Aviva 2005 Annual Report Download - page 147
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28 – Equity compensation plans continued
(ii) Share awards
The fair value of the awards was estimated on the date of grant, based on the following weighted average assumptions:
Weighted average assumption 2005 2004
Share price 632p 528p
Expected volatility* 41% 46%
Expected volatility of comparator companies’ share price* 44% 50%
Correlation between Aviva and competitors’ share price* 64% 55%
Expected life 3.0 years 3.0 years
Expected dividend yield 4.0% 4.7%
Risk free interest rate* 4.7% 4.5%
*For awards with market-based performance conditions.
The expected volatility used was based on the historical volatility of the share price over a period equivalent to the expected life of the
options prior to its date of grant.
The risk-free interest rate was based on the yields available of UK government bonds as at the date of grant. The bonds chosen were
those with a similar remaining term to the expected life of the options.
29 – Shares held by employee trusts
Movements in the cost of shares held by employee trusts comprise:
2005 2004
Number £m Number £m
Cost debited to shareholders’ funds
At 1 January 5,894,264 – 7,598,384 41
Cost of options granted to employees in prior years –(40)
Net deduction from shareholders’ funds –1
Distributed in year (4,070,476) – (1,704,120) (1)
Balance at 31 December 1,823,788 – 5,894,264 –
These shares are owned by employee share trusts in the Company and a subsidiary undertaking to satisfy awards under the Group’s
Long Term Incentive Plan and Deferred Bonus Plans. The shares are purchased in the market and carried at cost. Further details of the
shares held can be found in note 28. Details of the features of the plans can be found in the Directors’ remuneration report on pages
65 and 74.
30 – Preference share capital
The preference share capital of the Company at 31 December 2005 was:
2005 2004
£m £m
Authorised
200,000,000 cumulative irredeemable preference shares of £1 each 200 200
500,000,000 sterling new preference shares of £1 each 500 –
700 200
EmEm
700,000,000 Euro new preference shares of E1 each 700 –
£m £m
Issued and paid up
100,000,000 83⁄8% cumulative irredeemable preference shares of £1 each 100 100
100,000,000 83⁄4% cumulative irredeemable preference shares of £1 each 100 100
200 200
Financial statements
Aviva plc 2005
145