How much is the Employee Scheme costing the JSE?
The Employee Scheme is linked to the performance of the JSE share price but is a cash settled scheme. The impact of the Scheme depends on what happens to the JSE share price. The cost of the participation interests awarded under the Scheme is valued using the Black-Scholes valuation methodology and, in terms of IFRS the participation interests are expensed over the five years of the Employee Scheme. A quarter of the 1 million Participation Interests will be allocated upfront. The rest will be allocated in future. This is not really an equity based scheme though; the reference to the share price is merely a formula for determining a cash bonus. It is not equity at all; it’s just notionally similar to equity. In South Africa this is known as a phantom share scheme. As with all expenses there is a dilutionary effect on earnings but as this Scheme does not involve the issue of shares, there is no dilution of shareholding.
