Unilever 2007 Annual Report Download - page 120

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Notes to the consolidated accounts Unilever Group
118 Unilever Annual Report and Accounts 2007
Financial statements continued
29 Share-based compensation plans (continued)
2007 2006 2005
Option value information
Fair value per option €4.33 €3.10 €3.12
Valuation assumptions:
Expected option term 3.5 years 3.5 years 3.9 years
Expected volatility 27.5% 27.5% 27.5%
Expected dividend yield 3.2% 3.8% 3.6%
Risk-free interest rate 4.6% 3.8% 3.1%
The exercise prices and remaining life of the All-Employee and Executive Option Plans as at 31 December 2007 are as follows:
Options outstanding Options exercisable
Number Weighted
Range of outstanding at average remaining Weighted average Number exercisable at Weighted average
exercise prices 31 December 2007 contractual life exercise price 31 December 2007 exercise price
€8.41 – €11.70 1 681 642 3 years €10.98 1 681 642 €10.98
€12.40 – €16.97 18 327 615 4 years €14.87 15 633 936 €14.65
€17.00 – €24.66 38 685 700 4 years €19.07 30 660 231 €19.07
(ii) Performance Share Plans
The Global Performance Share Plan (GPSP) was introduced in 2005. Under this plan, managers can be awarded conditional shares which will vest
three years later at a level between 0% and 150% (for middle management) or 200% (for higher executives) depending on Unilever’s achievement
of set targets for Underlying Sales Growth and Ungeared Free Cash Flow over the three-year performance period. The amount to be paid by
participants to obtain the shares at vesting is zero.
In 2007 we introduced the Leadership Performance Share Plan (LPSP) under the Global Share Incentive Plan (GSIP) rules. The structure of this Plan is
comparable to the GPSP but the Plan has an additional third performance condition which is based on TSR ranking over the three year period.
North American managers participate in the North American Performance Share Programme, introduced in 2001, that awards Unilever shares if
North American company performance targets are met over a three-year period. The amount to be paid to the company by participants to obtain
the shares at vesting is zero.
A summary of the status of the Performance Share Plans as at 31 December 2007, 2006 and 2005 and changes during the years ended on these
dates is presented below:
2007 2006 2005
Number of Number of Number of
shares shares shares
Outstanding at 1 January 15 270 180 13 286 992 10 749 007
Awarded 6 209 781 6 162 489 6 514 252
Vested (3 465 990) (3 057 630) (3 510 939)
Forfeited (1 170 202) (1 121 671) (465 328)
Outstanding at 31 December 16 843 769 15 270 180 13 286 992
Exercisable at 31 December –––
2007 2006 2005
Share award value information
Fair value per share award €19.06 €17.22 €17.26