HSBC 2002 Annual Report Download - page 300

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
298
2002 2001
% per annum % per annum
Discount rate United Kingdom............................................ 5.6 5.9
Hong Kong .................................................... 5.5 6.5
Jersey............................................................. 5.6 5.9
Brazil............................................................. 10.25 10.25
United States ................................................. 6.75 7.25
France............................................................ 5.5 5.5
Return on assets United Kingdom............................................ 7.3 6.8
Hong Kong .................................................... 8.0 8.0
Jersey............................................................. 6.9 6.3
United States ................................................. 9.5 9.5
Rate of pay increase United Kingdom............................................ 2.75 3.75
Hong Kong .................................................... 4.5 6.0
Jersey............................................................. 4.0 4.25
Brazil............................................................. 6.05 6.05
United States ................................................. 3.75 4.0
France............................................................ 3.5 3.5
(d) Stock-based compensation
HSBC has adopted SFAS 123 and accounts for share compensation schemes based on their estimated fair values
at date of grant. The disclosure requirements are only applicable to options and other awards granted from 1
January 1995 onwards and, in the initial phase-in period, the amounts reported will not be representative of the
effect on reported net income for future years.
The SFAS 123 charge for the fair value of options granted since 1 January 1997 is US$240 million (2001:
US$316 million; 2000: US$234 million).
The Executive Share Option Scheme, Group Share Option Plan, Savings-Related Share Option Scheme and
Restricted Share Plan fall within the scope of SFAS 123. The disclosures of options outstanding only relate to
those granted from 1995 onwards.
Analysis of the movement in the number and weighted average exercise price of options is set out below.
Executive Share Option Scheme
The Executive Share Option Scheme is a long-term incentive scheme available to certain HSBC employees with
grants usually made each year. Options are granted at market value and are normally exercisable between the
third and tenth anniversaries of the date of grant, subject to vesting conditions. No further grants will be made
under the Scheme following the adoption of the Group Share Option Plan in 2000.
2002 2001 2000
Number
Wei
g
hte
d
average
exercise
price Number
Weighte
d
average
exercise
price Number
Weighte
d
average
exercise
price
(000’s) £ (000’ s) £ (000’ s) £
Outstanding at beginning of year .. 102,710 6.60 109,424 6.56 84,765 6.10
Granted in the year........................ –
–
–
–
32,789 7.46
Exercised in the year..................... (20,982) 6.26 (3,236) 5.34 (4,059) 4.11
Less: Forfeited in the year............. (2,083) 6.91 (3,478) 6.53 (4,071) 6.65
Outstanding at end of year ............ 79,645 6.68 102,710 6.60 109,424 6.56
The weighted average fair value of options as at the date of grant during 2000 was US$5.26.