ING Direct 2008 Annual Report Download - page 171

Summary of stock options outstanding and exercisable
2007
Range of exercise price in euros
Options
outstanding as
at 31 December
2007
Weighted
average
remaining
contractual life
Weighted
average
exercise
price
Options
exercisable as
at 31 December
2007
Weighted
average
remaining
contractual life
Weighted
average
exercise
price
0.00 – 15.00 6,236,710 5.19 12.02 6,236,710 5.19 12.02
15.00 – 20.00 9,773,356 5.55 18.47 9,773,356 5.55 18.47
20.00 – 25.00 15,180,545 6.84 23.10 1,556,832 3.21 21.83
25.00 – 30.00 15,338,397 3.46 28.72 15,206,363 3.42 28.74
30.00 – 35.00 24,726,711 8.69 32.47 7 7,3 0 0 3.59 33.08
35.00 – 40.00 5,632,834 3.14 35.51 5,632,834 3.14 35.51
76,888,553 38,483,395
Summary of stock options outstanding and exercisable
2006
Range of exercise price in euros
Options
outstanding as
at 31 December
2006
Weighted
average
remaining
contractual life
Weighted
average
exercise
price
Options
exercisable as
at 31 December
2006
Weighted
average
remaining
contractual life
Weighted
average
exercise
price
0.00 – 15.00 7,953,10 8 6.18 12.72 7,953,108 6.19 12.72
15.00 – 20.00 10,162,164 7. 20 18.69 121,471 6.66 18.49
20.00 – 25.00 14,820,967 8.24 23.25 44,875 5.65 23.12
25.00 – 30.00 19,937,14 8 4.44 28.73 19,796,024 4.43 28.74
30.00 – 35.00 13,696,046 9.20 32.78 102,034 4.59 32.93
35.00 – 40.00 7,60 6, 476 4.09 35.58 7,60 6,476 4.16 35.58
74,175,909 35,623,988
The aggregate intrinsic value of options outstanding and exercisable as at 31 December 2008 was nil and nil, respectively.
As at 31 December 2008 total unrecognised compensation costs related to stock options amounted to EUR 94 million (2007:
EUR 69 million; 2006: EUR 90 million). These costs are expected to be recognised over a weighted average period of 1.8 years (2007:
1.7 years; 2006: 1.9 years). Cash received from stock option exercises for the year ended 31 December 2008 was EUR 22 million (2007:
EUR 131 million; 2006: EUR 355 million).
The fair value of options granted is recognised as an expense under staff expenses and is allocated over the vesting period of the options.
The fair values of the option awards have been determined by using a Monte Carlo simulation. This model takes the risk free interest rate
into account (3.55% to 4.92%), as well as the expected life of the options granted (5 year to 8 years), the exercise price, the current share
price (EUR 18.70 – EUR 33.92), the expected volatility of the certificates of ING Group shares (25% – 39%) and the expected dividends
yield (3.57% to 8.99%). The source for implied volatilities used for the valuation of the stock options is ING’s trading system. The implied
volatilities in this system are determined by ING’s traders and are based on market data implied volatilities not on historical volatilities.
Due to timing differences in granting option rights and buying shares to hedge them, an equity difference can occur if shares are
purchased at a different price than the exercise price of the options. However, ING Group does not intentionally create a position and
occurring positions are closed as soon as possible. If option rights expire, the results on the (sale of) shares which were bought to hedge
these option rights are recognised in Shareholders’ equity.
Changes in share awards
Share awards (in numbers) Weighted average grant date fair value (in euros)
2008 2007 2006 2008 2007 2006
Opening balance 7,133,714 8,373,14 6 6,499,469 27.52 24.90 22.92
Granted 3,591,755 2,554,762 2,484,786 16.74 19.74 29.62
Performance effect –451,070 2,463,058 27.4 4 19.35
Vested –1,945,092 –5,569,061 –155,522 27.51 19.35 22.48
Forfeited –537,298 – 68 8,191 –455,587 25.92 26.39 23.10
Closing balance 7,792,009 7,133,714 8,373,14 6 22.60 27.52 24.90
The fair value of share awards granted is recognised as an expense under staff expenses and is allocated over the vesting period of the
share awards. The fair values of share awards have been determined by using a Monte Carlo simulation based valuation model. The
model takes into account the risk free interest rate, the current stock prices, expected volatilities and current divided yields of the
performance peer group used to determine ING’s Total Shareholder Return (TSR) ranking.
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ING Group Annual Report 2008