Peachtree 2015 Annual Report Download - page 147

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The Sage Group plc | Annual Report & Accounts 2015 145
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
14.1 Ordinary shares
Issued and fully paid
2015
shares
2015
£m
2014
shares 2014
£m
At 1 October 1,115,892,047 11.7 1,114,135,420 11.7
Proceeds from shares issued 2,406,701 0.1 1,756,627 –
At 30 September 1,118,298,748 11.8 1,115,892,047 11.7
Issues of ordinary shares
Under Executive Share Option Scheme, 1,501,758 14/77 p ordinary shares were issued during the year for aggregate proceeds of £3.5m.
Under the Savings-related Share Option Scheme, 928,923 14/77 p ordinary shares were issued during the year for aggregate proceeds of £1.9m.
14.2 Share-based payments
Accounting policy
Equity-settled share-based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) at the
date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis
over the vesting period, based on the Group’s estimate of the shares that will eventually vest allowing for the effect of non-market-based
vesting conditions.
Fair value is measured using the Black-Scholes or the Monte Carlo pricing models, based on observable market prices. The expected life
used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions
and behavioural considerations.
All outstanding Sage Performance Share Plans (“PSPs”) and certain Restricted Share Plans (“RSPs”) are subject to some non-market
performance conditions. These are organic revenue and EPS growth. The element of the income statement charge relating to market
performance conditions is fixed at the grant date.
At the end of the reporting period, the Group revises its estimates for the number of options expected to vest. It recognises the impact
of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
The total charge for the year relating to employee share-based payment plan was £9.1m (2014: £8.0m), all of which related to equity-settled
share-based payment transactions. This charge is shown by scheme below. After deferred tax, the total charge was £8.9m (2014: £7.8m).
Scheme
2015
£m
2014
£m
Executive Share Option Scheme ––
Performance Share Plan 6.8 6.1
Restricted Share Plan 1.8 1.5
Savings-related Share Option Scheme 0.5 0.4
Total 9.1 8.0
Executive Share Option Scheme
Certain senior executives hold a total of 761,734 (2014: 2,338,990) options to subscribe for shares in the Company at prices ranging from
214.0p to 270.0p under the share option schemes approved by shareholders. There have been no grants of executive share options under
the 1999 Executive Share Option Scheme (“ESOS”) since June 2008. Long-term incentive awards are made under The Sage Group plc
Performance Share Plan.
The performance targets governing the vesting of options were based on stretching EPS growth measured over a fixed three-year period
from the start of the financial year in which the grant is made. 30% of options vested at the end of the period where the increase in EPS
exceeded the Retail Prices Index (“RPI”) by 15% (an average of 5% per year) and 100% of those options vested at that time where RPI was
exceeded in that period by 27% (an average of 9% per year). Between those targets, options vested on a straight-line basis.
Options were valued using the Black-Scholes option-pricing model. The expected volatility was based on historical volatility over the
previous four years. The expected life is the average expected period to exercise. The risk free rate of return was the yield on zero-coupon
UK government bonds of a term consistent with the assumed option life of three years.