Executives and managers of the company and its subsidiaries are offered a weighted combination of:

• Allocations of share appreciation rights; (last allocation to employees – 5 June 2019)
• Conditional awards of full value performance shares
• Grants of full value restricted shares.

The scheme is regarded as an equity-settled share-option scheme.

Share appreciation rights

Allocations of share appreciation rights were made to qualifying executive management and other senior managers. Share appreciation rights vest in three equal tranches on the third, fourth and fifth anniversaries of the date of allocation. The vesting of each tranche is subject to the achievement of performance conditions. The vesting of allocations prior to December 2018 is subject to the company's headline earnings per share performance, measured against consumer price index (CPI) and the growth in gross domestic product (GDP) (real headline earnings per share growth). For allocations made in December 2018 and thereafter, vesting is subject to real headline earnings per share growth (weighted at 50%) and the performance of the company's return on invested capital (ROIC) against its WACC (weighted at 50%). Vested share appreciation rights must be exercised on or before the sixth anniversary of the date of allocation. The last allocation of share appreciation rights was made in June 2019.

The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share appreciation rights during the year.

Options were valued using a modified Black-Schöles model taking into account the dividend cover, expected exercise pattern and volatility of the Tiger Brands share price.

The following inputs were used:

Volatilities are based on the historical volatility of the Tiger Brands share price matching the remaining life of each option.

Performance shares

Annual awards of performance vesting shares (PVS) are made to executive management, senior management and middle management. PVS vest on the third anniversary of the date of award. Vesting is subject to the performance of the company's headline earnings per share, measured against CPI and the growth in GDP (50% weighting) and the performance of the company's ROIC against its WACC (50% weighting).

The following table illustrates the number of, and movements in, performance shares during the year.

Options were valued using the Binomial Lattice model that allows for the options to be exercised at different points between vesting date and the expiry date of the options. Binomial Lattice models are commonly used to value options and employee share options in particular.

The following inputs were used:

Volatilities are based on the historical volatility of the Tiger Brands share price matching the remaining life of each option.

Restricted shares

On an annual basis, subject to remuneration committee approval, executives, senior management and key talent may receive a grant of restricted shares. On vesting, options may be settled in cash or shares on the third anniversary of the grant date.

The following table illustrates the number of, and movements in, restricted shares during the year.

Options were valued using the Binomial Lattice model that allows for the options to be exercised at different points between vesting date and the expiry date of the options. Binomial Lattice models are commonly used to value options and employee share options in particular.

The following inputs were used:

In terms of the BEE transaction implemented on 17 October 2005, 4 381 831 Tiger Brands shares were acquired by the Tiger Brands Black Managers Trust.

The allocation of vested rights entitles beneficiaries to receive Tiger Brands shares (after making capital contributions to the Black Managers Trust) at any time after the lock-in period. In respect of options allocated on or before 31 July 2010, the lock-in period ends on 31 December 2014. In respect of allocations made after 31 July 2010, the lock-in date will be the latter of 31 December 2014 or, in respect of one-third of the allocations, three years after the allocation, the next third, four years and the last third, five years after the allocation. These vested rights are non-transferable.

A fter the lock-in date, the beneficiaries may exercise their vested rights, in which event the beneficiary may:

• Instruct trustees to sell all of their shares and distribute the proceeds to them, net of the funds required to pay the capital contributions, taxation (including employees' tax), costs and expenses
• Instruct the trustees to sell sufficient shares to fund the capital contributions, pay the taxation (including employees' tax), costs and expenses
• Distribute to them the remaining shares to which they are entitled
• Fund the capital contributions, taxation (including employees' tax) costs and expenses themselves and receive the shares to which they are entitled.

The expense recognised for employee services received during the year to 30 September 2022 is R6,3 million (2021: R6,3 million).

The following table illustrates the number of, and movements in, share participation rights during the year.

Participation rights were valued using the Monte-Carlo simulation approach to estimate the average, optimal payoff of the participation rights using 10 000 permutations. The payoff of each random path was based on: the projected Tiger Brands share price, outstanding debt projections and optimal early exercise conditions.

Volatility is measured as the annualised standard deviation of the daily price changes in the underlying share under the assumption that the share price is log normally distributed. Historical daily share price data was used to estimate the expected volatility.

The following inputs were used:

The risk-free interest rate was obtained from constructed ZAR swap curves on the valuation dates using key inputs being South African money-market rates and swap rates as published by Bloomberg.