EasyJet 2008 Annual Report Download - page 67

Download and view the complete annual report

Please find page 67 of the 2008 EasyJet annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 84

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84

easyJet plc
Annual report and accounts 2008
Notes to the
financial statements
continued
Long term incentive plan
The plan is open, by invitation, to Executive Directors and senior management, and provides for annual awards of performance shares worth up to 200%
of salary each year and matching shares linked to the investment of up to 50% of annual bonus in easyJet shares. The vesting of these awards is dependent
on return on equity targets being achieved.
Chief Executive recruitment award
In December 2005, on Andrew Harrison acquiring and retaining £1,000,000 worth of easyJet shares using his own funds, he was granted an equal number
of shares with a three-year vesting period. Half of the award is subject to performance conditions relating to the growth in EPS over the three years to
September 2008. The other half is subject to the same return on equity targets as the 2005 long term incentive plan award.
The weighted average remaining contractual life for each class of share award is as follows:
Years
Pre-flotation scheme 1.5
Discretionary schemes 6.2
Sharesave 2.7
Long term incentive plan 1.9
Share incentive plan 3.6
Chief Executive recruitment award 0.9
In accordance with the transitional provisions of IFRS 2, fair values have not been calculated for grants of share options that occurred before
8 November 2002. Exercise prices for these options lie between £1.61 and £3.65.
The fair value of other grants under the discretionary and sharesave schemes is estimated by applying a binomial option pricing model using
the following assumptions. The fair value of grants under all other schemes is the share price on the date of grant.
Share Exercise Expected Option Risk-free Fair
Grant date price price volatility life interest rate value
Discretionary schemes
19 January 2004 3.80 3.60 40% 6.5 4.62% 1.90
8 December 2004 1.81 1.84 42% 6.5 4.45% 0.88
2 June 2005 2.25 2.32 42% 6.5 4.20% 1.08
1 December 2005 3.42 3.30 42% 6.5 4.15% 1.42
Sharesave
29 June 2005 2.45 1.86 42% 3.5 4.09% 1.12
2 June 2006 3.66 2.61 42% 3.5 4.68% 1.79
8 June 2007 5.19 4.79 32% 3.5 5.76% 1.82
6 June 2008 2.86 2.40 41% 3.5 4.92% 1.16
Long term incentive plan
1 December 2005 3.42––––3.42
1 December 2006 5.95––––5.95
3 December 2007 5.63––––5.63
29 February 2008 4.33––––4.33
Share incentive plan 2.71-7.27––––2.71-7.27
Chief Executive recruitment award 3.76––––3.76
The weighted average fair value of shares issued under the share incentive plan during the year was £5.46 (2007: £5.04)
Share price is the closing share price from the last working day prior to the date of grant. Exercise price for the discretionary schemes
was determined using a five-day weighted average price. For the Sharesave scheme, a 20% discount has been given between share price and exercise price.
Expected volatility is based on recent historical volatility over a period comparable to the expected life of each type of option.
In all cases the assumed dividend yield is zero as easyJet does not pay dividends.
Levels of early exercises and lapses are estimated using historical averages.
65
OverviewDirectors’ reportReport on Directors’ remunerationFinancial informationOther information