HSBC 2010 Annual Report Download - page 290

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
9 – Share-based payments
288
Nil-cost share options were granted to senior executives on the basis of their performance in the previous year. The
share options were subject to the achievement of the same corporate performance conditions as the 2005 Performance
Share awards. The options vested after three years in the same proportion as the 2005 Performance Shares but were
only exercisable up to the fourth anniversary of the date of grant. These options have now lapsed and there are
currently no options with outstanding performance conditions.
Share options were also awarded to a number of employees under the HSBC Share Plan rules. These options may
vest after three years and are exercisable up to the tenth anniversary of the date of the grant, after which they lapse.
Movement in share options under the HSBC Share Plan
2010 2009
Number
Weighted
average
exercise
price Number
Weighted
average
exercise
price
(000s) £ (000s) £
Outstanding at 1 January .............................................................. 86 7.99 300 8.89
Adjustment for rights issue ........................................................... – – 44 7.75
Forfeited and expired in the year .................................................. – – (258) 7.66
Outstanding and exercisable at 31 December .............................. 86 7.99 86 7.99
No share options were granted in 2010 and 2009. The weighted average remaining contractual life of options
outstanding at the balance sheet date was 4.8 years (2009: 5.8 years). The exercise price of options outstanding at the
balance sheet date was £7.99 (2009: £7.99).
Savings-related share option plans
Savings-related share option plans invite eligible employees to enter into savings contracts to save up to £250 per
month (or its equivalent in US dollars, Hong Kong dollars or euros), with the option to use the savings to acquire
shares. The aim of the plans is to align the interests of all employees with the creation of shareholder value. The
options are exercisable within three months following the first anniversary of the commencement of a one-year
savings contract or within six months following either the third or the fifth anniversaries of the commencement of
three-year or five-year savings contracts, respectively. The exercise price is set at a 20% (2009: 20%) discount to the
market value immediately preceding the date of invitation (except for the one-year options granted under the US sub-
plan where a 15% discount is applied).
Movement in savings-related share options
2010 2009
Number
Weighted
average
exercise
price Number
Weighted
average
exercise
price
(000s) £ (000s) £
Outstanding at 1 January .............................................................. 172,526 3.69 74,401 6.97
Granted in the year ....................................................................... 22,017 5.39 152,796 3.32
Adjustment for rights issue ........................................................... – – 7,970 6.08
Exercised in the year ..................................................................... (16,830) 4.18 (5,011) 5.72
Forfeited, cancelled and expired in the year ................................ (19,858) 4.44 (57,630) 5.96
Outstanding at 31 December ........................................................ 157,855 3.87 172,526 3.69