Experian 2007 Annual Report Download - page 118

Introduction | Business review | Governance | Financial statements
31. Share-based payment arrangements (continued)
Former GUS share 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:
Arrangements Co-Investment Plan – Matching Shares Performance Share Plan
Nature of arrangement Grant of shares1Grant of shares
Vesting conditions:
–Service period
–Performance
Expected outcome of meeting
performance criteria (at grant date) Participants meet target performance 50.6% for June 2006 grant
60.0% for June 2005 grant
Maximum term 4 years 3 years
Method of settlement Share distribution Share distribution
Expected departures (at grant date) 7% 5%
1. The Matching Shares are a nil consideration option and have been classified as an awardof shares because the natureof the award is the same.
2. The Performance Share Plan performance condition is considered a ‘Market-based’ performance condition under IFRS 2. It was valued using a
Monte Carlo simulation with historic volatilities and correlations measured over the three year period preceding valuation. On conversion to
IFRS, the fair value of awards was calculated as 60% of the share price at date of grant. This valuation has applied to all grants up to 31 March
2006. It was deemed necessary to re-run the Monte Carlo simulation for the year ended 31 March 2007 as Group activity made the calculation
on conversion to IFRS inappropriate. The fair value of awards granted in June 2006 was calculated as 50.6% of the share price at date of grant.
The grant date for the Experian Co-Investment plan and the former GUS Co-Investment plan is the start of the financial year in which performance
is assessed. This is beforethe quantity of the shares award is determined. The underlying value of the award is known at the grant date, subject to
the outcome of the performance condition. The value of awarded shares reflects the performance outcome at the date of issue to participants.
(ii) Information relating to share grant valuation techniques
The majority of the grants were made on Experian Group Limited shares’ first day of trading on the London Stock Exchange and trading was
particularly volatile on this day. The weighted average share price for that day’s trading is being used to determine the value of Experian demerger
share awards. For the former GUS plans the value of awards is determined as the observed market closing rate on the date awarded grants are
issued to participants. For the Experian Co-Investment plan and the former GUS Co-Investment plan, this occurs after the first year of performance
is assessed. The Experian demerger and former GUS Performance Share plans’ market-based performance conditions are included in the fair value
measurement on grant date and are not revised for actual performance.
Under the shareawards, participants have an entitlement to dividend distributions from the issue date until point of vesting. The observed market
rate on the day of valuation is considered inclusive of future dividend distributions. No modifications are made for dividend distributions or other
factors.
(iii) Reconciliation of shareawards outstanding
Number of
options
m
2006
Share awards in respect of shares in GUS plc outstanding at the beginning of the year 4.9
New grants 2.0
Forfeitures (1.3)
Vesting (0.6)
Share awards in respect of shares in GUS plc outstanding at the end of the year 5.0
3years
Distribution percentage determined by ranking ‘Total
Shareholder Return’ relative to a comparator group
4years
Benchmark profit performance of Group/Division
assessed against specified targets
Notes to the Group financial statements
for the year ended 31 March 2007
116 |Experian Annual Report2007