HSBC 2003 Annual Report Download - page 349

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The number of options, weighted average exercise price, and the weighted average remaining contractual life
for options outstanding at the balance sheet date, analysed by exercise price range, are as follows:
2003 2002 2001
Exercise price range (£) ....................... 1.81 – 4.00 4.01 – 6.75 1.81 – 4.00 4.01 – 6.75 1.81 – 4.00 4.01 – 6.52
Number (000’s) .................................... 891 122,425 2,382 119,138 3,411 127,039
Weighted average exercise price (£) .... 3.78 5.76 3.78 6.02 3.62 5.81
Weighted average remaining
contractual life (years) ..................... 0.16 1.91 0.65 2.02 1.16 2.47
Of which exercisable:
Number (000’s) ................................ 891 264 –312 999 –
Weighted average exercise price (£) 3.78 5.22 – 4.52 3.23 –
Calculation of fair values
Fair values of share options, measured at the date of grant of the option, are calculated using a model that is
based on the underlying assumptions of the Black-Scholes model. The fair values calculated are inherently
subjective and uncertain due to the assumptions made and the limitations of the model used. The significant
weighted average assumptions used to estimate the fair value of the options granted in 2003 are as follows:
Group Share
Option Plan
3 year Savings-
Related Share
Option Schemes
5 year Savings-
Related Share
Option Schemes
Risk-free interest rate (%) ....................................................... 4.7 4.1 4.3
Expected life (years) ............................................................... 535
Expected volatility (%) ........................................................... 30 30 30
CCF
CCF granted share purchase and subscription offers to certain executives of CCF, directors and officers, as well
as to certain senior executives of subsidiaries.
Options granted between 1994 and 1999 vested upon announcement of HSBC’ s intent to acquire CCF and were
therefore included in the valuation of CCF.
CCF granted 909,000 options in 2000 after the public announcement of the acquisition and these options did not
vest as a result of the change in control. The options were subject to continued employment and vested on 1
January 2002. The CCF shares obtained on exercise of the options are exchangeable for HSBC’s ordinary
shares of US$0.50 each in the same ratio as the Exchange Offer for Crédit Commercial de France shares (13
ordinary shares of US$0.50 for each CCF share). Options are granted at market value and are exercisable within
10 years of the vesting date.
2003 2002 2001
Number
Weighted
average
exercise
price Number
Weighted
average
exercise
price Number
Weighted
average
exercise
price
(000’s) € (000’ s) € (000’ s) €
Outstanding at 1 January ............................. 857 142.50 861 142.50 908 142.50
Exercised in the year ................................... (1
)
142.50 (4
)
142.50 – –
Forfeited in the year .................................... –– ––(47
)
142.50
Outstanding at 31 December ....................... 856 142.50 857 142.50 861 142.50
The weighted average remaining contractual life for options outstanding at the balance sheet date was 8 years.