Peachtree 2015 Annual Report Download - page 149

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The Sage Group plc | Annual Report & Accounts 2015 147
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Awards from 2013 onwards
These performance shares are subject to a service condition and three performance conditions. Performance conditions are weighted one
third on the achievement of an EPS target, and one third on 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 the organic revenue growth target proportion to vest, the
underlying operating profit margin in the financial year of vesting must not be less than that of the underlying operating profit margin for
the financial year in which the award is granted.
The final third of the award is the performance target relating to TSR which measures share price performance against a designated
comparator group. Where the Company’s TSR is between median and upper quartile, the TSR vesting percentage will be calculated on a
straight-line pro-rata basis between 6.7% and 26.7% and where the Company’s TSR is between upper quartile and upper decile, the TSR
vesting percentage will be calculated on a straight-line pro-rata basis between 26.7% and 33.3%. The TSR vesting percentage may only
exceed 26.7% (“Stretch” level) if performance against either the EPS target or the organic revenue growth target is also at “Stretch” level.
The comparator group for awards granted from 2013 onwards is the companies comprised in the FTSE 100 Index at the start of the
performance period, excluding financial services and extraction companies.
Awards were valued using the Monte Carlo option-pricing model. Performance conditions were included in the fair value calculations,
which were based on observable market prices at grant date. All options granted under performance share awards have an exercise price
of nil. The fair value per award granted and the assumptions used in the calculation are as follows:
Grant date
January
2015
January
2015
January
2015
May
2015
May
2015
June
2015
June
2015
September
2015
September
2015
Share price at grant date £4.65 £4.65 £4.65 £5.44 £5.44 £5.13 £5.13 £4.91 £4.91
Number of employees 150 111 1 12 11 3 3 9 8
Shares under award 3,930,755 485,199 213,421 422,406 52,090 59,829 13,959 197,067 36,769
Vesting period (years) 33333 3 322
Expected volatility 20% 20% 20% 20% 20% 20% 20% 20% 20%
Award life (years) 33333 3 322
Expected life (years) 33333 3 322
Risk free rate 0.67% 0.67% 0.67% 0.91% 0.91% 0.96% 0.96% 0.65% 0.65%
Expected dividends expressed as a dividend yield ––––– – –––
Fair value per award £4.13 £4.65 £3.06 £5.14 £5.44 £4.82 £5.13 £4.54 £4.91
Grant date
January
2014
March
2014
March
2014
August
2014
August
2014
September
2014
September
2014
Share price at grant date £4.12 £4.20 £4.20 £3.67 £3.67 £3.70 £3.70
Number of employees 1 118 145 2 1 1 1
Shares under award 116,873 4,654,084 690,670 30,600 6,352 15,570 5,838
Vesting period (years) 3 3 3 3 3 3 3
Expected volatility 22% 22% 22% 21% 21% 20% 20%
Award life (years) 3 3 3 3 3 3 3
Expected life (years) 3 3 3 3 3 3 3
Risk free rate 1.10% 1.10% 1.10% 1.19% 1.19% 0.92% 0.92%
Expected dividends expressed as a dividend yield – – – – – – –
Fair value per award £3.49 £3.62 £4.20 £2.97 £3.67 £2.99 £3.70