Peachtree 2013 Annual Report Download - page 129

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Net debt and capital structure continued
The Sage Group plc | Annual Report & Accounts 2013 123
Financial statements
A reconciliation of option movements over the year is shown below:
2013 2012
Number
’000s
Weighted
average
exercise
price
£
Number
’000s
Weighted
average
exercise
price
£
Outstanding at 1 October 6,818 2.21 10,766 2.17
Forfeited (132) 2.08 (380) 2.36
Exercised (3,194) 2.08 (3,568) 2.07
Outstanding at 30 September 3,492 2.33 6,818 2.21
Exercisable at 30 September 3,492 2.33 6,818 2.21
2013 2012
Weighted
average
exercise
price
£
Number
of shares
’000s
Weighted average
remaining life years
Weighted
average
exercise
price
£
Number
of shares
’000s
Weighted average
remaining life years
Range of exercise prices
£ Expected Contractual Expected Contractual
1.34 – 2.70 2.33 3,492 – 2.1 2.21 6,818 – 2.8
The weighted average share price during the period for options exercised over the year was 344.6p (2012: 294.05p).
The Sage Group Performance Share Plan
Annual grants of performance shares will normally be made to Executive Directors and senior executives across the Group after
the preliminary declaration of the annual results.
Awards prior to 2013
Annual awards under the Plan are limited to shares worth up to 300% of base salary. In practice, annual grants to Executive Directors are limited to
shares with a maximum value on award of 210% of base salary except in exceptional circumstances, such as a promotion or recruitment or to reflect
local market practice.
The performance shares are subject to performance conditions on a sliding scale based on EPS. 25% of the award will vest at the end of the period
if the increase in EPS exceeds RPI by 9% (an average of 3% per year); 100% of the award will vest at that time only if RPI is exceeded in that period
by 27% (an average of 9% per year). Between those targets, awards will vest on a straight-line basis, and if those targets are not met there is no
opportunity for re-testing. Awards are then subject to a TSR “multiplier” whereby the level of vesting based on EPS achievement will be adjusted
according to TSR performance over the same three-year period compared with a group of international software and computer services companies.
The comparator group for awards made in 2012 comprised the following companies:
− Adobe Systems − Cegid − Logica − Salesforce.com
− ARM Holdings − Dassault Systèmes − Micro Focus International − SAP
− Blackbaud − Exact − Microsoft − Software AG
− Cap Gemini − Intuit − Oracle
If Sage’s TSR is ranked at lower quartile in the group, the multiplier is 0.75. If Sage’s TSR is ranked at median in the group, the multiplier is 1.
If Sage’s TSR is ranked at upper quartile in the group, then the multiplier is 1.5. Straight-line pro-rating applies between 0.75 and 1, and between
1 and 1.5, but the multiplier cannot be higher or lower than these figures.
Awards from 2013 onwards
The performance shares are subject to both performance conditions and a TSR target. Performance conditions are weighted one third on the
achievement of an EPS target, and one third the achievement of an organic revenue growth target. The remaining one third is based on a TSR target.
The EPS vesting percentage is based on compound EPS growth. Where compound EPS growth is between 6% and 12%, the EPS vesting
percentage will be calculated on a straight-line pro-rata basis between 6.7% and 26.7% and where compound EPS growth is between 12% and
15% the EPS vesting percentage will be calculated on a straight-line pro-rata basis between 26.7% and 33.3%.
The organic revenue growth target is based on the Company’s compound annual organic revenue growth. Where growth is between 4% and 8% the
organic revenue growth vesting percentage will be calculated on a straight-line pro-rata basis between 6.7% and 26.7%, and where the Company’s
compound organic revenue growth is between 8% and 10%, the organic revenue growth vesting percentage will be calculated on a straight-line
pro-rata basis between 26.7% and 33.3%. In order for organic revenue growth target proportion to vest, the EBITA margin in the financial year ending
30 September 2015 must not be less than that of the EBITA margin for the financial year ending 30 September 2012.
127The Sage Group plc | Annual Report & Accounts 2013
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