Barclays 2011 Annual Report Download - page 260

Notes to the financial statements
For the year ended 31 December 2011 continued
38 Share based payments
Accounting for share based payments
The Group applies IFRS 2 Share Based Payments in accounting for employee remuneration in the form of shares.
Employee incentives include awards in the form of shares and share options, as well as offering employees the opportunity to purchase shares on
favourable terms. The cost of the employee services received in respect of the shares or share options granted is recognised in the income
statement over the period that employees provide services, generally the period in which the award is granted or notified and the vesting date of the
shares or options. The overall cost of the award is calculated using the number of shares and options expected to vest and the fair value of the
shares or options at the date of grant.
The number of shares and options expected to vest takes into account the likelihood that performance and service conditions included in the terms
of the awards will be met. Failure to meet the non-vesting condition is treated as a cancellation, resulting in an acceleration of recognition of the cost
of the employee services.
The fair value of shares is the market price ruling on the grant date, in some cases adjusted to reflect restrictions on transferability. The fair value of
options granted is determined using option pricing models to estimate the numbers of shares likely to vest. These take into account the exercise
price of the option, the current share price, the risk-free interest rate, the expected volatility of the share price over the life of the option and other
relevant factors. Market conditions that must be met in order for the award to vest are also reflected in the fair value of the award, as are any other
non-vesting conditions – such as continuing to make payments into a share based savings scheme.
The charge for the year arising from share based payment schemes was as follows:
Charge for the year
2011
£m
2010
£m
2009
£m
Share Value Plan 634 361 –
Executive Share Award Scheme 101 304 178
Others 137 172 100
Total equity settled 872 837 278
Cash settled 34 23 8
Total continuing operations 906 860 286
Discontinued operations –– 12
Total share based payments 906 860 298
The terms of the main current plans are as follows:
Share value plan (SVP)
The SVP was introduced in March 2010 and approved by shareholders (for Executive Director participation and use of new issue shares) at the AGM in
April 2011. SVP awards are granted to participants in the form of a conditional right to receive Barclays shares (awards granted prior to May 2011 were
granted as provisional allocations of Barclays shares) which vest over a period of three years in equal annual tranches. Participants do not pay to receive
an award or to receive a release of shares. The grantor may also make a dividend equivalent payment to participants on vesting of a SVP award. SVP
awards are also made to eligible employees for recruitment purposes under schedule 1 to the SVP. From 2010, the portion of a business unit LTIP award
that was previously granted under ESAS is normally granted under SVP. All awards are subject to potential forfeiture in certain leaver scenarios.
Executive Share Award Scheme (ESAS)
For certain employees of the Group an element of their annual bonus is in the form of a deferred award of a provisional allocation of Barclays PLC shares
under ESAS. The total value of the bonus made to the employee, of which ESAS is an element, is dependent upon the business unit, Group and
individual employee performance. The ESAS element of the annual bonus must normally be held for at least three years. Additional bonus shares are
subsequently awarded to recipients of the provisional allocation and vest upon achieving continued service for three and five years from the date of
award. ESAS awards are also made to eligible employees for recruitment purposes under JSAP (Joiners Share Award Plan). All awards are subject to
potential forfeiture if the individual resigns and commences work with a competitor business. LTIP plans are cash and equity performance plans which
after 3 years (dependant on performance) pay half in cash and the remaining half in shares which are placed into ESAS for a further 1 or 2 years.
Other schemes
In addition to the above schemes, the Group operates a number of other schemes including schemes operated by and settled in the shares of
subsidiary undertakings, none of which are individually or in aggregate material in relation to the charge for the year or the dilutive effect of outstanding
share options. Included within other schemes are the Performance Share Plan, Incentive Share Plan, Sharesave, Sharepurchase, and the Barclays Long
Term Incentive Plan which was introduced and approved at the AGM in April 2011.
258 Barclays PLC Annual Report 2011 www.barclays.com/annualreport