Aviva 2006 Annual Report Download - page 162
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Aviva plc
Annual Report and Accounts 2006 158
Notes to the consolidated financial statements continued
28 – Equity compensation plans continued
(c) Movements in the year
Asummary of the status of the option plans as at 31 December 2006 and 2005, and changes during the years ended on those dates,
is shown below.
2006 2005
Weighted Weighted
average average
Number exercise price Number exercise price
of options p of options p
Outstanding at 1 January 35,984,159 497.34 39,617,478 516.75
Granted during the year 3,912,011 593.00 7,956,344 434.64
Forfeited during the year –– (890) 719
Exercised during the year (5,665,668) 394.93 (5,918,840) 419.69
Expired during the year (6,693,883) 569.15 (5,669,933) 581.58
Outstanding at 31 December 27,536,619 514.54 35,984,159 497.34
Exercisable at 31 December 12,757,480 516.30 8,238,435 600.59
(d) Expense charged to income statement
The total expense recognised for the year arising from equity compensation plans was as follows:
2006 2005
£m £m
Equity-settled expense 48 22
Cash-settled expense ––
48 22
(e) Fair value of options and awards granted after 7 November 2002
The weighted average fair value of options and awards granted during the year, estimated by using the Black-Scholes option-pricing
model, was £2.35 and £6.70 (2005: £1.88 and £4.50) respectively.
(i) Share options
The fair value of the options was estimated on the date of grant, based on the following weighted average assumptions:
Weighted average assumption 2006 2005
Share price 781p 618p
Exercise price 593p 491p
Expected volatility 26% 35%
Expected life 3.82 years 3.81 years
Expected dividend yield 3.70% 4.10%
Risk-free interest rate 4.80% 4.20%
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 on 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.
No options granted after 7 November 2002 wereexercised during the year (2005: nil).
Financial statements continued