HSBC 2004 Annual Report Download - page 294

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
292
ADSs which may be used to satisfy the exercise of these options and equity-based awards under the HSBC Finance
Corporation share plans.
Options and equity-based awards outstanding over HSBC Holdings ordinary shares under the HSBC Finance
Corporation share plans are as follows:
Number of
HSBC Holdings
ordinary shares Period of exercise Exercise price
31 December 2004 .............................................. 41,823,886 2005 to 2021 nil – US$25.40
31 December 2003 ............................................... 48,312,607 2004 to 2021 nil – US$25.40
Prior to its acquisition by HSBC Holdings, HSBC Finance Corporation issued 8.875 per cent Adjustable Conversion-
Rate Equity Security Units (‘Units’ ) consisting of a contract under which the holder agreed to purchase, for US$25
each, HSBC Finance Corporation common shares on 15 February 2006, with an option for early settlement. The
Units which remained outstanding following the acquisition of HSBC Finance Corporation were converted into
contracts to purchase HSBC Holdings ordinary shares. If a holder of Units elects to settle early, the holder will
receive 2.6041 HSBC Holdings ordinary shares per Unit. Units exercised at maturity, 15 February 2006, will entitle
the holder to receive a number of shares based on the market value of HSBC Holdings ordinary shares at the time, up
to a maximum of 3.1249 HSBC Holdings ordinary shares for each Unit. During 2004, 1,590,319 (2003: 51,072,691)
HSBC Holdings ordinary shares were issued in connection with the early settlement of 610,700 (2003: 19,612,420)
Units.
The maximum number of Units outstanding over HSBC Holdings ordinary shares are as follows:
Number of Units
exchangeable for
HSBC Holdings
ordinary shares Period of exercise Exercise price
31 December 2004 .............................................. 1,439,840 2005 to 2006 US$8.00 – US$9.60
31 December 2003 ............................................... 2,050,540 2004 to 2006 US$8.00 – US$9.60
Prior to its acquisition by HSBC Holdings, HSBC Finance Corporation issued US$1,220,793,000 Zero Coupon
Convertible Senior Debentures due 2021. The debentures which remained outstanding following the acquisition of
HSBC Finance Corporation were converted into rights to receive HSBC Holdings ordinary shares. Upon the
occurrence of certain events, a holder could have elected to exchange these debentures and would have received
24.13385 HSBC Holdings ordinary shares per US$1,000 principal amount of debentures. During 2004, nil (2003: nil)
HSBC Holdings ordinary shares were issued in connection with the conversion of these debentures and in August
2004, the entire outstanding principal amount of US$8,000 was repurchased.
The principal amount of these debentures outstanding over HSBC Holdings ordinary shares are as follows:
Principal amount
of debentures
exchangeable for
HSBC Holdings
ordinary shares Period of exercise Conversion value
31 December 2004 .............................................. –– –
31 December 2003 ............................................... US$8,000 2004 to 2021 US$41.44
Following the acquisition of Bank of Bermuda on 18 February 2004, all outstanding employee share options over
Bank of Bermuda shares were converted into rights to receive HSBC Holdings ordinary shares based on the
consideration of US$40 for each Bank of Bermuda share and the average closing price of HSBC Holdings ordinary
shares, derived from the London Stock Exchange Daily Official List, for the five business days preceding the closing
date of the acquisition. During 2004, options over 744,727 HSBC Holdings ordinary shares were exercised and
744,727 HSBC Holdings ordinary shares delivered from the HSBC (Bank of Bermuda) Employee Benefit Trust 2004
to satisfy the exercise of these options. During 2004, options over 23,500 HSBC Holdings ordinary shares lapsed. At
31 December 2004, the HSBC (Bank of Bermuda) Employee Benefit Trust 2004 held 3,255,273 HSBC Holdings
ordinary shares which may be used to satisfy the exercise of options.