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Unilever Annual Report and Accounts 2010 121
Financial statements
29 Share-based compensation plans
As at 31 December 2010, the Group had share-based compensation plans in the form of performance shares, share options and other share
awards. Starting in 2007, performance share awards and restricted stock awards were made under the Global Share Incentive Plan (GSIP),
exceptinNorth America where awards were made under the Unilever North America 2002 Omnibus Equity Compensation Plan.
The numbers in this note include those for Executive Directors shown in the Directors’ Remuneration Report on pages 61 to 67 and those
forkeymanagement personnel shown in note 4 on page 84. No awards were made to Executive Directors in 2008, 2009 or 2010 under
theUnilever North America 2002 Omnibus Equity Compensation Plan. Non-Executive Directors do not participate in any of theshare-based
compensation plans.
The economic fair value of the awards is calculated using option pricing models and the resulting cost is recognised as remuneration cost
amortised over the vesting period of the grant.
Unilever will not grant share options in total in respect of share-based compensation plans for more than 5% of its issued ordinary capital,
andforall plans together, for more than 10% of its issued ordinary capital. The Board does not apportion these limits to each plan separately.
The actual remuneration cost charged in each period is shown below, and relates almost wholly to equity settled plans:
€ million € million € million
Income statement charge 2010 2009 2008
Performance share plans (120) (166) (97)
(a)
Other plans (24) (29) (28)
(144) (195) (125)
(a) The Group also provides a Share Matching Plan (no awards after 2011), an All-Employee Share Option Plan, a TSR Long-Term Incentive Plan
(noawards after 2006) and an Executive Option Plan (no awards after 2005).
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%. Starting
in2010, GSIP performance conditions changed to underlying sales growth, underlying operating margin improvement and cumulative operating
cash flow for middle management, and the additional target based on TSR ranking for senior executives. 2010 GSIP performance conditions apply
to GSIP awards made in 2009 with respect to 2010 and 2011 performance years. Monte Carlo simulation is used to value the TSR component of
the awards.
North America managers participate in the North America Performance Share Programme (NA PSP) (no awards after 2010), that awards Unilever
shares ifNorth America company performance conditions 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. Performance conditions for 2010 NA PSP awards are the same as GSIP performance conditions.
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 63 and 64).
A summary of the status of the Performance Share Plans as at 31 December 2010, 2009 and 2008 and changes during the years ended on these
dates is presented below:
2010 2009 2008
Number of Number of Number of
shares
shares shares
Outstanding at 1 January 17,536,148 16,353,251 16,843,769
Awarded 9,292,689 8,867,844 6,887,890
Vested (8,626,746) (6,278,634) (6,415,295)
Forfeited
Outstanding at 31 December
Exercisable at 31 December
(961,715)
17,240,376
–
(1,406,313) (963,113)
17,536,148 16,353,251
– –
2010
2009 2008
Share award value information
Fair value per share award during the year €21.49 €13.02 €19.11