Annual Report & Accounts 2009 - Anglo Irish Bank

10. Share-based payment schemes
Following the Bank’s nationalisation in January 2009 the actual value of share options and awards previously granted to
employees and former Directors amounted to nil. No options or share awards were granted to employees in the current period
and all rights outstanding were extinguished for zero benefit under the Anglo Irish Bank Corporation Act, 2009.
Further details in respect of the share-based incentive plans that were operated by the Group are given below.
Employee Share Option Scheme
On 15 January 1999 the shareholders approved the establishment of the Anglo Irish Bank Employee Share Option Scheme
('ESOS') which replaced the scheme originally approved by shareholders in 1988.
Under its terms all qualifying employees could be invited to participate in the scheme at the discretion of the Directors. Options
were granted at the middle market price on the day on which the shares were dealt in immediately preceding the date of the
invitation.
Basic tier options could be exercised only between the third and tenth anniversaries of their grant, or at such earlier time as
approved by the Directors. Second tier options could be exercised only between the fifth and tenth anniversaries of their grant,
or at such earlier time as approved by the Directors.
The exercise of basic tier options granted since 15 January 1999 was conditional upon earnings per share growth of at least 5%
compound per annum more than the increase in the Irish consumer price index. The exercise of second tier options granted
since 15 January 1999 was conditional upon earnings per share growth of at least 10% compound per annum more than the
increase in the Irish consumer price index and the Bank's shares ranking in the top quartile of companies in the ISEQ Index of
the Irish Stock Exchange as regards growth in earnings per share.
Employee Share Ownership Plan
On 14 January 2000 the shareholders approved the establishment of the Anglo Irish Bank Employee Share Ownership Plan
('ESOP'). The plan's trustee could purchase ordinary shares of the Bank in the open market. Eligible employees could be granted
options to acquire shares held by the trustee on similar terms and exercise conditions as those applicable to basic tier options
under the ESOS.
Save As You Earn Scheme
On 14 January 2000 the shareholders also approved the establishment of the Anglo Irish Bank Save As You Earn ('SAYE')
scheme. This scheme had Irish, UK, Austrian, US and Swiss versions in order to conform with local legislation in these
jurisdictions.
Anglo Irish Bank
Annual Report & Accounts 2009
The share-based payment cost includes an equity settled share-based payment expense of €22m relating to share options and
awards granted in previous years. This accounting charge is determined by reference to the fair value of the options or share
awards calculated on the date of grant and does not reflect the current value to employees which is nil. The expense has no
impact on the Bank’s total equity as an equivalent amount is credited to the share-based payment reserve. As required by IFRS
the expense includes an accelerated charge of €21m following nationalisation.
The Irish version permitted eligible employees to enter into a savings contract with the Bank for a three or five year period
saving a maximum of €500 (€320 for contracts entered into prior to 1 February 2008) per month for the appropriate contract
period and to use the proceeds of the savings contract to fund the exercise of three, five or seven year options granted under
the scheme. Options were granted at a 25% discount to the market price on the date that employees were invited to enter into
these contracts. These options became exercisable when the participants' savings contracts were completed. Participants were
entitled to withdraw their savings at any stage at which point the savings contract was terminated and the options lapsed.
A variation of the Anglo Irish Bank SAYE scheme was introduced for all UK staff of the Group in 2001. This scheme permitted
eligible employees to enter into a savings contract with an outside financial institution for a three or five year contract period,
saving a maximum of Stg£250 per month for the appropriate contract period, and to use the proceeds of the savings contract
to fund the exercise of three, five or seven year options granted under the scheme. Options were granted at a 20% discount to
the average market price over the week preceding the date that employees were invited to enter into these contracts.
65