Annual Report & Accounts 2012 - Euromoney Institutional Investor ...

Euromoney Institutional Investor PLC Annual Report and Accounts 2012
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Notes to the Consolidated
Financial Statements continued
24 Share-based payments continued
Share Option Schemes continued
The company has six share option schemes for which an IFRS2 ‘Share-based payments’ charge has been recognised. Details of these schemes are set out
in the Directors’ Remuneration Report on pages 42 to 45. The fair value per option granted and the assumptions used in the calculation are shown below.
Date of grant
Executive
Options
January 28
2002
11
December 11
2009
SAYE
12
December 21
2010
13
December 20
2011
Market value at date of grant (p) 419 430 706 621
Option price (p) 419 344 565 497
Number of share options outstanding 52,000 44,567 25,497 148,488
Option life (years) 10.0 3.5 3.5 3.5
Expected term of option (grant to exercise (years)) 5.5 3.0 3.0 3.0
Exercise price (p) 419 344 565 497
Risk-free rate 4.10% 1.83% 1.63% 0.53%
Dividend yield 3.93% 7.49% 5.28% 4.30%
Volatility 30% 50% 38% 35%
Fair value per option (£) 0.72 1.21 1.82 1.54
The executive and Save as You Earn (SAYE) options were valued using the Black–Scholes option-pricing model. Expected volatility was determined by
calculating the historical volatility of the group’s share price over a period of 15 years. The executive options’ fair values have been discounted at a rate
of 10% to reflect their performance conditions. The expected term of the option used in the model has been adjusted, based on management’s best
estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The charge recognised in the year in respect of these
options was £97,000 (2011: charge £96,000).
Internet
Securities Inc.
Date of grant
Tranche 1
June 20
2005
CAP 2004
Tranche 2
June 20
2005
Tranche 3
June 20
2005
(cash-settled
options)
February 28
2006
Market value at date of grant (p) 401 401 401 n/a
Option price (p) 0.25 0.25 0.25 n/a
Number of share options outstanding 421 – 69,693 2,126
Option life (years) 10 10 10 10
Expected term of option (grant to exercise (years)) 3.28 4.53 5.53 4.50
Exercise price (p) 0.25 0.25 0.25 $13.10
Risk-free rate 5.0% 5.0% 5.0% –
Dividend growth 8.44% 8.44% 8.44% –
Fair value per option (£) 3.28 3.02 2.82 $14.34
The CAP 2004 options were valued using a fair value model that adjusted the share price at the date of grant for the net present value of expected
future dividend streams up to the date of expected exercise. Under IFRS 2, Internet Securities, Inc. options are classified as cash-settled options. As
such, their related fair value equates to the fair value at the balance sheet date. For both of these option schemes, the expected term of the option
used in the models has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural
considerations. The long-term incentive recognised in the year for the CAP 2004 options was a credit of £1,809,000 (2011: £nil), and for Internet
Securities, Inc. options was a charge of £8,000 (2011: credit £34,000).
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