Tesco 1999 Annual Report Download - page 39

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TESCO PLC ANNUAL REPORT 1999 37
Note 25 Share options continued
Executive share option scheme (1996)Shares
Number of under option Subscription
Date of grant executives 27 Feb 1999 prices (pence)
3 July 1996 29 3,695,277 98.3
23 September 1996 975 26,609,025 99.7
17 April 1997 1,057 20,580,537 117.7
7 October 1997 42 4,770,168 151.7
17 November 1997 2 446,373 160.3
21 May 1998 1,322 22,394,650 176.7
30 September 1998 37 1,609,009 164.0
28 January 1999 1,363 21,650,614 178.0
International executive share option scheme (1996)Shares
Number of under option Subscription
Date of grant executives 27 Feb 1999 prices (pence)
7 October 1997 118 1,914,690 151.7
21 May 1998 299 2,862,000 176.7
28 January 1999 383 4,116,500 178.0
The subscription price and number of shares have been adjusted as a result of the bonus issue on 3 July 1998.
Note 26 Pension commitments
The Group operates a funded defined benefit pension scheme for full-time employees, the assets of which are held as a segregated
fund, administered by trustees.
The pension cost relating to the scheme is assessed in accordance with the advice of an independent qualified actuary using the
projected unit method. The latest actuarial assessment of this scheme was at 5 April 1996. The assumptions which have the most
significant effects on the results of the valuation are those relating to the rate of return on investments and the rate of increase in
salaries and pensions. It was assumed that the investment return would be 81⁄2% per annum with dividend growth of 4% per annum,
that salary increases would average 51⁄2% per annum and that pensions would increase at the rate of 31⁄2% per annum.
At the date of the latest actuarial valuation, the market value of the scheme’s assets was £792m and the actuarial value of these assets
represented 108% of the benefits that had accrued to members, after allowing for expected future increases in earnings.
Benefit improvements to members have been agreed with the trustees which have resulted in an increased company cost. This increasing
ongoing cost has been offset by the amortisation of the surplus as a level percentage of pay over nine years. The pension cost of this
scheme to the Group was £55m (1998 – £44m).
The Group also operates a defined contribution pension scheme for part-time employees which was introduced on 6 April 1988.
The assets of the scheme are held separately from those of the Group, being invested with an insurance company. The pension cost
represents contributions payable by the Group to the insurance company and amounted to £17m (1998 – £15m). There were no
material amounts outstanding to the insurance company at the year end.
The Group also operates defined contribution schemes in the Republic of Ireland and Hungary. The contributions payable under these
schemes of £1m (1998 – £3m) have been fully expensed against profits in the current year.