Experian 2007 Annual Report Download - page 119

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31. Share-based payment arrangements (continued)
Number of
options
m
2007
Share awards in respect of shares in GUS plc outstanding at the beginning of the year 5.0
New grants 2.8
Vesting (4.2)
Awards in respect of shares in GUS plc at demerger 3.6
Less awards rolled-over into Home Retail Group share plans (0.7)
GUS share awards to Experian participants at demerger 2.9
Conversion to Experian Group awards at an average roll-over ratio of 1.78 2.3
Experian equivalent roll-over awards 5.2
Share awards in respect of Experian Group Limited on or after demerger 19.8
Forfeitures (0.4)
Share awards in Experian Group Limited outstanding at the end of the year 24.6
For Experian demerger plans there were 19,022,982 shares granted in 2007, with a weighted average award fair value of £5.20. For former GUS
plans there were 2,814,465 shares granted in 2007 (2006: 2,635,145), with a weighted average award fair value of £6.74 (2006: £7.69).
(c) Modification of GUS awards to Experian participants
(i) Details of modification
Prior to demerger,Experian participants held share incentive grants with entitlement to GUS share distributions. On demerger, the majority of
outstanding awards were rolled-over into plans with entitlement to Experian Group Limited share distributions. The quantity and exercise price of
awards were modified to maintain an equivalent compensation as the original GUS grants. The incremental fair value of the modification was US$8m.
(ii) Information relating to modified options
In total, 16.9m GUS options were rolled-over into 30.0m Experian Group Limited options. A Black-Scholes model was used to determine the fair
value of GUS and Experian Group Limited awards for modified grants. The weighted average estimated fair values and the inputs into the Black-
Scholes model areas follows:
Weighted average
GUS Experian
awards awards
Fair value (£) 2.71 1.64
Shareprice on modification date (£) 9.90 5.62
Exercise price (£) 8.08 4.57
Expected volatility 25.6% 27.6%
Expected dividend yield 3.7% 3.7%
Risk-free rate 4.9% 4.9%
Expected option life to exercise 3.48 years 3.48 years
(iii) Information relating to modified share awards
Weighted average
GUS Experian
awards awards
Quantity modified (millions) 4.9 8.7
Weighted average fair value (£) 8.14 4.67
(d) Other share awards
During the year Experian Group Limited issued put options to a small number of employees who own an equity interest in a subsidiary. These
options vest on 31 March 2008 assuming the employees remain with the Group and they will be exercisable from that date onwards. These options
are accounted for under IFRS 2 as performance conditions are linked to employment with the subsidiary. The options will be exercisable at a value
based on 20% of the prevailing market value of the subsidiary for which these employees work and this value is capped at US$50m. The option will
be settled in Experian Group Limited shares. The expected number of shares is 122,000. The option was purchased for US$0.7m by the employees
at fair value as calculated by third party valuation specialists. This valuation is based on the forecast revenue model of the subsidiary. No cost will
arise over the vesting period as the purchase price of the option was its market value.
Experian Annual Report2007 |117