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AER LINGUS GROUP PLC - ANNUAL REPORT 2008
80
22 Share premium, capital conversion reserve fund, and other reserves (continued)
2008
€’000
2007
€’000
Other reserves
Available-for-sale reserve
Beginning of year 3,953 1,053
Movement in year (1,080) 3,315
Deferred tax on movement in year 369 (415)
End of year 3,242 3,953
Cash flow hedging reserve
Beginning of year (261) (19,263)
Movement in year (72,381) 21,719
Deferred tax on movement in year 9,048 (2,717)
End of year (63,594) (261)
Treasury shares
Beginning of year (4,275) -
Purchase of shares (4,862) (4,275)
End of year (9,137) (4,275)
Share based payment reserve
Beginning of year 439 -
Movement in year 735 500
Deferred tax on movement in year (93) (61)
End of year 1,081 439
Total other reserves (68,408) (144)
Long Term Incentive Plan (“The LTIP”)
In July 2007, arising from the review of the Group’s compensation arrangements for executive directors and senior managers,
the Company’s shareholders approved the introduction of a LTIP in order to further align the interests of such executives and
senior managers with those of shareholders. The LTIP is a Share based performance award scheme, which will provide for
the vesting of shares subject to the achievement of minimum performance objectives measured over a three-year period. The
LTIP is tied to achievement of both a targeted Business Performance Measure (selected by the Remuneration Committee) and
to Total Shareholder Return (TSR). The TSR element is assessed against a peer group of European airlines and the Business
Performance Measure set by the Remuneration Committee. The maximum award under the LTIP is 150% of base salary. The
maximum number of shares that can vest is set at 125% of the maximum salary multiple. Awards under the LTIP can be made
on an annual basis at the discretion of the Remuneration Committee.
Early vesting of an award may occur at the discretion of the Remuneration Committee if there were to be a change of control in
the Company.
For awards issued in 2008, the Remuneration Committee set the minimum performance under the Business Performance
Measure as 10% compound growth in EBITDAR over the 3 year performance period. Conditional awards granted under the
Company’s LTIP in the year ended 31 December 2008 amounted to 1,917,567 ordinary shares (2007: 1,449,094). The share
price was €2.03 (2007: €2.36) at the date of the award and fair value was determined to be €1.55 (2007: €1.08).
Notes to the Consolidated Financial Statements
continued