Carphone Warehouse 2014 Annual Report Download - page 78

Carphone Warehouse Group plc
Annual Report 2014
76
FINANCIAL STATEMENTS
Notes to the Group financial statements continued
5 EMPLOYEE COSTS AND SHARE‑BASED PAYMENTS continued
b) SHARE-BASED PAYMENTS continued
ii) SHARE OPTION SCHEMES
During the year the Group introduced the Carphone Warehouse Share Scheme which allows nil-priced options to be offered to senior
employees who are not participants in the Carphone Warehouse Share Plan.
Options were first granted under the scheme in January . The options are subject to continuing employment and are subject to performance
conditions based on a combination of absolute TSR performance and relative TSR performance against the FTSE .
Prior to the CPW Europe Acquisition, CPW Europe had a share option scheme, under which participants received options over A shares in
NewCPW and each of Best Buy and the Company had an obligation to acquire % of these shares at a value based on the Headline PBT of
CPW Europe over the vesting period. The pool was based on earnings in excess of minimum growth targets, against the earnings for the year
ended  March . The Company and Best Buy agreed a minimum value of the pool, in recognition of the value that had already accrued
inthe scheme in relation to Best Buy Mobile.
In order to align the interests of participants with those of the Company, the value of the A shares in New CPW were assessed at defined points
during the vesting period, and nil-priced options over shares in the Company were granted to participants through the Participation Plan to
match this value, so that participants benefited from any growth in the market capitalisation of the Company during the vesting period.
Further to the CPW Europe Acquisition the Remuneration Committee allowed the scheme to vest based on performance achieved to  March .
In addition to the Group’s obligations under the scheme the Group also agreed to satisfy Best Buy’s obligations under the scheme. The Company
issued m shares in relation to these obligations.
The following table summarises the number and weighted average exercise price ("WAEP") of share options for these schemes:
2014 2013
Number WAEP Number WAEP
million £million £
Outstanding at the beginning of the year 5 — — —
Granted during the year 18 —7 —
Lapsed during the year — — (2) —
Exercised during the year (14) —— —
Outstanding at the end of the year 9 — 5 —
Exercisable at the end of the year — — — —
Options exercised during the year were exercised at a weighted average market price of £..
All options outstanding at the end of the year were nil-priced and had a weighted average remaining contractual life of . years.
iii) SAVE AS YOU EARN SCHEME
During the year the Group introduced a Save As You Earn scheme which allows participants to save up to £ per month for either three
or five years. At the end of the savings period participants can purchase shares in the Company based on a discounted share price determined
at the commencement of the scheme. The following table summarises the number and WAEP of share options for these schemes:
2014 2013
Number WAEP Number WAEP
million £million £
Outstanding at the beginning of the year — — — —
Granted during the year 32.24 — —
Outstanding at the end of the year 32.24 — —
Exercisable at the end of the year — — — —
All options outstanding at the end of the year had an exercise price of £.. Options outstanding at the end of the year had a weighted
average remaining contractual life of . years.
iv) JOINT VENTURE INCENTIVE SCHEMES
Virgin Mobile France has issued market-priced and nil-priced share options in Virgin Mobile France to certain employees of the business.
These options vest over periods of two to four years.
v) FAIR VALUE MODEL
The fair value of options with external performance targets was estimated at the date of grant using a Monte Carlo model. The model
combines the market price of a share at the date of grant with the probability of meeting performance criteria, based on the historical
performance of Carphone Warehouse and Old Carphone Warehouse shares.
vi) CHARGE TO INCOME STATEMENT AND ENTRIES IN RESERVES
During the year ended  March , the Group recognised a non-cash accounting charge to profit and loss of £m (: nil) in respect of
equity settled share-based payments, which is offset by an entry through reserves. This entry is offset in reserves by the non-recourse
element of loans provided to participants in the Carphone Warehouse Share Plan.