Unilever 2009 Annual Report Download - page 130

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29 Share-based compensation plans (continued)
Performance Share Plans
In 2007 we introduced the Global Share Incentive Plan (GSIP). The provisions of this plan are comparable with the GPSP, with the same
performance conditions of underlying sales growth and ungeared free cash flow for middle management, and the additional target based on
TSR ranking for senior executives. Starting in 2008, awards made to GSIP participants normally vest at a level between 0% and 200%. Monte
Carlo simulation is used to value the TSR component of the awards.
North America managers participate in the North America Performance Share Programme, introduced in 2001, that awards Unilever shares
if North America 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.
The Global Performance Share Plan (GPSP) was introduced in 2005. Under this plan, managers were awarded conditional shares which vest
three years later at a level between 0% and 150% (for middle management) or 200% (for senior executives). The GPSP performance conditions
for middle management were achievement of underlying sales growth and ungeared free cash flow targets over a three-year period. For senior
executives, in addition to these two conditions, there was an additional target based on TSR ranking in comparison with a peer group over the
three-year period (see description on page 46).
A summary of the status of the Performance Share Plans as at 31 December 2009, 2008 and 2007 and changes during the years ended on these
dates is presented below:
2009 2008 2007
Number of Number of Number of
shares shares shares
Outstanding at 1 January 16,353,251 16,843,769 15,270,180
Awarded 8,867,844 6,887,890 6,209,781
Vested (6,278,634) (6,415,295) (3,465,990)
Forfeited (1,406,313) (963,113) (1,170,202)
Outstanding at 31 December 17,536,148 16,353,251 16,843,769
Exercisable at 31 December –––
2009 2008 2007
Share award value information
Fair value per share award during the year €13.02 €19.11 €19.06
Additional information
At 31 December 2009, there were options outstanding to purchase 41,786,145 (2008: 53,373,170) ordinary shares in NV or PLC in respect
of share-based compensation plans of NV and its subsidiaries and the North American plans, and 14,260,636 (2008: 16,807,546) ordinary shares
in NV or PLC in respect of share-based compensation plans of PLC and its subsidiaries.
To satisfy the options granted, certain NV group companies hold 45,317,466 (2008: 58,100,378) ordinary shares of NV or PLC, and trusts in
Jersey and the United Kingdom hold 7,150,549 (2008: 9,450,493) PLC shares. The trustees of these trusts have agreed, until further notice, to
waive dividends on these shares, save for the nominal sum of 0.01p per 31⁄9p ordinary share. Shares acquired for this purpose during 2009
represented less than 0.1% of the Group’s called up capital. The balance of shares held in connection with share plans at 31 December 2009
represented 1.7% (2008: 2.2%) of the Group’s called up capital.
The book value of €965 million (2008: €1,191 million) of all shares held in respect of share-based compensation plans for both NV and PLC
is eliminated on consolidation by deduction from other reserves (see note 23 on page 119). Their market value at 31 December 2009 was
€1,187 million (2008: €1,134 million).
At 31 December 2009 there were no options for which the exercise price was above market price. At 31 December 2008 the exercise price of
27,102,133 NV and PLC options were above the market price of the shares.
Shares held to satisfy options are accounted for in accordance with IAS 32 and SIC 12. All differences between the purchase price of the shares
held to satisfy options granted and the proceeds received for the shares, whether on exercise or lapse, are charged to reserves. In 2008 this
included €6 million for shares held to meet options expiring in the short term which were priced above market value. The basis of the charge
to operating profit for the economic value of options granted is discussed on page 126.
Between 31 December 2009 and 1 March 2010, no grants were made and 144,276 shares were forfeited related to the performance share
plans.
Unilever Annual Report and Accounts 2009 127