VINCI - 2008 annual report

Consolidated fi nancial statements
19.2 Performance shares
On 11 December 2007, VINCI’s Board of Directors granted, with eff ect from 2 January 2008, 2,165,700 existing performance shares to some
eligible employees and company offi cers, bringing the number of performance share plans in place in VINCI to two.
Information on the features of the 2007 and 2008 performance share plans
Plan Plan granted 2/1/2008 Plan granted 2/1/2007
Number of benefi ciaries 1,570 1,434
Vesting date of the shares granted 2/1/2010 or 2/1/2011 2/1/2009
Date of end of year of unavailability of shares granted 2/1/2012 or 02/01/2013 2/1/2011
Number of shares granted subject to performance conditions 2,165,700 2,200,000
Shares cancelled (45,475) (147,020)
Number of shares granted subject to performance conditions at end of year 2,120,225 2,052,980
These plans provide that the shares are only defi nitively allocated at the end of a vesting period of two years, which the Board can extend to three
years. Furthermore, allocation of the performance shares is conditional on changes in a performance index, which is determined on the basis of
changes in the VINCI share price compared with a basket of 12 comparable securities, and of changes in fi nancial criteria connected with VINCI’s
consolidated results, as follows:
Performance criteria Weight in the performance index
Variation in the VINCI share price compared with basket of 12 comparable securities 50.0%
Change in net earnings per share 12.5%
Change in cash fl ows from operations before tax and fi nancing costs (*) 12.5%
Change in operating profi t from ordinary activities (*) 12.5%
Change in ROCE (*) 12.5%
(*) Restated for minority interests
The performance index has to show an average annual increase during the reference period of 10% or more for all the performance shares
granted to be defi nitively acquired by the benefi ciaries.
If the change in the performance index is less than 10% annually on average, the number of performance shares fi nally granted is reduced in
proportion.
Under the performance share plans, relating to 2,200,000 shares, granted on 2 January 2007 to certain eligible salaried employees and company
offi cers, 2,052,980 shares remained vested as from 2 January 2009.
Fair value of the performance share plan
The fair value of the performance shares granted was estimated by an external actuary at the grant date using a binomial valuation model of the
“Monte Carlo” type.
In accordance with IFRS 2, the model includes in the fair value the marginal impact of the stock market performance criteria. The impact of the
performance due to the volatility of the fi nancial performance criteria is determined on the basis of an expected value estimated by VINCI at the
grant date.
In consequence, the number of performance shares measured at fair value in the calculation of the IFRS 2 expense is adjusted at each balance
sheet day for the impact of the change since the grant date of the shares, in the likelihood of the fi nancial criteria connected with consolidated
earnings being met.
On the basis of the assumptions set out below, the fair value of these two plans amounts to €123.4 million of which €64.4 million was recognised
as an expense in 2008 and €32.1 million in 2007.
The main assumptions used for this assessment are:
2008 Plan 2007 Plan
Price of VINCI share on date plan was announced (in euros) 55.7 49.5
Fair value of performance share at grant date (in euros) 28.2 24.5
Fair value of share price at grant date (in %) 50.53% 49.61%
Original maturity (in years) - vesting period 2 or 3 years 2 or 3 ans
Volatility 26.51% 21.79%
Risk-free interest rate 4.07% 3.76%
220 VINCI __ 2008 ANNUAL REPORT