ETX-10829_Etex-AR2017_WEB_2018_DEF2 (2)

6.1
Financial report
Consolidated financial statements
Etex Annual Report 2017
Financial report
Consolidated financial statements
likely to be mitigated in part by an increase in asset values). The inflation assumption adopted is consistent with the discount rate used.
It is used to set the assumptions for pension increases and deferred revaluations used for preserved members’ benefits. An increase in
the inflation rate of 1.0% would result in a €20 million increase in the present value of the defined benefit obligation of the Plans (which is
likely to be mitigated in part by an increase in asset values). The increase in the present value of the defined benefit obligation due to a
member living one year longer would be approximately €4 million.
There is also a risk of asset volatility leading to lower funding levels in the Plans.
Note 22 – Share based payments
On 23 June 2004 the Board introduced a stock option plan to reward executives and senior staff. The plan authorises the issuance of a
maximum of 3,500,000 options to be granted annually over a 5-year period. In each of the years 2004 to 2008 grants were made under
this plan (SOP 2004, SOP 2005, SOP 2006, SOP 2007 and SOP 2008). The options granted in 2004 to 2008 were extended by 3 year
by decision of the Board on April 21, 2009.
On 7 July 2009 the Board introduced a new stock option plan on similar terms, authorizing the issuance of a maximum of 3,000,000
options over 5 year (SOP 2009, SOP 2010, SOP 2011, SOP 2012 and SOP 2013). On 18 December 2013 the Board extended this plan
by one year (SOP 2014) and authorised a maximum of 1,000,000 options to be granted.
On 19 December 2014, the Board introduced a new stock option plan on similar terms: the plan authorises the issuance of a maximum of
5,000,000 options to be granted annually over a 5-year period with an annual maximum of 1,000,000 options. In 2015, 2016 and in 2017
grants were made under this plan (SOP 2015, SOP 2016 and SOP 2017).
Each option gives the beneficiary the right to buy one Etex SA share at an exercise price determined at grant date and is vested on a
monthly basis over 4 years. Each beneficiary of an option is also granted a put option whereby the shares acquired under the stock
option plan can be sold back to the Group at a price determined at each put exercise period, which is similar to the stock option plan
exercise period.
Fair value of the options granted during the period
The fair value of the services received in return for share options is based on the fair value of the share options granted, measured using
the Black & Scholes model with the following inputs:
Stock option plans granted by the company
Plan
Contractual life
of an option Exercise period Exercise price
Number of options still to
be exercised
SOP 2008 20.6.2018 Once a year as from 2012, between 1.6 and 20.6 17.32 473,000
SOP 2011 20.6.2018 Once a year as from 2015, between 1.6 and 20.6 24.01 84,500
SOP 2012 20.6.2019 Once a year as from 2016, between 1.6 and 20.6 18.45 367,554
SOP 2013 20.6.2020 Once a year as from 2017, between 1.6 and 20.6 27.76 612,928
SOP 2014 20.6.2021 Once a year as from 2018, between 1.6 and 20.6 30.09 863,988
SOP 2015 20.6.2022 Once a year as from 2019, between 1.6 and 20.6 32.83 815,739
SOP 2016 20.6.2023 Once a year as from 2020, between 1.6 and 20.6 26.74 796,822
SOP 2017 20.6.2024 Once a year as from 2021, between 1.6 and 20.6 33.23 781,000
Details of the share options outstanding during the year
In thousands of EUR
2016 2017
Weighted
Number of share
average Number of share
options exercise price
options
Weighted
average
exercise price
Outstanding at the beginning of the year 4,462,651 24.54 4,500,745 26.41
Granted during the year 803,000 26.74 781,000 33.23
Forfeited during the year - - -8,130 28.02
Exercised during the year -748,906 15.81 -478,084 22.06
Expired during the year -16,000 16.02 - -
Outstanding at the end of the year 4,500,745 26.41 4,795,531 27.95
Of which exercisable at the end of the year 1,277,554 18.84 1,537,982 22.12
For share put options exercised during the period, the weighted average share price was €25.72 (€17.85 in 2016).
2016 2017
Expected volatility (% pa) 20.00 20.00
Risk-free interest rate (% pa) 0.02 0.28
Expected dividend increase (% pa) 10.00 10.00
Rate of pre-vesting forfeiture (% pa) - -
Rate of post-vesting leaving (% pa) 1.00 1.00
Share Price (as estimated) 26.74 33.23
Expected early exercise of options 5-6 years 5-6 years
Fair value per granted instrument determined at grant date (€) 3.59 4.84
The expected volatility is slightly lower than the industrial Belgian listed companies (25%), because the market ratios are fixed for the
entire exercise period of the option.
Due to newly granted stock options in current year and due to the increase of the fair value of the options granted in the past and not
exercised yet, Etex recognised a share-based payment expense of €8,167 thousand during the year (an expense of €1,166 thousand in
2016). The total carrying amount of the liability related to the stock option plans amounts to €14,966 thousand (€8,547 thousand in 2016)
and is disclosed under “Employee benefits liabilities” as described under note 21.
Etex Annual Report 2017 p. 51
Etex Annual Report 2017 p. 52
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