Annual Report 2014

Financial report
Consolidated financial statements
Note 22 – Share based payments
On 23 June 2004 the Board introduced a stock option plan to reward executives and senior staff. The plan authorises the issuance of
a maximum of 3,500,000 options to be granted annually over a 5-year period. In each of the years 2004 to 2008 grants were made
under this plan (SOP 2004, SOP 2005, SOP 2006, SOP 2007 and SOP 2008).
On 7 July 2009 the Board introduced a new stock option plan on similar terms. The plan authorises the issuance of a maximum of
3,000,000 options to be granted annually over a 5-year period. In 2009, 2010, 2011, 2012 and 2013 grants were made under this plan
(SOP 2009, SOP 2010, SOP 2011, SOP 2012 and SOP 2013). On 18 December 2013 the Board extended this plan by one year (SOP 2014)
and authorised a maximum of 1,000,000 options to be granted.
Each option gives the beneficiary the right to buy one Etex SA share at an exercise price determined at grant date and is vested on a
monthly basis over 4 years. Each beneficiary of an option is also granted
a put option whereby the shares acquired under the stock option plan can be sold back to the Group at a price determined at each put
exercise period, which is similar to the stock option plan exercise period. On 21 April 2009 the Board offered a 3-year extension of the
exercise period of the SOP 2004 to SOP 2008 plans.
Fair value of the options granted during the period
The fair value of the services received in return for share options is based on the fair value of the share options granted, measured using
the Black & Scholes model with the following inputs:
2013 2014
Expected volatility (% pa) 20.00 20.00
Risk-free interest rate (% pa) 0.93 0.85
Expected dividend increase (% pa) 10.00 10.00
Rate of pre-vesting forfeiture (% pa) - -
Rate of post-vesting leaving (% pa) 1.00 1.00
Share Price (as estimated) 27.76 30.09
Expected early exercise of options 5-6 years 5-6 years
Fair value per granted instrument determined at grant date (€ ) 4.44 4.81
The expected volatility is slightly lower than the industrial Belgian listed companies (25%), because the market ratios are fixed for
the entire exercise period of the option.
Due to the increase of the fair value of the options granted in the past and not exercised yet, Etex recognised a share-based payment
expense of € 3,475 thousand during the year (an income of € 1,398 thousand in 2013). The total carrying amount of the liability related
to the stock option plans amounts to € 7,916 thousand (€ 6,187 thousand in 2013) and is disclosed under “Employee benefits liabilities”
as described under note 21.
Stock option plans granted by the company
PLAN
CONTRACTUAL LIFE
OF AN OPTION
EXERCISE PERIOD
EXERCISE
PRICE
NUMBER OF OPTIONS
STILL TO BE EXERCISED
SOP 2005 20.6.2015 Once a year as from 2009, between 1.6 and 20.6 11.19 5,000
SOP 2006 20.6.2016 Once a year as from 2010, between 1.6 and 20.6 13.72 51,500
SOP 2007 20.6.2017 Once a year as from 2011, between 1.6 and 20.6 20.89 254,500
SOP 2008 20.6.2018 Once a year as from 2012, between 1.6 and 20.6 17.32 514,500
SOP 2009 20.6.2016 Once a year as from 2013, between 1.6 and 20.6 12.12 502,500
SOP 2010 20.6.2017 Once a year as from 2014, between 1.6 and 20.6 17.96 222,500
SOP 2011 20.6.2018 Once a year as from 2015, between 1.6 and 20.6 24.01 369,271
SOP 2012 20.6.2019 Once a year as from 2016, between 1.6 and 20.6 18.45 712,734
SOP 2013 20.6.2020 Once a year as from 2017, between 1.6 and 20.6 27.76 752,000
SOP 2014 20.6.2021 Once a year as from 2018, between 1.6 and 20.6 30.09 882,000
Total 4,266,505
128