saxo-bank-annual-report-2015

NOTES – SAXO BANK GROUP
Note (DKK 1,000)
11 Share-based payments
The Group has warrant programmes in Saxo Bank A/S and Saxo Payment A/S.
Warrants Saxo Bank A/S
In 2015 2,156,175 warrants with a right to subscribe for shares in Saxo Bank A/S were sold. The fair value of the warrants in 2015
was estimated to DKK 11 million. The fair value was measured using the Black-Scholes option pricing model based on the assumptions
at the grant date considering time to maturity, risk-free interest rate (0.27%), volatility (25%), share price (115/140) and exercise
restrictions etc. The warrants will vest over a period of 5 years. The warrants are conditional on the performance of the Group. In case
of leave of a holder the warrants of said holder may be repurchased. The warrants may be exercised during 1 February 2020 until 28
February 2022. The warrants or a portion thereof that are not exercised by 28 February 2022 will be deemed forfeited without any
further compensation. The fair value at grant date of these warrants after deduction of cash payment received from participants is expensed
in the income statement over the vesting period from 2015 to 2019.
In 2014 390.000 warrants were sold to a consulting firm with an owner who has become a member of the Board of Directors at the
fair value of DKK 2.6 million at the grant date. The warrants may be exercised during 15 March 2015 until 31 March 2017. The warrants
or a portion thereof that are not exercised by 31 March 2017 will be deemed forfeited without any further compensation. The
warrants are not conditional on performance or presence of the holder.
Warrants were granted in 2007 (2,156,644 warrants) and 2008 (2,849,840 warrants). The exercise price of the granted warrants is
equal to the fair value on the date of granting. At the time of grant the fair value of the warrants granted in 2007 was estimated to
DKK 13 million and the fair value of the warrants granted in 2008 was estimated to DKK 55 million. The fair value was measured using
the Black-Scholes option pricing model based on the assumptions at the grant date considering time to maturity, risk-free interest rate
(3%), volatility (20% in 2007 and 25% in 2008), and exercise restrictions etc. The warrants were conditional on the performance of the
individual and of the Group and/or presence of the holders concerned. The fair value at grant date of these warrants was expensed in
the income statement over the vesting period from 2007 to 2014.
The conditions for the outstanding number of warrants granted in 2007 and 2008 with expiry in 2014 have been modified. The lockup
period has been extended to 30 June 2018. The fair value of DKK 13 million of the modified warrants is calculated based on the
assumptions at the date of modification considering time to maturity and risk-free interest rate (4%). The fair value was expensed and
recognised as Staff costs and administrative expenses in 2014. There are no additional terms or conditions associated with the extended
lock-up period.
The warrants are accounted for as equity-settled transactions.
Number of warrants
Average
exercise
price
Board of
Directors
Board of
Management Employees Total
Outstanding at 1 january 2014 - 1,770,000 1,230,133 3,000,133
Granted 120 390,000 - - 390,000
Exercised 103 - - (19,418) (19,418)
Expired - - - (1,159,352) (1,159,352)
Outstanding at 31 December 2014 390,000 1,770,000 51,363 2,211,363
Granted 180 - 399,600 1,756,575 2,156,175
Outstanding at 31 December 2015 - 390,000 2,169,600 1,807,938 4,367,538
The weighted average share price at the date of exercise in 2014: DKK 115.
Out of the 4,367,538 (2014: 2,211,363) outstanding warrants as per 31 December 2015 2,382,598 warrants (2014: 1,821,363 warrants)
were exercisable. Warrants exercised in 2014 resulted in 19,418 shares being issued at an exercise price of DKK 103 each.
60 · SAXO BANK · ANNUAL REPORT 2015