Vodafone 2006 Annual Report Download - page 101

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Vodafone Group Plc Annual Report 2006 99
Financials
20. Share-based payments
The Company currently uses a number of equity settled share plans to grant options
and shares to its directors and employees.
Share options
Vodafone Group savings related and Sharesave schemes
The Vodafone Group 1998 Sharesave Scheme (the “Sharesave Scheme”) enables UK
staff to acquire shares in the Company through monthly savings of up to £250 a year
over a three or five year period, at the end of which they also receive a tax free bonus.
The savings and bonus may then be used to purchase shares at the option price, which
is set at the beginning of the savings contract and usually at a discount of 20% to the
then prevailing market price of the Company’s shares. Invitations to participate in this
scheme are usually made annually.
Vodafone Group executive schemes
The Company has a number of discretionary share option plans, under which awards are
no longer made. The current share options plans in place are the Vodafone Group 1998
Company Share Option Scheme and Vodafone Group 1988 Executive Share Option
Scheme (which are UK HM Revenue and Customs approved) and the Vodafone Group
1998 Executive Share Option Scheme and the Vodafone 1988 Share Option Scheme
(which are unapproved). Options under discretionary schemes are subject to
performance conditions. Options are normally exercisable between three and ten years
from the date of grant.
Vodafone Group 1999 Long Term Stock Incentive Plan and ADSs
The Vodafone Group Plc 1999 Long Term Stock Incentive Plan is a discretionary plan
under which both share option grants and share awards may be made. For grants made
to US employees, prior to 7 July 2003 the options have phased vesting over a four year
period and are exercisable in respect of ADSs. For grants made after 6 July 2003, options
are normally exercisable between three and ten years from the date of grant, subject to
the satisfaction of predetermined performance conditions and are exercisable in respect
of ordinary shares listed on the London Stock Exchange, or ADSs for US employees.
Other share option schemes
Share option schemes are operated by certain of the Group’s subsidiary and associated
undertakings, under which options are only issued to key personnel.
Share plans
Share Incentive Plan
The Share Incentive Plan enables UK staff to acquire shares in the Company through
monthly purchases of up to £125 per month or 5% of salary, whichever is lower. For
each share purchased by the employee, the Company provides a free matching share.
In addition to the above, all permanent employees at 1 April 2005 received an award of
320 shares (2005: 350) (known as "All Shares") in Vodafone Group Plc on 1 July 2005
(5 July 2004), under the Vodafone Group Plc Global All Employee Share Plan. The awards
vest after two years and are not subject to performance conditions other than continued
employment.
Restricted share plans
Under the Vodafone Group Short Term Incentive Plan, introduced in 1998, shares are
conditionally awarded to directors based on achievement of one year performance
targets. Release of the shares is deferred for a further two years and is subject to
continued employment. Additional shares are released at this time if a further
performance condition has been satisfied over the two year period.
Under the Vodafone Group Long Term Incentive Plan and the Vodafone Group Plc 1999
Long Term Stock Incentive Plan referred to above, awards of performance shares are
granted to directors and certain employees. The release of these shares is conditional
upon achievement of performance targets measured over a three year period.
Under these restricted share plans, the maximum aggregate number of ordinary shares
which may be issued in respect of options or awards will not (without shareholder
approval) exceed:
a. 10% of the ordinary share capital of the Company in issue immediately prior to the
date of grant, when aggregated with the total number of ordinary shares which have
been allocated in the preceding ten year period under all plans; and
b. 5% of the ordinary share capital of the Company in issue immediately prior to the
date of grant, when aggregated with the total number of ordinary shares which have
been allocated in the preceding ten year period under all plans other than the
Sharesave Scheme and the Vodafone Group Plc All Employee Share Plan.