Marks and Spencer 2006 Annual Report Download - page 73

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71Marks and Spencer Group plc
12 SHARE-BASED PAYMENTS continued
The fair value of executive share options granted during the year is calculated based on a Black-Scholes model assuming the
inputs shown below:
2006 2005 2005
Grant date Jun 05 Nov 04 Jul 04
Share price at grant date 352p 337p 347p
Exercise price 352p 337p 347p
Expected life 5 years 5 years 5 years
Contractual life 10 years 10 years 10 years
Risk free rate 4.2% 4.6% 5.0%
Expected volatility 31.9% 37.3% 38.7%
Expected dividend yield 3.4% 3.3% 3.3%
Fair value of option 87.0p 98.8p 106.8p
Volatility has been estimated by taking the historic volatility in the Company’s share price over a five-year period to match the
expected option life.
The resulting fair value is expensed over the five-year service period on the assumption that 30% of options will lapse over the
service period as employees leave the Company.
Outstanding options granted under all executive share option schemes are as follows:
Weighted average remaining
Number of options contractual life (years) Option
Options granted 2006 2005 2006 2005 price
(1984 Scheme)
May 1995 –1,025,065 –0.1 414p
May 1996 13,100 39,376 0.1 1.1 458p
November 1996 –6,172 –1.6 486p
June 1997 5,692 11,384 1.2 2.2 527p
(1997 Scheme)
June 1998 486,551 847,693 2.2 3.2 557p
November 1998 7,425 41,088 2.6 3.6 404p
June 1999 217,279 1,015,906 3.2 4.2 358p
November 1999 –21,583 –4.6 278p
(2000 Scheme)
September 2000 6,945 329,342 4.4 5.4 215p
June 2001 358,488 1,873,894 5.2 6.2 256p
December 2001 110,170 1,793,630 5.7 6.7 350p
(2002 Scheme)
June 2002 1,500,272 5,603,693 6.2 7.2 350p
November 2002 102,905 704,148 6.6 7.6 353p
January 2003 32,738 212,121 6.8 7.8 297p
March 2003 –112,612 –7.9 296p
June 2003 5,355,784 7,394,132 7.2 8.2 297p
November 2003 522,773 600,292 7.6 8.6 270p
January 2004 96,884 96,884 7.8 8.8 289p
February 2004 85,185 85,185 7.8 8.8 270p
July 2004 6,950,820 8,985,830 8.3 9.3 347p
November 2004 868,599 890,886 8.6 9.6 337p
June 2005 1,413,856 – 9.2 – 352p
18,135,466 31,690,916 7.5 7.6 335p