Setting new standards - Friends Life

FINANCIAL STATEMENTS
IFRS FINANCIAL STATEMENTS
EEV SUPPLEMENTARY INFORMATION
Notes to the consolidated accounts continued
11. Share based payments continued
(b) The Re-Investment Plan
The Re-Investment Plan was a plan established to allow employees previously employed by F&C Group (Holdings) Limited (F&CGH Group)
prior to the merger to voluntarily re-invest one half of their entitlement under the Shadow Equity Plan (SEP) into ordinary shares in F&C and
rights to receive further ordinary shares in F&C. The Re-Investment Plan is primarily an equity settled scheme with an additional minor cash
settled award being made in certain circumstances.
The purpose of the Re-Investment Plan, which was a one-off plan linked to the merger, was to encourage key former F&CGH Group
employees to re-invest one half of their proceeds of their vested SEP entitlement into Investment Shares which will be forfeitable for a period
up to two years should the participant voluntarily resign or be dismissed for gross misconduct within 24 months of completion of the merger
on 11 October 2004.
To encourage reinvestment, and in recognition of the fact that the Investment Shares carry forfeiture provisions, after three years participants
will receive up to one Matching Share for each Investment Share (subject to continued employment and achievement of performance
conditions relating to EPS growth). One third of Matching Shares have no performance criteria, while the remaining two-thirds vest in line
with performance based on F&C Underlying EPS growth between 2003 and 2006.
The cash settled element of the awards is based on dividends payable on the F&C shares during the vesting period, (prior to becoming
unconditional) being notionally reinvested in F&C shares. Once the award shares vest, the value of the notional shares is paid to the
employee in cash.
The number of Investment Share and Matching Share awards are as follows:
2006 2005
Investment Matching Investment Matching
shares no. shares no. shares no. shares no.
Outstanding at start of year 4,625,626 9,533,741 11,021,991 11,021,991
Forfeited (169,199) (1,144,760) (836,054) (955,538)
Exercised (4,408,520) (485,821) (5,560,311) (532,712)
Expired - - - -
Outstanding at end of year 47,907 7,903,160 4,625,626 9,533,741
The exercise price for all awards is nil pence.
The weighted average F&C share price during 2006 was 201 pence (2005: 212 pence).
At 31 December 2006 the following awards granted under The Re-Investment Plan were outstanding:
Earliest exercise
date (assuming
No. of awards performance
Grant date outstanding criteria satisfied)
11 October 2004 Investment shares 47,907 11 October 2006
11 October 2004 Matching shares 7,903,160 11 October 2007
The awards outstanding at 31 December 2006 have a weighted average contractual life of 0.8 years (2005: 1.5 years).
The fair value of services received in return for share awards granted are measured by reference to the fair value of share awards granted.
No valuation model was used as awards were granted at full market value.
110 Friends Provident Annual Report & Accounts 2006