Experian 2007 Annual Report Download - page 114

Introduction | Business review | Governance | Financial statements
31. Share-based payment arrangements (continued)
Experian Roll-over plans (formerly GUS plans)
The arrangements in respect of former GUS plans which were in place in the year ended 31 March 2006 and in the period from 1 April 2006 to the
date of demerger were as follows:
The 1998 Approved and
Non-Approved Executive The North America Stock Savings related share
Arrangements Share Option Schemes Option Plan option schemes
Nature Grant of options Grant of options ‘Save as you earn’ scheme
Vesting conditions:
–Service period 3 years 1, 2 and 3 years 3 or 5 years
–Performance/Other EPS growth performance n/a Saving obligation over the
condition1vesting period
Expected outcome of meeting performance
criteria (at grant date) Condition is satisfied n/a n/a
Maximum term 10 years 6 years 3.5 or 5.5 years
Method of settlement Share distribution Share distribution Share distribution
Expected departures (at grant date) 5% 1year – 0% 3years2–30%
2years – 15% 5 years2–50%
3years – 20%
Option exercise price calculation3Market price over the Market price over the 20% discount to market price
3dealing days preceding 3dealing days preceding over the 3 dealing days
the grant the grant preceding the grant
1. The performance condition for The 1998 Approved and Non-Approved Executive Share Option Schemes required average Benchmark EPS
growth to exceed the average growth in the general index of retail prices by at least 4% p.a. over a 3 year period. The period of assessment
commenced at the beginning of the financial year of grant. This is not a market based performance condition as defined by IFRS 2.
2. The stated values for expected departures include participants who did not meet the savings requirement of the scheme.
3. Three day averages were calculated by taking middle market quotations of a GUS plc share from the London Stock Exchange daily official list.
(ii) Weighted average share price
2007 2006
££
Weighted average share price of Experian Group Limited15.90 n/a
GUS plc share price at demerger 9.90 n/a
Weighted average share price of GUS plc29.82 9.32
1. Experian’s weighted average share price for 2007 is for the period from the listing date, 11 October 2006, to 31 March 2007.
2. Weighted average share price for 2007 is in respect of the period up to demerger.
Options in respect of the Ordinary shares of Experian Group Limited and GUS plc were exercised on a regular basis throughout the periods that the
respective shares were in issue.
(iii) Information relating to option valuation techniques
For the Experian demerger plans and the former GUS plans the Black-Scholes model is used to determine an appropriate value of the option grants.
Inputs into the model are calculated as follows:
Expected volatility: Experian demerger plans – As shares in Experian Group Limited werenewly listed during the year,thereis insufficient share
price history in order to calculate historical volatility. Accordingly to arrive at a reasonable volatility assumption an analysis of the share price volatility
of comparable companies was performed.
Expected volatility: former GUS plans – Calculated as an average over the expected life with an assumption made for volatility in each year of
the expected life. Volatility in the first year was assumed to be the same as implied volatility on grant date. Volatility for year 4 and beyond was
assumed to remain at the long run (10 year observed) historic volatility. Linear interpolation was assumed for years 2 and 3.
Expected dividend yield – Yields are based on the current consensus analyst forecast figures at the time of grant. The inputs utilised are an
average of the forecast over the next three financial years.
Notes to the Group financial statements
for the year ended 31 March 2007
112 |Experian Annual Report2007