Holiday Inn 2012 Annual Report Download - page 125

OVERVIEW BUSINESS REVIEW GOVERNANCE
GROUP FINANCIAL
STATEMENTS
PARENT COMPANY FINANCIAL STATEMENTS OTHER INFORMATION
Notes to the Group Financial Statements 123
Annual Bonus Plan
The IHG Annual Bonus Plan (ABP) enables eligible employees,
including Executive Directors, to receive all or part of their bonus
in the form of deferred shares. The deferred shares are released
on the third anniversary of the award date. Under the terms of the
current plan, a fixed percentage of the bonus is awarded in the
form of shares with no voluntary deferral and no matching shares.
The awards in all of the plans are conditional on the participants
remaining in the employment of a participating company or leaving
for a qualifying reason as per the plan rules. Participation in the
ABP is at the discretion of the Remuneration Committee. The
number of shares is calculated by dividing a specific percentage of
the participant’s annual performance-related bonus by the middle
market quoted prices on the three consecutive dealing days
immediately preceding the date of grant. A number of executives
participated in the plan during the year and conditional rights over
340,924 (2011 528,213) shares were awarded to participants.
Long Term Incentive Plan
The Long Term Incentive Plan (LTIP) allows Executive Directors
and eligible employees to receive share awards, subject to the
achievement of performance conditions, set by the Remuneration
Committee, which are normally measured over a three-year period.
Awards are normally made annually and, except in exceptional
circumstances, will not exceed three times salary for Executive
Directors and four times salary in the case of other eligible
employees. During the year, conditional rights over 2,698,714
(2011 3,257,364) shares were awarded to employees under the plan.
The plan provides for the grant of ‘nil cost options’ to participants
as an alternative to conditional share awards.
Executive Share Option Plan
For options granted, the option price is not less than the market
value of an ordinary share, or the nominal value if higher. The
market value is the quoted price on the business day preceding the
date of grant, or the average of the middle market quoted prices on
the three consecutive dealing days immediately preceding the date
of grant. A performance condition has to be met before options can
be exercised. The performance condition is set by the Remuneration
Committee. The plan was not operated during 2012 and no options
were granted in the year under the plan. The latest date that any
options may be exercised is 4 April 2015.
Sharesave Plan
The Sharesave Plan is a savings plan whereby employees contract
to save a fixed amount each month with a savings institution for
three or five years. At the end of the savings term, employees are
given the option to purchase shares at a price set before savings
began. The Sharesave Plan, when operational, is available to all UK
employees (including Executive Directors) employed by participating
Group companies provided that they have been employed for at least
one year. The plan provides for the grant of options to subscribe for
ordinary shares at the higher of nominal value and not less than
80% of the middle market quotations of the ordinary shares on the
three dealing days immediately preceding the invitation date. The
plan was not operated during 2012 and no options were granted
in the year under the plan.
US Employee Stock Purchase Plan
The US Employee Stock Purchase Plan will allow eligible
employees resident in the US an opportunity to acquire Company
American Depositary Shares (ADSs) on advantageous terms.
The option to purchase ADSs may be offered only to employees of
designated subsidiary companies. The option price may not be less
than the lesser of either 85% of the fair market value of an ADS on
the date of grant or 85% of the fair market value of an ADS on the
date of exercise. Options granted under the plan must generally be
exercised within 27 months from the date of grant. The plan was not
operated during 2012 and at 31 December 2012 no options had been
granted under the plan.
Former Six Continents Share Schemes
Under the terms of the separation of Six Continents PLC in 2003,
holders of options under the Six Continents Executive Share
Option Schemes were given the opportunity to exchange their
Six Continents PLC options for equivalent value new options
over IHG shares. As a result of this exchange, 23,195,482 shares
were put under option at prices ranging from 308.5p to 593.3p.
The exchanged options were immediately exercisable and are
not subject to performance conditions. During 2012, 352,115
(2011 397,943) such options were exercised and 106,699
(2011 45,655) lapsed, leaving no such options outstanding
at 31 December 2012 (2011 458,814).
27. Share-based payments