Barclays 2009 Annual Report Download - page 264

262 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09
Notes to the accounts
For the year ended 31st December 2009
continued
44 Share-based payments continued
At the balance sheet date the following cash-settled schemes operated within the Group:
Absa Group Limited Phantom Performance Share Plan (Phantom PSP)
The Phantom PSP is a cash-settled plan and payments made to participants in respect of their awards are in the form of cash. The Phantom PSP shares
(and any associated notional dividend shares) are awarded at no cost to the participants. The amount that is ultimately paid to the participants is equal to
the market value of a number of ordinary shares as determined after a three-year vesting period. The vesting of the Phantom PSP awards will be subject
to two non-market performance conditions which will be measured over a three-year period, starting on the first day of the financial year in which the
award is made. The award will vest after three years to the extent that the performance conditions are satisfied. These awards are forfeited in total if Absa
performance fails to meet the minimum criteria.
Absa Group Limited Phantom Executive Share Award Scheme (Phantom ESAS)
The Phantom ESAS is a cash-settled share-based payment arrangement, where the participant’s notional bonus comprises a number of restricted nil-cost
options, based on the allocation price of ordinary shares. If the participant is in the employ of the Group after the three-year vesting period, the participant
will receive 20% bonus phantom shares. If the bonus award remains in the Phantom ESAS for another two years, the participant receives an additional
10% bonus phantom shares. Dividend phantom shares are paid to participants on the ordinary phantom shares as if the shares were held from inception.
The number of dividend phantom shares awarded is therefore calculated on the initial allocation and on the 20% and 10% bonus phantom shares, over
the three- or five-year period. Employees that receive performance bonuses in excess of a predetermined amount are compelled to place a set percentage
of the bonus award in the Phantom ESAS. Employees also have the option of utilising more of their bonus award for voluntary ESAS phantom shares.
The weighted average fair value per option granted during the year is as follows:
2009 2008
££
Sharesave 1.43 0.92
PSP 2.81 4.89
Sharepurchase 1.82 3.38
ISP 2.58 4.22
ESAS 1.08 4.09
AGLPSP 6.88 7.76
AGLESAS 6.82 7.17
Fair values for Sharesave and PSP are calculated at the date of grant using either a Black-Scholes model or Monte Carlo simulation. Sharepurchase, ISP,
ESAS, AGLPSP and AGLESAS are nil cost awards on which the performance conditions are substantially completed at the date of grant. Consequently the
fair value of these awards is based on the market value at that date.
As described above, the terms of the ESAS scheme require shares to be held for a set number of years from the date of vest. The calculation of the vest
date fair value of such awards includes a reduction for this post-vesting restriction. This discount is determined by calculating how much a willing market
participant would rationally pay to remove the restriction using a Black-Scholes option pricing model. The total discount required in 2009 is £10m
(2008: £10m, 2007: £66m).
The significant weighted average assumptions used to estimate the fair value of the options granted in 2009 are as follows:
2009
Sharesave PSP
Weighted average share price 3.51 2.34
Weighted average exercise price 2.70 1.77
Expected volatility 45% 45%
Expected option life 4 years 2 years
The significant weighted average assumptions used to estimate the fair value of the options granted in 2008 are as follows:
2008
Sharesave PSP
Weighted average share price 3.11 5.45
Weighted average exercise price 2.51 2.07
Expected volatility 37% 37%
Expected option life 4 years 3 years
The significant weighted average assumptions used to estimate the fair value of the options granted in 2007 are as follows:
2007
Sharesave PSP BGI EOP AGLSIT
Weighted average share price 5.82 7.07 95.33 9.18
Weighted average exercise price 4.81 – 95.33 7.62
Expected volatility 25% 25% 20% 30%
Expected option life 4 years 3 years 4 years 5 years