
ration
000
Retirement
medical
and other
benefits
000
Total
package
000
Bonus1
000
  2017
Total
000
  % increase
excluding
bonus7
Executive director                      
MR Wade6 SGD 768 133 901 307   1 208   Nil

Retired director – local

  Basic
remuneration
000
Retirement
medical
and other
benefits
000
Severence
and leave
pay on
retirement
000
  2017
Total
000
Executive director – retired 30 July 2017          
AK Olivier 4 144 964 9 795   14 903
1 Bonus payment in respect of services rendered in 2017 accrued as at year-end, as detailed here.
2 Appointed as executive chairman 1 June 2017.
3 Alternate to PJ Uys.
4 Appointed as lead independent non-executive director 1 June 2017.
5 Fees ceded to Remgro.
6 Resigned as executive director 1 November 2017.
7 Increases are based on performance and responsibilities and include role complexity, level of experience and contribution to group performance. Remuneration is benchmarked by independent consultants.

Current directors – local

Local Directors’
fees
R000
Committee
fees
R000
Basic
remune-
ration
R000
Retirement
medical
and other
benefits
R000
Total
package
R000
Bonus1
R000
  2016
Total
R000
  % increase
from 2015
excluding
bonus9
Executive directors                    
AK Olivier 6 539 1 778 8 317 1 087   9 404   7.63
B Ntuli 3 718 486 4 203 721   4 924   7.76
DA Polkinghorne 3 229 644 3 873 2 033   5 906   6.40
AG Waller 3 824 695 4 519 729   5 248   6.69
Sub-total 17 310 3 603 20 912 4 570   25 483  
Non-executive directors                
H Adams 266 79 345   345
JJ Durand2,3 107 74 181   181
MR Faku4 266 16 282   282
WD Geach 356 205 561   561
G Gelink 266 213 479   479
MJ Hankinson 827 362 1 189   1 189
Z Malinga5 46 46   46
R Ndlovu6 61 186 247   247
T Nyoka7 118 60 178   178
NL Sowazi 266 209 475   475
PJ Uys2 247 246 493   493
SDM Zungu 266 266   266
Sub-total 3 092 1 650 4 742   4 742
Total emoluments local 3 092 1 650 17 310 3 603 25 651 4 570   30 222    

Current directors – offshore

Offshore Currency Directors’
fees
000
Committee
fees
000
Basic
remune-
ration
000
Retirement
medical
and other
benefits
000
Total
package
000
Bonus1
000
  2016
Total
000
  % increase
excluding
bonus10
Executive director                      
MR Wade SGD 768 133 901 100   1 001   0.64
Non-executive director                
AC Brahde8 GBP 11 11   11    
1 Bonus payment in respect of services rendered in 2016 accrued as at year-end.
2 Fees ceded to Remgro.
3 Resigned as independent non-executive director 27 May 2016 and was replaced by PJ Uys.
4 Resigned as member of the social and ethics committee on 22 February 2016.
5 Appointed as independent non-executive director 24 October 2016.
6 Appointed as independent non-executive director 27 May 2016.
7 Includes fees paid by Grindrod Bank Limited. Resigned as director of the boards of Grindrod Bank Limited on 7 April 2016 and Grindrod Limited on 16 May 2016.
8 Resigned as independent non-executive director 27 May 2016.
9 Increases are based on performance and responsibilities and include role complexity, level of experience and contribution to group performance. Remuneration is benchmarked by independent consultants. Average increase from March 2016 to February 2017 is 6%. Deviation from the 6% is due to two months of remuneration at prior year increase levels. Annual increases are effective 1 March 2016, affecting 10 months of the financial year.
10 The 0.64% increase from 2015 to 2016 is due to timing as more fully set out in note 9 above.

As discussed above Grindrod entered into an agreement with each of the remaining executive directors to retain their skills for an 18 month period until 31 December 2018 when the strategic plan had been fully executed. B Ntuli, DA Polkinghorne, AG Waller and MR Wade received R 4.5 million, R 4.2 million, R 4.8 million and SGD 0.8 million respectively representing one year’s annual salary.

Inclusive of AK Olivier’s retirement payments and retention payments above, total executive and non-executive remuneration was R64.1 million and SGD2.0 million.

Short-term incentive: performance bonuses

The table below shows the bonus payments related to performances for executive participants in the scheme as approved by the committee:

Stretch profit
targets
Specific
strategic
actions
Non-specific
value-added
element
  Payout as a percentage of TCOE
    2017   2016
AK Olivier         N/A   13
B Ntuli 8 29 19   56   17
DA Polkinghorne 25 27 17   69   52
MR Wade 25 15   40   13
AG Waller 30 20   50   16
Average 8 28 18   54   22
Target weighting 50 30 20   100   100
  Target Weighting Performance against target
B Ntuli    
Grindrod and Freight Services HEPS 50 Partially achieved
Strategic repositioning of Freight Services 30 Partially achieved
Specific projects execution   Achieved
Non-specific value added 20 Partially achieved
DA Polkinghorne    
Grindrod and Financial Services HEPS 50 Partially achieved
Strategic repositioning of Financial Services 30 Partially achieved
Specific projects execution   Achieved
Non-specific value added 20 Partially achieved
MR Wade    
Grindrod and Shipping HEPS 50 Not achieved
Strategic repositioning of Shipping 30 Partially achieved
Specific projects execution   Achieved
Non-specific value added 20 Partially achieved
AG Waller    
Grindrod HEPS 50 Not achieved
Strategic repositioning of the group 30 Achieved
Balance sheet and liquidity targets   Achieved
Capital allocation Achieved
Shared Services restructure   Achieved
Non-specific value added 20 Achieved

MJ Hankinson was asked to fill the role of the executive chairman and chief executive officer on the resignation of AK Olivier. The remuneration committee confirmed that he would be eligible for 100% of his annual salary by way of bonus. MJ Hankinson’s sole KPI is the execution of the strategic plan. The remuneration committee assessed that MJ Hankinson had achieved his KPI for the six month period ended 31 December 2017 and he was awarded his bonus in full. Note that MJ Hankinson’s remuneration excludes pension, provident, medical aid and long term incentives.

Share option scheme

The share option scheme is closed. At 31 December 2016, only AK Olivier remained as a participant in the scheme with 400 000 vested ordinary-share options. Following his retirement, these options, with a strike price of R12.51, expire on 31 July 2018.

Grindrod Limited share-price-linked option scheme

No share option gains and cash-settled share-price-linked option payments were paid during 2017. This was due to the share price below the award price.

Executive directors / prescribed officers   Share-price-
linked option
payment
2017
R000
  Share-price-
linked option
payment
2016
R000
AK Olivier1    
B Ntuli    
DA Polkinghorne    
MR Wade    
AG Waller    
Total    
1 In terms of the scheme rules, a bonus payment of R4 259 040 was made following the retirement of AK Olivier.

A summary of options granted to executives and senior management, still to vest as at 31 December 2017, is as follows:

Date option granted Number of
options
granted
Price
R
Cancel-
lations
Forfeited Vesting on
retirement/
transfer
Vested Net total1
2013 5 639 000 16.68 (1 026 333) (1 132 334) (2 631 333) 849 000
2014 2 427 000 26.97 (318 000) (961 000) (241 000) (384 332) 522 668
2015 4 111 000 18.97 (435 000) (948 000) 2 728 000
2016 6 911 000 9.22 (961 000) (1 612 000) 4 338 000
2017 7 094 000 13.84 (578 000) (1 517 000) 4 999 000
2017 1 350 000 10.90   (150 000) 1 200 000
  27 532 000 (3 318 333) (961 000) (5 600 334) (3 015 665) 14 636 668
1 At 31 December 2017, the fair value of these options was R18 million.

The details of awards granted to executives as at 31 December 2017 are as follows:

Director   Options at
1 January
2017
  Options
granted
during the
year
Options
vested
during the
year
Vesting
price
R
  Options at
31 December
20171
  Option
price
R
Vesting
dates
AK Olivier   3 112 700     68 400 13.84       14.72 February 2017
          345 700 13.84       16.68 February 2017
          345 600 12.26       16.68 February 2018
63 000 13.84       26.97 February 2017
63 000 12.26       26.97 February 2018
63 000 12.26       26.97 February 2019
254 300 12.26       18.97 February 2018
254 300 12.26       18.97 February 2019
254 400 12.26       18.97 February 2020
467 000 12.26       9.22 February 2019
467 000 12.26       9.22 February 2020
467 000 12.26       9.22 February 2021
1 517 000 505 666 12.26       13.84 February 2020
  505 667 12.26       13.84 February 2021
      505 667 12.26       13.84 February 2022
B Ntuli 810 700 14 000 13.84       14.72 February 2017
    111 300 13.84       16.68 February 2017
      111 400   16.68 February 2018
      82 667   18.97 February 2018
      82 667   18.97 February 2019
  82 666   18.97 February 2020
  108 667   9.22 February 2019
108 667   9.22 February 2020
108 666   9.22 February 2021
685 000 228 333   13.84 February 2020
  228 333   13.84 February 2021
          228 334   13.84 February 2022
DA Polkinghorne 522 332 11 666 13.84     14.72 February 2017
54 333 13.84     16.68 February 2017
    54 333   16.68 February 2018
12 667 13.84     26.97 February 2017
12 667   26.97 February 2018
12 666   26.97 February 2019
37 300   18.97 February 2018
37 300   18.97 February 2019
37 400   18.97 February 2020
  84 000   9.22 February 2019
84 000   9.22 February 2020
84 000   9.22 February 2021
238 000 79 333   13.84 February 2020
79 333   13.84 February 2021
          79 334   13.84 February 2022
MR Wade   855 000     50 000 13.84   16.68 February 2017
                50 000   16.68 February 2018
              107 667   18.97 February 2018
    107 667   18.97 February 2019
  107 666   18.97 February 2020
  144 000   9.22 February 2019
  144 000   9.22 February 2020
  144 000   9.22 February 2021
440 000   146 667   13.84 February 2020
    146 667   13.84 February 2021
            146 666   13.84 February 2022
AG Waller 1 121 400 22 400 13.84       14.72 February 2017
  137 000 13.84       16.68 February 2017
    137 000   16.68 February 2018
  79 334   18.97 February 2018
  79 333   18.97 February 2019
  79 333   18.97 February 2020
  195 667   9.22 February 2019
555 000   195 667   9.22 February 2020
    195 666   9.22 February 2021
  185 000   13.84 February 2020
  185 000   13.84 February 2021
          185 000   13.84 February 2022
    6 422 132   3 435 000 5 043 066     4 814 066      
1 At 31 December 2017, the fair value of these options was R6 million.

The cost of scheme settlements is hedged against 6 287 384 treasury shares (2016: 8 833 128), not allocated to the forfeitable share plan, purchased at a weighted average price of R19.05 (2016: R17.31). During 2017, 100 000 shares (2016: nil) were bought back at an average price of R13.87.

Grindrod Limited forfeitable share plan

The following table summarises the movements in the forfeitable share plan during the year.

Award date Date option
granted
Number of
options
granted
Price1
R
Number of
forfeitable
shares
vested2
Number of
forfeitable
shares
forfeited
Total
forfeitable
shares3
31 May 2012 2012 2 150 000 13.65 (1 654 630) (495 370)
31 May 2012 2012 152 884 14.71 (152 884)
31 August 2013 2013 107 388 24.91 (44 596) (62 792)
24 February 2014 2014 1 068 000 27.15 (414 971) (330 362) 322 667
23 February 2015 2015 650 000 17.97 (157 755) (92 245) 400 000
22 February 2016 2016 1 076 000 9.61 (97 286) (165 714) 813 000
28 September 2016 2016 100 000 12.00 (100 000)
28 February 2017 2017 100 000 13.87 (50 000) 50 000
26 June 2017 2017 3 020 000 13.87 (410 000) 2 610 000
1 November 2017 2017 430 000 15.48 430 000
    8 854 272   (2 522 122) (1 706 483) 4 625 667
1 The price reflects the market price on the dates of award.
2 The vesting price for the 2012, 2013 and 2014 awards, that vested during 2017, was R11.41, R10.75 and R13.31 respectively.
3 At 31 December 2017, the fair value of these options based on a closing share price of R13.65 was R63 million.

The table below shows the executive participants in the scheme. No forfeitable shares were granted to the executives during 2017.

Award date   Opening
balance
1 January
2017
  Number of
forfeitable
shares
vested
Number of
forfeitable
shares
forfeited
Total
forfeitable
shares1
AK Olivier2,3   963 000   (666 499) (296 501)
B Ntuli   433 400   (50 000) 383 400
DA Polkinghorne   211 400   (50 000) 161 400
MR Wade   461 200   (150 000) 311 200
AG Waller   543 400   (150 000) 393 400
    2 612 400   (1 066 499) (296 501) 1 249 400
1 At 31 December 2017, the fair value of these options was R17 million.
2 The number of forfeitable shares vested includes 383 166 shares, at a price on vesting of R12.38, subject to pro-rata vesting on retirement.
3 Based on approval of the remuneration committee, a cash bonus of R1 871 800 was made in lieu of shares that would have vested during AK Olivier’s notice period.

Grindrod Bank share-price-linked option scheme

A summary of options granted to executives and senior management of Grindrod Bank, still to vest as at 31 December 2017, is as follows:

Date option granted Number of
options granted
Price R Lapse Vested Net total1
2013 1 553 000 7.55 (22 000) (1 254 500) 276 500
2014 2 207 000 9.88 (31 000) (1 465 333) 710 667
2015 1 309 000 13.04 (92 000) (206 000) 1 011 000
2016 945 000 15.60 (69 000) 876 000
2017 1 109 000 16.93 1 109 000
  7 123 000 (145 000) (2 994 833) 3 983 167

Bonus payments totalling R17 917 661 were made on Grindrod Bank options vesting and settled in 2017. This included payments made to D Polkinghorne of R2 358 470 and payments made to key managers who exited the scheme following the formation of a newly established entity, Bridge Fund Managers, on the merger of Grindrod Asset Management with that of private equity house Infinitus Holdings Proprietary Limited.

The details of awards granted to an executive as at 31 December 2017 are as follows:

Director   Options at
1 January
2017
  Options
granted
during the
year
Options
vested
during the
year
Vesting
price
R
  Options at
31 December
20171
  Option
price
R
Vesting
dates
DA Polkinghorne   763 334     78 334 16.93       6.86 February 2017
        56 000 16.93       7.55 February 2017
28 000 16.93   28 000   7.55 February 2018
98 000 16.93       9.88 February 2017
49 000 16.93   49 000   9.88 February 2018
49 000 16.93   49 000   9.88 February 2019
    47 000   13.04 February 2018
  47 000   13.04 February 2019
  47 000   13.04 February 2020
  46 000   15.60 February 2019
  46 000   15.60 February 2020
  46 000   15.60 February 2021
145 000   48 333   16.93 February 2020
  48 333   16.93 February 2021
          48 334   16.93 February 2022
  763 334 145 000 358 334   550 000