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Stock-Based Compensation
 12 Months Ended
Jun. 30, 2021
Stock-Based Compensation [Abstract]  
Stock-Based Compensation
16.
 
STOCK
-
BASED
 
COMPENSATION
 
 
Amended and Restated Stock Incentive Plan
 
The
 
Company’s
 
Amended
 
and
 
Restated
 
2015
 
Stock
 
Incentive
 
Plan
 
(the
 
“Plan”)
 
was
 
most
 
recently
 
amended
 
and
 
restated
 
on
November 11, 2015, after approval
 
by shareholders. No evergreen provisions are included in
 
the Plan. This means that the maximum
number of shares issuable under the
 
Plan is fixed and cannot be increased
 
without shareholder approval, the plan
 
expires by its terms
upon a specified date, and no new stock options are awarded automatically upon exercise of an outstanding stock option. Shareholder
approval is required for the repricing of awards or the implementation
 
of any award exchange program.
 
 
The Plan
 
permits Net1
 
to grant
 
to its
 
employees, directors
 
and consultants
 
incentive stock
 
options, nonqualified
 
stock options,
stock appreciation rights, restricted stock, performance-based awards
 
and other awards based on its
 
common stock. The Remuneration
Committee of the Company’s Board
 
of Directors (“Remuneration Committee”) administers the Plan.
 
The total number
 
of shares of common
 
stock issuable under the
 
Plan is
11,052,580
. The maximum
 
number of shares for
 
which
awards, other than performance-based awards,
 
may be granted
 
in any combination during
 
a calendar year to
 
any participant is
569,120
.
The maximum
 
limits on
 
performance-based
 
awards that
 
any participant
 
may be
 
granted during
 
a calendar
 
year are
569,120
 
shares
subject to stock option awards
 
and $
20
 
million with respect to awards
 
other than stock options. Shares
 
that are subject to awards
 
which
terminate or lapse without the payment of
 
consideration may be granted again under the
 
Plan. Shares delivered to the Company as
 
part
or full payment for
 
the exercise of an option or to satisfy withholding obligations upon the exercise of an option may be granted again
under the
 
Plan in
 
the Remuneration
 
Committee’s
 
discretion. No
 
awards may
 
be granted
 
under the
 
Plan after
 
August 19,
 
2025, but
awards granted on or before such date may extend to later dates.
 
 
Options
 
General Terms of
 
Awards
 
 
Option awards are generally granted with an exercise price equal to the market price of the Company's stock at the date of grant,
with vesting conditioned upon the recipient’s continuous service through the applicable vesting date and expire
10
 
years after the date
of grant. The options generally become exercisable in accordance with a
 
vesting schedule ratably over a period of
three years
 
from the
date of grant. The Company issues new shares to satisfy stock option award
 
exercises but may also use treasury shares.
 
Valuation
 
Assumptions
 
 
The
 
fair
 
value
 
of
 
each
 
option
 
is
 
estimated
 
on
 
the
 
date
 
of
 
grant
 
using the
 
Cox
 
Ross
 
Rubinstein
 
binomial
 
model
 
that
 
uses the
assumptions
 
noted
 
in
 
the
 
table
 
below.
 
The
 
estimated
 
expected
 
volatility
 
is
 
generally
 
calculated
 
based
 
on
 
the
 
Company’s
750
-day
volatility.
 
The
 
estimated
 
expected life
 
of
 
the option
 
was determined
 
based
 
on historical
 
behavior
 
of
 
employees
 
who were
 
granted
options
 
with
 
similar
 
terms.
 
 
16.
 
STOCK
-
BASED
 
COMPENSATION
 
(continued)
 
 
Amended and Restated Stock Incentive Plan (continued)
 
Options (continued)
 
Valuation
 
Assumptions (continued)
 
 
The table below presents the range of assumptions used to value options
 
granted during the years ended 2021, 2020 and 2019:
2021
2020
2019
Expected volatility
 
62
%
57
%
44
%
Expected dividends
 
0
%
0
%
0
%
Expected life (in years)
 
3
3
3
Risk-free rate
 
0.19
%
1.57
%
2.75
%
Restricted Stock
 
General Terms of
 
Awards
 
Shares of restricted stock are
 
considered to be participating non-vested equity shares
 
(specifically contingently returnable shares)
for the
 
purposes of
 
calculating earnings per
 
share (refer
 
to Note
 
18)
 
because, as discussed
 
in more
 
detail below, the recipient
 
is obligated
to transfer any unvested
 
restricted stock back
 
to the Company for
 
no consideration
 
and these shares of
 
restricted stock are eligible
 
to
receive non-forfeitable
 
dividend equivalents
 
at the same
 
rate as common
 
stock. Restricted
 
stock generally
 
vests ratably
 
over a
three
year
 
period, with
 
vesting conditioned
 
upon the
 
recipient’s
 
continuous service
 
through the
 
applicable vesting
 
date and
 
under certain
circumstances, the achievement of certain performance targets,
 
as described below.
 
 
Recipients
 
are
 
entitled
 
to
 
all
 
rights
 
of
 
a
 
shareholder
 
of
 
the
 
Company
 
except
 
as
 
otherwise
 
provided
 
in
 
the
 
restricted
 
stock
agreements.
 
These
 
rights
 
include
 
the
 
right
 
to
 
vote
 
and
 
receive
 
dividends
 
and/or
 
other
 
distributions.
 
However,
 
the
 
restricted
 
stock
agreements generally
 
prohibit transfer
 
of any
 
nonvested and
 
forfeitable restricted
 
stock. If
 
a recipient
 
ceases to
 
be a
 
member of
 
the
Board of
 
Directors or
 
an employee
 
for any
 
reason, all
 
shares of
 
restricted stock
 
that are
 
not then
 
vested and
 
nonforfeitable will
 
be
immediately forfeited and transferred to the Company for no consideration. Forfeited shares of restricted stock
 
are available for future
issuances by the Remuneration Committee.
 
 
The Company issues new shares to satisfy restricted stock awards.
 
Valuation
 
Assumptions
 
The fair value
 
of restricted stock
 
is generally based
 
on the closing
 
price of the
 
Company’s stock
 
quoted on The
 
Nasdaq Global
Select Market on the date of grant.
 
 
Forfeiture of 150,000 shares
 
of restricted stock with Performance Conditions awarded
 
in August 2016
 
In August 2016, the
 
Remuneration Committee approved an
 
award of
350,000
 
shares of restricted stock to executive
 
officers. In
May 2017, the
 
Company determined
 
to accelerate the
 
vesting of all
 
(
200,000
) of the
 
shares of restricted
 
stock awarded to
 
its former
CEO. The shares of restricted stock awarded to executive
 
officers in August 2016 were subject to time-based
 
and performance-based
vesting conditions.
 
In order
 
for any
 
of the
 
shares to
 
vest, the
 
recipient was
 
required to
 
remain employed
 
by the
 
Company on
 
a full-
time basis on the date that it
 
files its Annual Report on Form
 
10-K for the fiscal year ended
 
June 30, 2019. If that condition is
 
satisfied,
then the shares will vest based on the level of Fundamental EPS the Company achieves for the fiscal
 
year ended June 30, 2019 (“2019
Fundamental EPS”), as follows:
 
●
 
One-third of the shares will vest if the Company achieves 2019 Fundamental
 
EPS of $
2.60
;
●
 
Two-thirds of the
 
shares will vest if the Company achieves 2019 Fundamental EPS of $
2.80
; and
●
 
All of the shares will vest if the Company achieves 2019 Fundamental EPS of $
3.00
.
 
At levels of 2019 Fundamental EPS greater
 
than $
2.60
 
and less than $
3.00
, the number of shares
 
that will vest will be
 
determined
by linear interpolation relative to 2019 Fundamental EPS of
 
$
2.80
. All shares of restricted stock have been
 
valued utilizing the closing
price
 
of
 
shares
 
of
 
the
 
Company’s
 
common
 
stock
 
quoted
 
on
 
The
 
Nasdaq
 
Global
 
Select
 
Market
 
on
 
the
 
date
 
of
 
grant
.
 
 
16.
 
STOCK
-
BASED
 
COMPENSATION
 
(continued)
 
 
Amended and Restated Stock Incentive Plan (continued)
 
Restricted Stock (continued)
 
Forfeiture of 150,000 shares
 
of restricted stock with Performance Conditions awarded
 
in August 2016 (continued)
 
Any shares that did
 
not vest in accordance
 
with the above-described conditions
 
would be forfeited. During
 
the year ended June
30, 2019, the Company reversed
 
the stock-based compensation charge recognized related to
150,000
 
shares of restricted stock because
the Company did not achieve the 2019 Fundamental EPS target.
 
The
150,000
 
shares of restricted stock were forfeited.
 
Forfeiture of 150,000 shares
 
of restricted stock with Market Conditions awarded
 
in August 2017
 
 
In August 2017, the Remuneration Committee approved an award
 
of
210,000
 
shares of restricted stock to executive officers. The
shares of restricted
 
stock awarded to
 
executive officers
 
in August 2017
 
were subject to
 
a time-based vesting
 
condition and a
 
market
condition and would vest
 
in full only on
 
the date, if any,
 
that the following conditions
 
were satisfied: (1) the
 
price of the Company’s
common stock must equal or exceed certain agreed VWAP
 
levels (as described below) during a measurement period commencing on
the date that
 
it filed its Annual
 
Report on Form
 
10-K for the
 
fiscal year ended
 
June 30, 2020
 
and ending on
 
December 31, 2020
 
and
(2) the recipient
 
is employed by the
 
Company on a
 
full-time basis when
 
the condition in
 
(1) is met.
 
If either of
 
these conditions was
not satisfied, then none of the shares of restricted stock
 
would vest and they would be forfeited. The $
23.00
 
price target represents an
approximate
35
% increase,
 
compounded annually,
 
in the
 
price of
 
the Company’s
 
common stock
 
on Nasdaq
 
over the
 
$
9.38
 
closing
price on August 23, 2017.
 
The VWAP
 
levels and vesting percentages related to such levels were as follows:
●
 
Below $
15.00
 
(threshold)—
0
%
●
 
At or above $
15.00
 
and below $
19.00
—
33
%
●
 
At or above $
19.00
 
and below $
23.00
—
66
%
●
 
At or above $
23.00
—
100
%
 
 
The
210,000
 
shares of restricted stock were effectively forward starting knock-in barrier options with multi-strike prices of
zero
.
The fair
 
value of
 
these shares
 
of restricted
 
stock was calculated
 
utilizing a
 
Monte Carlo
 
simulation model
 
which was
 
developed for
the purpose
 
of the
 
valuation of
 
these shares.
 
For each
 
simulated share
 
price path,
 
the market
 
share price
 
condition was
 
evaluated to
determine whether
 
or not
 
the shares would
 
vest under
 
that simulation.
 
A standard
 
Geometric Brownian
 
motion process
 
was used
 
in
the forecasting
 
of the share
 
price instead of
 
a “jump diffusion”
 
model, as the
 
share price volatility
 
was more stable
 
compared to
 
the
highly volatile regime
 
of previous
 
years. Therefore, the
 
simulated share
 
price paths
 
capture the idiosyncrasies
 
of the
 
observed Company
share price movements.
 
 
In scenarios where
 
the shares do not
 
vest, the final vested
 
value at maturity is
 
zero. In scenarios where
 
vesting occurs, the final
vested value on maturity is
 
the share price on vesting date. The
 
value of the grant is the
 
average of the discounted vested values.
 
The
Company used an expected volatility of
44.0
%, an expected life of
 
approximately
three years
, a risk-free rate ranging between
1.275
%
to
1.657
% and
no
 
future dividends
 
in its
 
calculation of
 
the fair
 
value of
 
the restricted
 
stock. The
 
estimated expected
 
volatility was
calculated based on the Company’s
30 day
 
VWAP
 
share price using the exponentially weighted moving average of returns.
 
On August 5, 2020,
 
the Company and its
 
then chief executive officer and
 
member of its board
 
of directors, Mr. Herman G. Kotzé,
entered into
 
a Separation
 
and Release of
 
Claims Agreement
 
(the “Separation
 
Agreement”). The
 
parties agreed
 
that Mr.
 
Kotzé’s
 
last
day
 
of
 
employment
 
with
 
the Company
 
would
 
be
 
September
 
30,
 
2020,
 
unless
 
terminated
 
earlier
 
by
 
the
 
Company
 
for
 
cause.
 
Upon
separation
 
from
 
the
 
Company,
 
Mr.
 
Kotzé
 
forfeited
150,000
 
shares
 
of
 
restricted
 
stock
 
that
 
were
 
subject
 
to
 
the
 
market
 
conditions
described above
 
because he was
 
no longer
 
an employee of
 
the Company as
 
of the vesting
 
date. The
 
VWAP
 
market conditions were
not
 
achieved
 
and
 
all
 
outstanding
 
shares
 
of
 
restricted
 
stock
 
wer
e
 
forfeited
 
on
 
December
 
31,
 
2020
.
 
 
16.
 
STOCK
-
BASED
 
COMPENSATION
 
(continued)
 
 
Amended and Restated Stock Incentive Plan (continued)
 
Restricted Stock (continued)
 
Market Conditions - Restricted Stock Granted in September 2018
 
 
In September 2018, the Remuneration Committee approved an award of
148,000
 
shares of restricted stock to executive officers.
The
148,000
 
shares of restricted stock awarded to
 
executive officers in September
 
2018 are subject to a time-based vesting
 
condition
and a market
 
condition and vest
 
in full only
 
on the
 
date, if
 
any, that the following
 
conditions are
 
satisfied: (1) the
 
price of
 
the Company’s
common stock must equal or exceed certain agreed VWAP
 
levels (as described below) during a measurement period commencing on
the date that
 
it files its
 
Annual Report on
 
Form 10-K for
 
the fiscal year
 
ended June 30,
 
2021 and ending
 
on December 31,
 
2021 and
(2) the recipient is employed by the Company on a full-time basis when
 
the condition in (1) is met. If either of these conditions is not
satisfied,
 
then
 
none
 
of
 
the
 
shares
 
of
 
restricted
 
stock
 
will
 
vest
 
and
 
they
 
will
 
be
 
forfeited.
 
The
 
$
23.00
 
price
 
target
 
represents
 
an
approximate
55
% increase,
 
compounded annually,
 
in the
 
price of
 
the Company’s
 
common stock
 
on Nasdaq
 
over the
 
$
6.20
 
closing
price on September 7, 2018.
 
The VWAP
 
levels and vesting percentages related to such levels are as follows:
 
●
 
Below $
15.00
 
(threshold)—
0
%
●
 
At or above $
15.00
 
and below $
19.00
—
33
%
●
 
At or above $
19.00
 
and below $
23.00
—
66
%
●
 
At or above $
23.00
—
100
%
 
 
The fair value of these shares of restricted stock was calculated using a Monte Carlo simulation of
 
a stochastic volatility process.
The choice of a stochastic volatility process as an extension to the standard Black Scholes process was driven by both observations of
larger than expected moves in the daily time series for the Company’s
 
VWAP
 
price, but also the observation of the strike structure of
volatility
 
(i.e.
 
skew
 
and
 
smile)
 
for
 
out-of-the
 
money
 
calls
 
and
 
out-of-the
 
money
 
puts
 
versus
 
at-the-money
 
options
 
for
 
both
 
the
Company’s stock and NASDAQ futures.
 
In scenarios where
 
the shares do not
 
vest, the final vested
 
value at maturity is
 
zero. In scenarios where
 
vesting occurs, the final
vested value on maturity is the share price on vesting
 
date. In its calculation of the fair value of
 
the restricted stock, the Company used
an average volatility of
37.4
% for the VWAP
 
price, a discounting based on USD overnight indexed swap rates for
 
the grant date, and
no future dividends. The average volatility was extracted from the time series for VWAP prices as the standard deviation of log prices
for the
three years
 
preceding the grant date. The mean reversion
 
of volatility and the volatility of
 
volatility parameters of the stochastic
volatility process
 
were extracted
 
by regressing
 
log differences
 
against log
 
levels of
 
volatility from
 
the time
 
series for
 
at-the-money
options
30 day
 
volatility quotes, which were available from January 2, 2018 onwards.
 
Executive officers forfeited
88,000
 
shares of restricted
 
stock that were
 
subject to the
 
market conditions described above
 
following
their separation from the Company during the year ended June 30, 2021.
 
 
Performance Conditions - Restricted Stock Granted in February 2020
 
 
The
454,400
 
shares of restricted
 
stock awarded to
 
executive officers in February
 
2020 are subject
 
to time-based and
 
performance-
based vesting conditions and vest in full only on the date, if any,
 
that the following conditions are satisfied: (1) the achievement of an
agreed return on average net equity per year during a
 
measurement period commencing from July 1, 2021, through June 30, 2023,
 
and
(2) the recipient
 
is employed by
 
the Company
 
on a full-time
 
basis when the
 
condition in
 
(1) is met.
 
Net equity
 
is calculated as
 
total
equity attributable
 
to the
 
Company’s
 
shareholders plus
 
redeemable common
 
stock, in
 
conformity with
 
GAAP.
 
The net
 
equity as
 
of
June 30, 2021, was
 
set as the base
 
year for the measurement period. The
 
average net equity is
 
calculated as the simple average
 
between
the opening
 
net equity
 
and closing
 
net equity
 
during each
 
fiscal year
 
within the
 
measurement
 
period.
 
The targeted
 
return per
 
year
within the measurement period is derived from GAAP net income
 
attributable to the Company per fiscal year.
 
The performance-based awards vest
 
based on the achievement of
 
the following targeted return
 
on average net equity during
 
the
measurement period, of:
●
 
8
% per year:
50
% vest;
●
 
14
% per year:
100
% vest.
 
No
 
shares of restricted
 
stock will vest
 
at a return
 
on average net
 
equity of less
 
than
8
%. Calculation of
 
the award based
 
on the
returns between
8
% and
14
% will be interpolated
 
on a linear basis.
 
The Company’s
 
Remuneration Committee may
 
use its discretion
to
 
adjust
 
any
 
component
 
of
 
the
 
calculation
 
of
 
the
 
award
 
on
 
a
 
fact
-
by
-
fact
 
basis,
 
for
 
instance,
 
as
 
the
 
result
 
of
 
an
 
acquisition.
 
 
16.
 
STOCK
-
BASED
 
COMPENSATION
 
(continued)
 
 
Amended and Restated Stock Incentive Plan (continued)
 
Restricted Stock (continued)
 
Performance Conditions - Restricted Stock Granted in February 2020
 
(continued)
 
 
Executive
 
officers
 
forfeited
374,400
 
shares
 
of
 
restricted
 
stock
 
that
 
were
 
subject
 
to
 
the
 
performance
 
conditions
 
described
following their separation from the Company during the year ended June
 
30, 2021.
 
Market Conditions - Restricted Stock Granted in May 2021
 
 
In May 2021,
 
the Remuneration
 
Committee approved an
 
award of
158,734
 
shares of restricted
 
stock to executive
 
officers. The
158,734
 
shares of restricted
 
stock awarded to
 
executive officers in
 
May 2021 are
 
subject to a
 
time-based vesting condition and
 
a market
condition and vest
 
in full only
 
on the date,
 
if any, that the
 
following conditions are
 
satisfied: (1) a
 
compounded annual
20
% appreciation
in the Company’s stock price over the measurement period commencing on
 
June 30, 2021 through June 30,
 
2024,
 
and (2) the recipient
is employed
 
by the Company
 
on a full-time
 
basis when the
 
condition in
 
(1) is met.
 
If either of
 
these conditions
 
is not satisfied,
 
then
none of the
 
shares of restricted
 
stock will vest and
 
they will be
 
forfeited. The Company’s
 
closing stock price
 
on Nasdaq on
 
June 30,
2021, was $
4.71
.
 
 
The appreciation levels (times and price) and vesting percentages as of each
 
period ended related to such levels are as follows:
●
 
Prior to the first anniversary of the grant date:
0
%
●
 
Fiscal 2022, stock price as of June 30, 2022 is
1.2
 
times higher (i.e. $
5.65
 
or higher) than $
4.71
:
33
%;
●
 
Fiscal 2023, stock price as of June 30, 2023 is
1.44
 
times higher (i.e. $
6.78
 
or higher) than $
4.71
:
67
%;
●
 
Fiscal 2024, stock price as of June 30, 2024 is
1.728
 
times higher (i.e. $
8.14
) than $
4.71
:
100
%.
 
The fair value of these shares of restricted stock was calculated using a Monte Carlo simulation of
 
a stochastic volatility process.
The choice of a stochastic volatility process as an extension to the standard Black Scholes process was driven by both observations of
larger than expected moves in the daily time series for
 
the Company’s closing price, but also the observation
 
of the strike structure of
volatility
 
(i.e.
 
skew
 
and
 
smile)
 
for
 
out-of-the
 
money
 
calls
 
and
 
out-of-the
 
money
 
puts
 
versus
 
at-the-money
 
options
 
for
 
both
 
the
Company’s stock and NASDAQ futures.
 
In scenarios where the
 
shares do not vest, the
 
final vested value at maturity
 
is zero. In scenarios
 
where vesting occurs, the
 
final
vested value on maturity is the share price on vesting
 
date. In its calculation of the fair value of
 
the restricted stock, the Company used
an average volatility of
61.6
% for the closing price, a discounting based on USD overnight
 
indexed swap rates for the grant date, and
no future dividends. The average volatility was extracted from the time series for closing prices as the standard deviation of log prices
for the three years preceding the grant
 
date. The mean reversion of volatility
 
and the volatility of volatility parameters of
 
the stochastic
volatility process
 
were extracted
 
by regressing
 
log differences
 
against log
 
levels of
 
volatility from
 
the time
 
series for
 
at-the-money
options
30 day
 
volatility quotes, which were available for the three years preceding
 
May 5, 2021.
 
Stock Appreciation Rights
 
 
The Remuneration Committee may also grant stock appreciation rights, either singly
 
or in tandem with underlying stock options.
Stock appreciation rights entitle the holder upon exercise to receive an amount in any combination of cash or shares of common stock
(as determined by the Remuneration Committee) equal
 
in value to the excess
 
of the fair market value
 
of the shares covered by
 
the right
over
 
the
 
grant
 
price.
 
No
 
stock
 
appreciation
 
rights
 
have
 
been
 
granted.
 
 
16.
 
STOCK
-
BASED
 
COMPENSATION
 
(continued)
 
 
Stock option and restricted stock activity
 
 
Options
 
The following table summarizes stock option activity for the years ended
 
June 30, 2021, 2020 and 2019:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($'000)
Weighted
average
grant date
fair value
($)
Outstanding - July 1, 2018
809,274
13.99
2.67
370
4.20
Granted – September 2018
600,000
6.20
10.00
1,212
2.02
Expired unexercised
(370,000)
19.27
-
5.00
Forfeited
(174,695)
6.65
-
2.00
Outstanding - June 30, 2019
864,579
7.81
7.05
-
2.62
Granted – October 2019
561,000
3.07
10.00
676
1.20
Forfeited
(93,928)
7.50
-
2.81
Outstanding - June 30, 2020
1,331,651
5.83
7.56
-
2.01
Granted – August 2020
150,000
3.50
3.00
166
1.11
Granted – November 2020
560,000
3.01
10.00
691
1.23
Exercised
(17,335)
3.07
35
Forfeited
(729,484)
6.65
-
2.24
Outstanding - June 30, 2021
1,294,832
3.93
7.68
1,624
1.45
These options have an exercise price range of $3.01 to $11.23.
 
On August 5, 2020, the
 
Company granted one of its
 
non-employee directors, Mr. Ali Mazanderani, in his capacity as
 
a consultant
to the Company,
150,000
 
stock options with an exercise price
 
of $
3.50
. These stock options are subject to
 
the non-employee director’s
continuous service through the applicable vesting date, and half of the options vest on each of the first and second anniversaries of the
grant date.
 
 
During the years ended June 30,
 
2021 and 2020,
331,833
 
and
170,335
 
stock options became exercisable, respectively.
No
 
stock
options
 
became
 
exercisable
 
during
 
the
 
year
 
ended
 
June
 
30,
 
2019.
 
During
 
the
 
year
 
ended
 
June
 
30,
 
2021,
 
the
 
Company
 
received
approximately $
0.5
 
million from the
 
exercise of
17,335
 
stock options.
No
 
stock options were
 
exercised during
 
the years ended
 
June
30, 2020 and 2019, respectively.
 
 
During
 
the
 
years
 
ended
 
June
 
30,
 
2021,
 
2020
 
and
 
2019,
 
employees
 
forfeited
729,484
,
93,928
 
and
174,695
 
stock
 
options,
respectively.
 
The number
 
of forfeitures
 
during the
 
year ended
 
June 30,
 
2021, increased
 
significantly compared
 
to prior
 
periods as
 
a
result of the closure of our IPG operations during the latter half of calendar 2020 and the unrelated
 
(to the IPG closure) resignation of
various employees in
 
the first half of calendar
 
2021. These stock options
 
forfeited had strike prices
 
ranging from $
3.01
 
to $
11.23
. In
addition, the Company’s former chief executive officer forfeited
250,034
 
stock options with strike
 
prices ranging from $
6.20
 
to $
11.23
per share following his separation from the Company. During the year ended June 30, 2019,
200,000
 
stock options awarded in August
2008
 
and
 
170,000
 
stock
 
options
 
awarded
 
in
 
May
 
2009
 
expired
 
unexercised.
 
 
1
6.
 
STOCK
-
BASED
 
COMPENSATION
 
(continued)
 
 
Options (continued)
 
The following table presents stock options vested and expected to vest as of
 
June 30, 2021:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($’000)
Vested
 
and expecting to vest - June 30, 2021
1,294,832
3.93
7.68
1,624
These options have an exercise price range of $
3.01
 
to $
11.23
.
 
The following table presents stock options that are exercisable as of June 30,
 
2021:
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($’000)
Exercisable - June 30, 2021
326,677
5.57
7.43
206
16.
 
STOCK
-
BASED
 
COMPENSATION
 
(continued)
 
 
Restricted stock
 
The following table summarizes restricted stock activity for the years
 
ended June 30, 2021, 2020 and 2019:
Number of
shares of
restricted
stock
Weighted
average
grant date
fair value
($’000)
Non-vested – July 1, 2018
765,411
6,162
Granted – September 2018
148,000
114
Total vested
(64,003)
503
Vested
 
– August 2018
(52,594)
459
Vested
 
– March 2019
(11,409)
44
Total forfeitures
(265,500)
1,060
Forfeitures – employee terminations
(115,500)
460
Forfeitures – August 2016 awards with performance conditions
(150,000)
600
Non-vested – June 30, 2019
583,908
3,410
Granted – February 2020
568,000
2,300
Total vested
(18,908)
70
Vested
 
– March 2020
(11,408)
42
Vested
 
– March 2020 - accelerated vesting
 
(7,500)
28
Forfeitures
(17,500)
65
Non-vested – June 30, 2020
1,115,500
5,354
Granted – May 2021
254,560
1,035
Total vested
(311,300)
1,037
Vested
 
– August 2020
(244,500)
812
Vested
 
– September 2020 - accelerated vesting
 
(66,800)
225
Total forfeitures
(674,200)
2,690
Forfeitures - employee terminations
(644,200)
2,542
Forfeitures – August 2017 awards with market conditions
 
(30,000)
148
Non-vested – June 30, 2021
384,560
1,123
The
 
May
 
2021
 
grants
 
comprise
158,734
 
shares
 
of
 
restricted
 
stock
 
awarded
 
to
 
executive
 
officers
 
that
 
are
 
subject
 
to
 
a
 
market
condition (related
 
to share
 
price performance)
 
and time-based
 
vesting, and
95,826
 
shares of
 
restricted stock
 
awarded to
 
employees,
including
77,040
 
shares of restricted stock awarded
 
to Mr. Mali, our Chief Executive
 
Officer: Southern Africa, that are
 
subject to time-
based vesting. During
 
the year ended June
 
30, 2021,
244,500
 
shares of restricted stock
 
with time-based vesting
 
conditions vested. In
connection with the
 
Company’s former
 
chief executive officer’s
 
separation, the Company
 
agreed to accelerate
 
the vesting of
66,800
shares
 
of
 
restricted
 
stock
 
which
 
were
 
granted
 
in
 
February
 
2020,
 
and
 
which
 
were
 
subject
 
to
 
time-based
 
vesting.
 
These
 
shares
 
of
restricted stock vested
 
on September 30,
 
2020. The
644,200
 
shares of restricted
 
stock that were forfeited
 
during the year ended
 
June
30, 2021,
 
includes
475,200
 
shares of restricted
 
stock forfeited
 
by the Company’s
 
former chief
 
executive officer
 
upon his separation
from
 
the
 
Company.
 
The
30,000
 
shares
 
were
 
forfeited
 
by
 
an
 
executive
 
officer
 
as
 
the
 
market
 
condition
 
(related
 
to
 
share
 
price
performance) was not achieved.
 
The
 
February 2020
 
grants comprise
113,600
 
shares of
 
restricted stock
 
awarded to
 
executive officers
 
that are
 
subject to
 
time-
based vesting
 
and
454,400
 
shares of
 
restricted
 
stock awarded
 
to executive
 
officers
 
that are
 
subject to
 
performance
 
and time-based
vesting. On
 
March 1,
 
2018,
22,817
 
shares of
 
restricted stock
 
with time-based
 
vesting conditions
 
were granted
 
to our chief
 
financial
officer and these awards vest in two tranches, of which
11,408
 
vested on March 1, 2020, and
11,409
 
vested on March 1, 2019. During
the year
 
ended June
 
30, 2020,
 
employees forfeited
17,500
 
shares of
 
restricted stock
 
upon termination
 
and
7,500
 
shares (50%
 
of the
original award) of restricted stock with time-based vesting conditions were forfeited by an executive officer upon the disposal of Net1
Korea. The Company’s Board of
 
Directors accelerated the vesting of the other half of the award and
7,500
 
vested.
 
The September 2018 grants comprise
148,000
 
shares of restricted stock awarded
 
to executive officers that are
 
subject to market
and time-based vesting. On
 
March 1, 2019,
11,409
 
of the
22,817
 
shares of restricted
 
stock awarded to
 
our chief financial
 
officer vested.
The 52,594
 
shares of
 
restricted stock
 
represent awards
 
made to
 
non-employee directors
 
that vested.
 
During the
 
year ended
 
June 30,
2019, employees
 
forfeited
115,500
 
shares of restricted
 
stock upon termination
 
which had either
 
time-based or
 
market conditions.
 
In
addition,
 
an
 
executive
 
officer
 
forfeited
 
150,000
 
shares
 
of
 
restricted
 
stock
 
as
 
the
 
performance
 
conditions
 
were
 
not
 
achieved.
 
 
16.
 
STOCK
-
BASED
 
COMPENSATION
 
(continued)
 
 
Restricted stock (continued)
 
The fair
 
value of
 
restricted stock
 
which vested
 
during the
 
years ended
 
June 30,
 
2021, 2020
 
and 2019,
 
was $
1.0
 
million, $
0.1
million and $
0.5
 
million, respectively.
 
 
July 1 award to new Group
 
Chief Executive Officer
 
On June 30,
 
2021, the Company
 
entered into employment
 
agreements
 
with Mr.
 
Chris G.B. Myer,
 
under which Mr.
 
Meyer was
appointed Group Chief Executive Officer of the Company effective July 1,
 
2021. Mr. Meyer was awarded
117,304
 
shares of restricted
stock on July
 
1, 2021, which were
 
subject to time-based
 
vesting and vest
 
in full on
June 30, 2024
, subject to Mr.
 
Meyer’s continued
service to the
 
Company through June
 
30, 2024.
 
In addition, under
 
the terms of
 
Mr. Meyer’s engagement, the Company’s Remuneration
Committee also awarded Mr.
 
Meyer
117,304
 
shares of restricted stock which
 
include performance conditions
 
and which only vested
on June
 
30, 2024
 
if the
 
conditions are
 
met and
 
Mr.
 
Meyer remains
 
employed
 
with the
 
Company through
 
June 30,
 
2024. Vesting
 
of
half of
 
these awards,
 
or
58,652
 
shares of
 
restricted stock,
 
is subject
 
to the
 
Company achieving
 
its
three-year
 
financial services
 
plan
during the specific measurement
 
period from June
 
30, 2021, to
 
June 30, 2024,
 
and the other
 
half is subject
 
to share price
 
growth targets,
and only vest if the Company’s share price
 
is $
8.14
 
or higher on June 30, 2024.
 
The parties also agreed that, on or about January
 
1, 2022, the Company will issue such number of shares
 
of restricted stock equal
to the aggregate
 
amount of the
 
Company’s common stock purchased by Mr. Meyer
 
between when the
 
Company files its
 
Annual Report
on Form 10-K for the year ended June 30, 2021, and December 31, 2021. The number of shares of restricted to stock to be issued will
be calculated using a base amount of up to $ 1.0 million, in each case, divided by the Fair Market Value (as defined in the Company’s
Amended and Restated 2015 Stock Incentive Plan) of the
 
Company’s common stock
 
as determined by the Company’s
 
Remuneration
Committee.
 
These
 
shares of
 
restricted
 
stock
 
are also
 
expected to
 
include
 
time-based
 
vesting
 
conditions
 
and will
 
be subject
 
to
 
Mr.
Meyer’s continuous service
 
to the Company through the applicable vesting date.
 
Stock-based compensation charge and unrecognized compensation
 
cost
 
The Company has
 
recorded a net stock
 
compensation charge
 
of $
0.3
 
million, $
1.7
 
million and $
0.4
 
million for the
 
years ended
June 30, 2021, 2020 and 2019, respectively,
 
which comprised:
Total
 
charge
Allocated to IT
processing,
servicing and
support
Allocated to
selling, general
and
administration
Year
 
ended June 30, 2021
Stock-based compensation charge
 
$
1,430
$
-
$
1,430
Reversal of stock compensation charge related to stock
options and restricted stock forfeited
(1,086)
-
(1,086)
Total - years ended
 
June 30, 2021
$
344
$
-
$
344
Year
 
ended June 30, 2020
Stock-based compensation charge
 
$
1,873
$
-
$
1,873
Reversal of stock compensation charge related to stock
options and restricted stock forfeited
(145)
-
(145)
Total - years ended
 
June 30, 2020
$
1,728
$
-
$
1,728
Year
 
ended June 30, 2019
Stock-based compensation charge
 
$
2,319
$
-
$
2,319
Reversal of stock compensation charge related to stock
options and restricted stock forfeited
(1,926)
-
(1,926)
Total - years ended
 
June 30, 2019
$
393
$
-
$
393
The
 
stock-based
 
compensation
 
charges
 
and
 
reversal
 
have
 
been
 
allocated
 
to
 
selling,
 
general
 
and
 
administration
 
based
 
on
 
the
allocation
 
of
 
the
 
cash
 
compensation
 
paid
 
to
 
the
 
relevant
 
employees.
 
 
16.
 
STOCK
-
BASED
 
COMPENSATION
 
(continued)
 
 
Stock-based compensation charge and unrecognized compens
 
ation cost (continued)
 
As of June
 
30, 2021, the
 
total unrecognized
 
compensation cost related
 
to stock options
 
was approximately
 
$
0.8
 
million, which
the
 
Company
 
expects
 
to
 
recognize
 
over
 
approximately
two years
.
 
As of
 
June
 
30,
 
2021,
 
the
 
total
 
unrecognized
 
compensation
 
cost
related to restricted stock awards was approximately $
1.2
 
million, which the Company expects to recognize over approximately
three
years
.
 
 
Tax
 
consequences
 
The Company
 
recorded a
 
deferred tax
 
asset of
 
approximately $
0.1
 
million and
 
$
0.4
 
million, respectively,
 
for the
 
years ended
June 30, 2021 and June 30, 2020. As of June 30, 2021 and 2020,
 
the Company recorded a valuation allowance of approximately $
0.1
million and $
0.4
 
million respectively,
 
related to the
 
deferred tax asset
 
because it does
 
not believe that
 
the stock-based compensation
deduction would be utilized as it does not anticipate generating
 
sufficient taxable income in the United States. The
 
Company deducts
the difference
 
between
 
the market
 
value
 
on date
 
of exercise
 
by the
 
option recipient
 
and the
 
exercise
 
price
 
from income
 
subject to
taxation in the United States.