G4S Annual Report and Accounts 2011

Overview Strategic review Performance
Notes to the consolidated financial statements continued
42 Share-based payments
The group has two types of equity-settled share-based payment scheme in place: (1) share options previously held by employees over Securicor plc shares
and rolled over to G4S plc shares with the acquisition of that business on 19 July 2004, and (2) conditional allocations of G4S plc shares.
Share options
Share options rolled over from Securicor plc fall under the Executive Share Option Scheme (ESOS). Options under the ESOS were granted at market
value, vest three or four years following the date of grant (provided that certain non-market performance conditions are met and that the recipients
continue to be employed by the group during the vesting period) and are exercisable up to ten years following the date of grant.
Details of the share options outstanding during the year are as follows:
Number of
shares under
option
2011
Weighted
average exercise
price (pence)
2011
Number of
shares under
option
2010
Weighted
average exercise
price (pence)
2010
Outstanding at 1 January 50,000 91.00 150,000 115.23
Exercised during the year (50,000) 91.00 (100,000) 127.34
Outstanding and exercisable at 31 December – – 50,000 91.00
The weighted average share price at the date of exercise for share options exercised during the year was 289.30p (2010: 266.27p). No options were
outstanding at 31 December 2011.
No share option expense has been recognised in the income statement during the year as all share options had previously vested (2010: all vested).
Shares allocated conditionally
Shares allocated conditionally fall under either the group’s performance-related bonus scheme or the group’s Performance Share Plan (PSP). Shares
allocated conditionally under the performance-related bonus scheme vest three years following the date of grant provided certain non-market
performance conditions are met. Those allocated under the PSP vest after three years, to the extent that (a) certain non-market performance conditions
are met as to two-thirds of the allocation and (b) certain market performance conditions are met as to the remaining third of the allocation. Vesting occurs
after the third anniversary of the date the shares were allocated conditionally. To the extent that the performance criteria have been met and the shares
are not forfeited, these shares can only be released upon request after the third anniversary but before the tenth anniversary.
The number of shares allocated conditionally is as follows:
Performancerelated
bonus
scheme
2011
Number
PSP
2011
Number
Total
2011
Number
Performancerelated
bonus
scheme
2010
Number
PSP
2010
Number
Total
2010
Number
Outstanding at 1 January 1,525,349 14,914,806 16,440,155 1,322,739 14,962,009 16,284,748
Allocated during the year 121,090 6,431,172 6,552,262 546,896 5,204,762 5,751,658
Transferred during the year (577,984) (2,798,491) (3,376,475) (344,286) (4,053,117) (4,397,403)
Forfeited during the year – (727,154) (727,154) – (1,177,848) (1,177,848)
Expired during the year – (1,717,883) (1,717,883) – (21,000) (21,000)
Outstanding at 31 December 1,068,455 16,102,450 17,170,905 1,525,349 14,914,806 16,440,155
The weighted average remaining contractual life of conditional share allocations outstanding at 31 December 2011 was 19 months (2010: 15 months).
The weighted average share price at the date of allocation of shares allocated conditionally during the year was 253.0p (2010: 259.2p) and the contractual
life of all conditional allocations was three years.
Under the PSP, the vesting of one-third of the shares allocated conditionally depends upon Total Shareholder Return (a market performance condition)
over the vesting year measured against a comparator group. 25% of the allocation vests upon the group’s Total Shareholder Return equalling median
performance amongst the comparator group. The fair value of the shares allocated subject to this market performance condition has therefore been
reduced by 75%.
Total expenses of £1m were recognised in the income statement in the year (2010: £7m) in respect of conditional share allocations, the calculation of which
included an estimate of the number of those shares allocated subject to non-market performance conditions that would vest based upon the probable
achievement against the performance conditions.
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G4S plc
Annual Report and Accounts 2011