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53 easyJet plc Annual report and accounts 2009
Notes
A Non-Approved Discretionary Share Option Scheme
B Approved Discretionary Share Option Scheme
C Long Term Incentive Plan – Performance Shares
D Long Term Incentive Plan – Matching Shares
E Chief Executive Officer Recruitment Award
F Sharesave (SAYE) scheme
G Share Incentive Plan – Free shares
H Share Incentive Plan – Matching Shares
Note 1: The number of shares are calculated according to the scheme rules of individual plans based on the middle-market closing share price of the day prior to grant (except for the June 2005 ESOS
award which was based on the previous practice of the average middle-market price of the five days prior to grant). As is usual market practice, the option price for SAYE awards is determined by the
Committee in advance of the award, by reference to the share price following announcements of results.
Note 2: Participants purchase shares monthly under the plan and the company provides one matching share for each share purchased. These are first available for vesting three years after purchase.
The potential vesting of outstanding awards if the performance were based at the end of the year under review is shown at the end of this section.
The performance criteria for vesting of these share options and awards are as follows:
Discretionary Share Option Schemes (A&B)
Based on the average annual growth in earnings per share (EPS), where no shares vest if EPS growth is less than RPI plus 5%, 30% vest where EPS growth is
RPI plus 5% and 100% vest where EPS growth is RPI plus 20%. Straight-line vesting will occur between these points.
In relation to the provision, the Committee agreed on 15 May 2009 to facilitate Andrew Harrison’s continued service at easyJet and agreed to exercise its
discretion to extend the period for which his vested share options can be exercised to six months from the termination date.
Long Term Incentive Plan (C&D)
Awards prior to those made during the year under review were subject to the achievement of the following ROE targets:
Grant date Basis year
Threshold
(25% vests)
Target
(50% vests)
Maximum
(100% vests)
December 2005 30 September 2006 8.4% 8.8% 10.0%
30 September 2007 11.8% 12.4% 13.0%
30 September 2008 12.5% 13.2% 15.0%
December 2006 30 September 2009 12.5% 14.0% 16.5%
December 2007 30 September 2010 12.5% 14.0% 16.5%
February 2008 30 September 2010 13.5% 15.5% 17.5%
Straight-line vesting will occur between the threshold, target and maximum targets set out above. The returns on equity shown for the February 2008 grant
relate to awards in excess of 100% of basic salary.
The December 2006 award is due to vest in December 2009. The award has performance targets relating to return on equity achieved in the year ended
30 September 2009. However, the targets have not been met and the award will not vest.
The performance conditions that applied to the awards made during the year under review retained ROE as the primary measure of long-term
performance. However, to enable the LTIP to take into account the unique short-term challenges that the airline industry was subject to during the year
under review, additional short-term targets were also set for part of the awards.
The actual targets set reflected the extensive discussions that were undertaken with easyJet’s major shareholders and the shareholder protection bodies.
Both the range of ROE targets set and the short-term targets were felt to take full account of both (i) the exceptional volatility in the price of oil and (ii)
economic uncertainty triggered by the banking crisis.