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

Euromoney Institutional Investor PLC Annual Report and Accounts 2012
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Directors’ Remuneration Report
continued
The CSOP 2010 has the same performance
criteria as that of the CAP 2010 as set out
above. The number of CSOP 2010 awards that
will vest proportionally reduces the number of
shares that vest under the CAP 2010. The CSOP
is effectively a delivery mechanism for part of
the CAP 2010 award. The CSOP 2010 options
have an exercise price of £6.03 2 , which will
be satisfied by a funding award mechanism
which is in place and results in the net gain 3 on
these options being delivered in the equivalent
number of shares to participants as if the
same gain had been delivered using CAP 2010
options. The amount of the funding award will
depend on the company’s share price at the
date of exercise.
2004 Capital Appreciation Plan
(CAP 2004)
CAP 2004 was approved by shareholders
on February 1 2005 and replaced the 1996
executive share option scheme. Each CAP
2004 award comprised an option to subscribe
for ordinary shares of 0.25 pence each in the
company for an exercise price of 0.25 pence per
ordinary share. No consideration was paid for
the grant of the awards. No further awards may
be granted under CAP 2004.
CAP 2004 awards vest in three equal tranches.
The first tranche became exercisable on
satisfaction of the primary performance
condition in 2007, and lapse to the extent
unexercised on September 30 2014. The other
two tranches of awards became exercisable
following the results achieved in financial years
2008 and 2009, but only to the extent that
the additional performance condition was also
achieved. The primary performance condition,
broadly, required the company to achieve
adjusted pre-tax profits 1 of £57.0 million by no
later than the financial year ending September
30 2008 and remain at least this level for
two further vesting periods. The additional
performance condition required that the profits
of the respective participants’ businesses in
the subsequent two vesting periods be at least
75% of that achieved in the year the primary
performance condition was first met.
The CAP 2004 profit target was achieved in 2007
and the option pool (a maximum of 7.5 million
shares) was allocated between the holders of
outstanding awards by reference to their profit
contribution to the achievement of the primary
performance condition, subject to the condition
that no individual had an option over more than
10% of the option pool. One third of the awards
vested immediately. The primary performance
target was achieved again in 2008 and, after
applying the additional performance condition,
2,241,269 options from the second tranche of
options vested in February 2009. The primary
performance target was achieved again in 2009
and, after applying the additional performance
condition, 1,527,152 options from the third (final)
tranche of options vested in February 2010. The
additional performance condition was applied
to profits for financial years 2010 and 2011 for
those individual participants where the additional
performance conditions had not previously been
met and 303,321 and 244,152 options vested in
February 2011 and February 2012 respectively.
Applying the additional performance test to
profits for financial year 2012, a further 54,599
options are expected to vest in February 2013.
For the executive directors, the value of the
second and third tranches of the CAP 2004
award that vested in February 2012 is set out
in the directors’ share option table on pages
49 to 51 and has been trued-up from the
estimates provided in last year’s annual report.
The provisional number of options vesting in
February 2013 for those directors who have
CAP 2004 options that did not previously vest
are also set out in this table. The number of
CAP 2004 options vesting in February 2013
is provisional and will depend on any true-up
adjustments required by the remuneration
committee to be made to reflect the results
for the three month period to December 2012.
Financial year 2012 is the last year for which the
additional performance test can be applied. As
a result, an estimated 629,507 unvested CAP
2004 options at September 30 2012 will lapse.
1996 executive share option scheme
Some of the executive directors have options
from a previous executive share option scheme
approved by shareholders in 1996. This scheme
expired in 2006 and no share options have been
issued under it since February 2004 although
options granted may be exercised before various
dates to February 2014. These options are
exercisable subject to the performance condition
that the Total Shareholder Return (TSR) of the
company exceeds the average TSR for the
FTSE 250 index for the same period. For the
performance condition to be satisfied, the TSR
of the company must exceed that of the FTSE
250 on a cumulative basis, measured from the
date of grant of the option, in any four out of six
consecutive months starting 30 months after the
option grant date.
Shown below is the group’s TSR for the five
years to September 2012 compared to the TSR
of the FTSE 250 index over the same period.
This index has been presented as it comprises
the comparator group for the performance
condition attached to the executive share
option scheme. The TSR calculations assume the
reinvestment of dividends.
Details of options held and exercised under this
scheme can be found on pages 49 to 51 of this
report. The fair value per option granted and
the assumptions used to calculate its value are
set out in note 24.
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