Experian 2013 Annual Report Download - page 143
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Business review Business overview Governance Financial statements
35. Share incentive plans
(a) Cost of share-based compensation
2013
US$m
2012
US$m
Share awards 73 56
Share options 5 9
Total expense recognised in Group income statement 78 65
Reported within employee benefit costs as follows:
Within Benchmark PBT 78 60
Charge in respect of demerger-related share incentive plans (excluded from Benchmark PBT) – 5
Total expense recognised in Group income statement 78 65
The Group has a number of equity settled, share-based employee incentive plans. Details of the arrangements under which awards are made
and options granted are given below, together with information on award valuation. The price of the Company’s ordinary shares is quoted in
sterling and accordingly award, option and share prices are disclosed in sterling.
(b) Share awards
(i) Summary of arrangements and performance conditions
There are three plans under which share awards are granted – the two Experian Co-Investment Plans (the ‘Experian CIPs’) and the Experian
Performance Share Plan (the ‘Experian PSP’).
Awards take the form of a grant of shares and vest over a service period of three years with a maximum term of the same length. The method
of settlement for the awards is by share distribution. The assumption at grant date for employee departures prior to vesting is between 5% and
10% for conditional awards and 20% for the unconditional awards which are only made under the Experian PSP. Other details in respect of
conditional awards are given below.
Performance conditions for vesting Assumed outcome at grant date
Experian CIPs 50% – Benchmark profit performance of Group assessed
against specified targets
50% – Cumulative operating cash flow of Group
Benchmark profit – 82% to 100%
Cumulative operating cash flow – 100%
Experian PSP 75% – Benchmark profit performance of Group assessed
against specified targets
25% – Distribution percentage determined by ranking Total
Shareholder Return (‘TSR’) relative to a comparator group
Benchmark profit – 82% to 100%
TSR – Range from 45% to 52%
Experian CIPs
The grant date for these plans is the start of the financial year in which performance is assessed. This is before the number of shares to be
awarded is determined but the underlying value of the award is known, subject to the outcome of the performance condition. The value of
awarded shares reflects the performance outcome assumed at the date of their issue to participants and is recognised over a four-year period.
The range of performance conditions for awards under this plan are set out below. The Benchmark profit performance condition (the
‘profit condition’) requires Benchmark PBT growth at the stated percentages over a three-year period. The cumulative operating cash flow
performance condition (the ‘cash flow condition’) is based on cumulative operating cash flow over a three-year period.
Profit condition Cash flow condition
Year of award Target Maximum Target Maximum
Year ended 31 March 2013 7% per annum 14% per annum US$3.7bn US$4.1bn
Year ended 31 March 2012 7% per annum 14% per annum US$3.0bn US$3.4bn
Year ended 31 March 2011 5% per annum 11% per annum US$2.9bn US$3.3bn
The period of assessment commences at the beginning of the financial year of grant. These are not market-based performance conditions as
defined by IFRS 2.