Setting new standards - Friends Life

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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
PARENT COMPANY ACCOUNTS ABBREVIATIONS AND DEFINITIONS Notes to the consolidated accounts continued 11. Share based payments continued (c) Friends Provident plc (i) Description of the plans There are a number of active stock option and award schemes over Friends Provident shares all of which are equity settled schemes. Certain schemes are open to all employees whilst others are open to executives only. Schemes operated by the Group include ShareSave schemes, Executive Share Options Schemes (ESOS), and Long Term Incentive Plan (LTIP). There is a range of performance and vesting conditions including conditions based on term of service, the financial performance of the Company, and other terms. ShareSave schemes vest on completion of continuous terms of service ranging from 3 to 5 years. The ESOS and LTIP schemes vest on completion of 3-year terms of service and the achievement of certain financial performance measures by the Group, initially over a 3-year period. (ii) Outstanding options and awards relating to Friends Provident plc Share options The options outstanding at 31 December 2006, over Friends Provident plc shares, had an exercise price and an earliest exercise date as shown below: Number of Exercise price Earliest share options pence per share Exercise date ShareSave 2001 277,222 180.00 1 August 2006 ShareSave 2002 2,865,393 107.76 1 October 2007 ShareSave 2003 519,086 108.54 1 October 2006 ShareSave 2004 1,616,915 102.47 1 October 2007 ShareSave 2005 2,418,450 143.94 1 November 2008 ShareSave 2006 2,225,146 147.74 1 November 2009 ESOS 2002 2,197,214 195.00 14 March 2006 ESOS 2003 864,833 71.00 17 March 2006 ESOS 2003 73,989 136.00 6 August 2006 ESOS 2004 6,844,897 153.00 15 March 2007 ESOS 2004 1,494,299 127.00 12 August 2007 ESOS 2005 6,134,164 178.00 29 March 2008 LTIP 2005 1,528,747 10.00 29 March 2008 LTIP 2006 2,195,062 10.00 24 March 2009 The following table summarises information about options outstanding at 31 December 2006: Range of Number of Weighted average remaining Weighted average exercise exercise prices options outstanding contractual life in years price in pence £0.10 – £0.72 4,588,642 1.53 21.50 £0.73 – £1.35 6,495,693 1.02 110.93 £1.36 – £1.98 20,171,082 1.10 163.82 Friends Provident Annual Report & Accounts 2006 111
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Setting new standards Friends Provi
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Friends Provident plc Pixham End Do
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