HSBC 2001 Annual Report Download - page 261

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significant weighted average assumptions used to estimate the fair value of the options granted in 2001 are as
follows:
Group Share
Option Plan
3 year Savings-
Related Share
Option Schemes
5 year Savings-
Related Share
Option Schemes
Risk-free interest rate (%)............... 5.65 5.40 5.50
Expected life (years) ....................... 10 3.5 5.5
Expected volatility (%) ................... 30 30 30
Crédit Commercial de France
CCF granted share purchase and subscription offers to certain executives of CCF, directors and officers, as well
as to certain senior executives of subsidiaries.
Options granted between 1994 and 1999 vested upon announcement of HSBC’ s intent to acquire CCF and were
therefore included in the valuation of CCF.
CCF granted 909,000 options in 2000 after the public announcement of the acquisition and these options did not
vest as a result of the change in control. The options were subject to continued employment and vested on 1
January 2002. The CCF shares obtained on exercise of the options are exchangeable for HSBC’ s ordinary
shares of US$0.50 each in the same ratio as the Exchange Offer for Crédit Commercial de France shares (13
ordinary shares of US$0.50 for each CCF share). Options are granted at market value and are exercisable within
10 years of the vesting date.
2001 2000
Number
Wei
g
hte
d
average
exercise price Number
Weighte
d
average
exercise price
(000’s) £ (000’ s) £
Outstanding at beginning of year .................. 907,500 6.68
–
–
Granted in the year........................................ –
–
909,000 6.68
Less: Forfeited in the year............................. (47,000) 6.68 (1,500) 6.68
Outstanding at end of year ............................ 860,500 6.68 907,500 6.68
The weighted average exercise price of options granted during 2000 was £6.68, the fair value as at the date of
grant was £41.88 and the weighted average remaining contractual life for options outstanding at the balance
sheet date was 10 years.
Restricted Share Plan
Conditional awards under the Restricted Share Plan
Conditional awards under the Restricted Share Plan have been in operation since 1996. It is intended to align the
interests of executives to the creation of shareholder value. This is achieved by setting certain Total Shareholder
Return targets which must normally be attained in order for the awards to vest.
2001 2000 1999
Number Number Number
(000’s) (000’ s) (000’ s)
Outstanding at beginning of year ............................................ 4,092 2,085 412
Additions during the year........................................................ 2,564 2,085 1,673
Less: Released in the year....................................................... (210)
–
–
Less: Forfeited in the year....................................................... (249) (78)
–
Outstanding at end of year ...................................................... 6,197 4,092 2,085
The weighted average purchase price for shares purchased by HSBC for conditional awards under the Restricted