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Unilever Group Notes to the consolidated accounts
33 Equity based compensation plans
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As at 31 December 1999, the Group had nine equity based compensation plans. These were the Unilever PLC 1985 Share Save Plan
(the ‘PLC Sharesave Plan’), the Unilever PLC 1985 Executive Share Option Plan and the Unilever PLC 1985 Unapproved Executive Share
Option Plan and the Unilever PLC International 1997 Executive Share Option Plan (together the ‘PLC Option Plans’), the Unilever
Savings Related Share Option Plan (Ireland) (the ‘Ireland Sharesave Plan’), the Unilever NV Executive Share Option Plan (the ‘NV Option
Plan’), the Unilever NV Employee Share Option Plan (the ‘NV Sharesave Plan’), the Unilever North America Executive Stock Option Plan
(the ‘NA Option Plan’) and the Unilever North America Employee Stock Purchase Plan (the ‘NA Purchase Plan’), which are all described
below. Grants of share options to directors and other senior executives in 1997 and subsequent years are made under the International
1997 Executive Share Option Plan (the ‘International Plan’). The International Plan comprises the NV Executive Option Plan, the
Unilever PLC 1985 Executive Share Option Plan, the Unilever PLC International 1997 Executive Share Option Plan and the North
American Executive Stock Option Plan.
On 13 October 1997 the ordinary share capital of NV and PLC was divided so that each existing Fl. 4 and 5p ordinary share was split
into four shares of Fl. 1 and 1.25p respectively.
The Group applies APB Opinion 25 and related interpretations in accounting for these plans. Accordingly, the Group has recognised
only the following compensation costs, Fl. 29.3 million in 1999, Fl. 1.7 million in 1998 and Fl. 9.5 million in 1997. Had the Group
accounted for options under the requirement of SFAS 123 the impact on reported results would have been as follows:
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Fl. million
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1999 1998 1997
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Actual compensation cost recognised 29.3 1.7 9.5
Pro forma compensation cost under SFAS 123 124.3 74.2 21.8
Actual net profit 6 106 6 488 10 923
Pro forma net profit under SFAS 123 6 037 6 433 10 915
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Guilders per Fl. 1.12 (1997-1998: Fl. 1)
of ordinary capital
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1999 1998 1997
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Actual earnings per share 5.80 5.80 9.78
Pro forma earnings per share 5.73 5.75 9.77
Actual diluted earnings per share 5.66 5.66 9.55
Pro forma diluted earnings per share 5.60 5.61 9.54
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The remaining disclosures required by SFAS 123 are given below for each of the plans individually.
The PLC Sharesave Plan
The PLC Sharesave Plan provides for the granting of options to purchase shares of Unilever PLC to eligible employees of the Group.
Under the terms of the plan, eligible employees, to whom options have been granted, make monthly contributions to a savings plan
approved by the United Kingdom Treasury for this purpose. At the end of five years the proceeds from the savings plan may be applied
to purchase ordinary shares of PLC at a price which is not less than 90% of the market value of the shares on a specified date within
a 30 day period ending with the date on which the options were granted. This discount is amortised over the five year vesting period
of the PLC Sharesave Plan. In 1999, 1998 and 1997 the total amortisation under the Plan amounted to £2.4 million, £2.1 million and
£1.7 million respectively.
The maximum number of shares for which options can be granted are as follows:
PLC Sharesave Plan – 316 000 000
PLC Sharesave Plan and PLC Option Plans – Such number as equals 3% of PLC’s issued ordinary share capital, over a three year period.
PLC Sharesave Plan and PLC Option Plans– Such number as equals 10% of PLC’s issued ordinary share capital, over a ten year period.
A summary of the status of the PLC Sharesave Plan as at 31 December 1999, 1998 and 1997 and the changes during these years is
presented below:
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For the years ended 31 December: 1999 1998 1997
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Weighted Weighted Weighted
Number average Number average Number average
of shares price of shares price of shares price
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Outstanding at the beginning of the year 32 029 021 £3.58 37 439 231 £2.85 43 603 272 £2.30
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Granted 6 252 700 £5.14 6 328 960 £5.94 10 200 928 £3.71
Exercised 4 521 318 £2.42 7 192 536 £2.31 14 604 184 £1.89
Forfeited 2 983 085 £4.30 4 546 634 £2.81 1 760 785 £2.43
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Outstanding at the end of the year 30 777 318 £4.00 32 029 021 £3.58 37 439 231 £2.85
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Options exercisable at the end of the year 127 864 £2.29 250 070 £2.28 772 837 £1.82
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