TomTom 2014 Annual Report Download - page 59

option holder over a period of seven years from the grant date but only after completion of the vesting period. Options expire after the exercise
period. The options will be covered at the time of exercise by issuing new shares.
The following table summarises information about the stock options outstanding on 31 December 2014:
Year of grant Number outstanding at
31-12-2014
Exercise price per share (€) Weighted average
remaining life
Number exercisable at
31-12-2014
Weighted average exercise
price (€)
2009 3,744,880 5.71 - 6.00 1.46 3,744,880 5.75
2010 3,137,083 4.81 - 5.48 2.35 3,137,083 5.30
2011 1,634,300 6.08 - 6.20 3.36 1,509,300 6.11
2012 3,215,250 3.34 - 3.88 4.36 0 n.a.
2013 2,770,200 3.36 - 5.90 5.35 0 n.a.
2014 1,960,080 4.93 - 5.28 6.36 0 n.a.
A summary of the group's stock option plans and the movements during the years 2014 and 2013 are presented below:
Option plans 2014 2013
No. Weighted average
exercise price (€)
No. Weighted average
exercise price (€)
OUTSTANDING AS AT 1 JANUARY 17,182,090 5.39 17,682,662 7.21
Granted 1,960,080 5.24 3,006,000 3.52
Exercised –1,363,610 5.96 –281,200 4.65
Expired –691,485 8.30 –1,639,550 27.86
Forfeited –625,282 5.21 –1,585,822 5.53
OUTSTANDING AS AT 31 DECEMBER 16,461,793 5.41 17,182,090 5.39
The fair value of the stock options granted in May 2014 and May 2013 was determined using the binomial tree model. This model contains
the input variables, including the risk-free interest rate, volatility of the underlying share price, exercise price, and share price at the date of
grant. The fair value calculated is allocated on a straight-line basis over the vesting period, based on the group's estimate of equity instruments
that will eventually vest.
2014 2013
Share price at grant date (€) 5.28 3.52
Exercise price (€) 4.93-5.28 3.36-5.90
Expected volatility 45% 50%
Expected average option life in years 5.3 5.3
Weighted average risk-free rate 0.98% 0.72%
Expected dividends Zero Zero
The option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. Volatility is
determined using industry benchmarking for listed peer group companies, as well as the historic volatility of the TomTom NV stock. The
group's employee stock options have characteristics that are significantly different from those of traded options, and changes in the subjective
input assumptions can affect the fair value estimate.
Phantom share plan
The existing Phantom share plan was introduced in 2011. Under this plan, eligible employees are entitled to receive a cash payment equal to
the value of the number of shares that have vested. These cash-settled phantom shares are conditional on the employee completing three
years of service (the vesting period). On 31 December 2014 the outstanding liability with regard to the phantom share plan was €8.0 million
(2013: €5.3 million).
The following table provides the movement in the number of phantom shares.
2014 2013
OUTSTANDING AS AT 1 JANUARY 2,356,730 1,407,750
Vested and paid out –393,300 0
Granted 1,235,855 1,073,680
Forfeited –204,955 –124,700
OUTSTANDING AS AT 31 DECEMBER 2,994,330 2,356,730
The fair value of the phantom shares was determined using the applicable share price at the grant date and subsequent reporting date.
Restricted stock plans
As from 2011, the group introduced a restricted stock plan to retain a selected group of talented employees. Each restricted-stock unit gives
the right to receive one TomTom share after a three-year vesting period and qualifies as an equity-settled plan. The costs that arise from this
plan are spread over the vesting period and have been determined based on TomTom's share price on the grant date. Total 2014 stock
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