Annual Report & Accounts 2009
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- 19 Ordinary shares
| Group and Company | 2009 Nominal value £m |
2008 Nominal value £m |
|---|---|---|
| Authorised | ||
| 500,000,000 ordinary shares of 5p each (2008: 500,000,000) | 25.0 | 25.0 |
| Allotted, called up and fully paid | ||
| At 3 February 2008 (364,682,685 shares) | 18.2 | 18.2 |
| Allotted under share option schemes (584,265 shares) | 0.1 | – |
| At 1 February 2009 (365,266,950 shares) | 18.3 | 18.2 |
Allotments during the year
On various dates during the year, allotments were made under the Company’s Executive Share Option Schemes totalling 584,265 (2008: 800,731) ordinary shares with a nominal value of £29,213 (2008: £40,037) for a cash consideration of £0.9 million (2008: £1.4 million).
Potential issues of ordinary shares
Executive Share Option Scheme
The Executive Share Option Scheme (ESOS) is available to Executive Directors and other senior management. Grants are made with a value up to 100% of an individual’s annual salary. Vesting of options is subject to a performance condition based on the growth in earnings per share over a minimum three year period exceeding RPI growth over the same period by a pre-determined amount. Further details of the vesting conditions are given in the Remuneration Report starting on page 69. The Company’s intention is that it will no longer grant options under the ESOS to those individuals receiving awards under the Performance Share Plan (see below). Both approved and unapproved share options are exercisable between three and ten years from the date of grant.
At 1 February 2009, the aggregate number of shares covered by options under the Company’s Executive Share Option Scheme is 7,180,152 (2008: 9,627,061) and the total potential consideration is £13.5 million (2008: £18.1 million). The following table summarises information about these options:
| Range of exercise prices | 2009 Number | 2009 Weighted average remaining contractual life (years) |
2008 Number | 2008 Weighted average remaining contractual life (years) |
|---|---|---|---|---|
| £1.00 – £2.00 | 5,585,525 | 6.13 | 7,358,328 | 7.21 |
| £2.00 – £3.00 | 1,305,427 | 5.91 | 1,848,583 | 6.69 |
| £3.00 – £4.00 | 50,000 | 1.92 | 115,000 | 3.36 |
| £4.00 – £5.00 | 239,200 | 1.26 | 280,150 | 2.25 |
| £5.00 – £6.00 | – | – | 25,000 | 2.66 |
| 7,180,152 | 5.90 | 9,627,061 | 6.90 | |
Save As You Earn Option Scheme
Grants under the Save As You Earn (SAYE) option scheme are available to all eligible UK employees and are not subject to any performance conditions, although do require the employee to save over a three or five year period. SAYE options are exercisable within six months after the end of the savings contract.
At 1 February 2009, the aggregate number of shares covered by options under the Company’s Save As You Earn option scheme is 959,630 (2008: 872,254) and the total potential consideration of £1.4 million (2008: £1.3 million) is made up as follows:
| Number of shares outstanding | |||
|---|---|---|---|
| Date of grant | Option price | 2009 | 2008 |
| April 2004 | 194p | 83,586 | 88,836 |
| April 2005 | 143p | 85,735 | 361,849 |
| April 2006 | 180p | 54,853 | 81,445 |
| April 2007 | 152p | 249,231 | 340,124 |
| April 2008 | 137p | 486,225 | – |
| 959,630 | 872,254 | ||
Performance Share Plan (previously referred to as the Long-Term Incentive Plan)
Prior to the Company’s Annual General Meeting on 12 June 2007, under the Company’s Performance Share Plan (PSP), Executive Directors and senior executives were awarded rights to acquire ordinary shares with the value up to 100% of salary in any one year. The main performance condition was based on the growth of the Company’s total shareholder return, TSR, (share price growth and reinvested dividends) over a three year period relative to the companies in the FTSE mid-250 Index (excluding investment trusts). Following approval at the 12 June 2007 Annual General Meeting, the upper limit for awards was increased to 150% of salary in any one year. In addition, half of the award made to Executive Directors is now subject to a relative TSR performance condition over a three year period. The other half of the award to Executive Directors, together with participants other than Executive Directors, is now subject to an earnings per share performance condition, and will not vest unless the annual compound growth rate of the Company’s earnings per share over a three year performance period exceeds the annual compound growth rate of RPI over the same period by 4%. Further details of the performance conditions are available in the Remuneration Report.
At 1 February 2009, the aggregate number of outstanding shares covered by grants under the PSP, was 8,577,371 (2008: 4,700,671) as follows:
| Number of ordinary shares | ||
|---|---|---|
| Date of grant | 2009 | 2008 |
| April 2006 | 971,261 | 1,347,391 |
| June 2007 | 2,695,445 | 3,304,859 |
| July 2007 | 48,421 | 48,421 |
| August 2007 | 46,410 | – |
| April 2008 | 4,667,661 | – |
| June 2008 | 148,173 | – |
| 8,577,371 | 4,700,671 | |
Restricted Share Plan
Under the Company’s Restricted Share Plan (RSP), individuals are granted rights to ordinary shares which carry no vesting conditions other than the requirement that the employee must still be in the Company’s employment at the vesting date. During the year 51,461 (2008: 53,034) shares vested under the plan and 117,099 (2008:49,315) shares were granted under the plan. At 1 February 2009 there were 166,414 (2008: 100,776) outstanding ordinary shares granted under the plan all of which vest in the financial year ending 31 January 2010.
Premier Farnell Executive Trust
The Premier Farnell Executive Trust has acquired ordinary shares in the open market in order to partially meet obligations under the Premier Farnell Performance Share Plan or to provide similar employee benefits. The costs of administering the plan are borne by the Company. The Trustees have waived the right to receive dividends in respect of the ordinary shares held by the Trust. During the year the Trust acquired 1,532,806 (2008: 1,153,693) of the Company’s ordinary shares for a total cash consideration of £2.9 million (2008: £2.5 million), and the Trust used 51,461 (2008: 53,034) ordinary shares to satisfy vesting conditions under the Restricted Share Plan. At 1 February 2009, the Trust held 2,886,004 (2008: 1,404,659) ordinary shares with a total nominal value of £144,300 (2008: £70,233) and a total market value of £3.9 million (2008: £2.1 million).
Reconciliation of option movements during the year
A reconciliation of option movements under the ESOS and SAYE is as follows:
| 2009 | 2008 | ||||
|---|---|---|---|---|---|
| Number (’000) |
Weighted average exercise price |
Number (’000) |
Weighted average exercise price |
||
| Outstanding: | |||||
| Beginning of year | 10,499 | £1.85 | 14,399 | £1.93 | |
| Granted | 575 | £1.37 | 400 | £1.52 | |
| Forfeited | (2,350) | £1.91 | (2,046) | £1.84 | |
| Exercised | (584) | £1.46 | (801) | £1.77 | |
| Expired | – | – | (1,453) | £2.64 | |
| End of year | 8,140 | £1.83 | 10,499 | £1.85 | |
| Exercisable | 4,684 | £1.86 | 4,994 | £2.13 | |
| Weighted average remaining contractual life (years) | 5.4 | 6.8 | |||
The weighted average share price at the date of exercise for share options exercised during the year was £1.75 (2008: £2.06).
Reconciliation of share award movements during the year
A reconciliation of movements in awards under the PSP is as follows:
| Number of awards (’000s) | ||
|---|---|---|
| 2009 | 2008 | |
| Outstanding: | ||
| Beginning of year | 4,701 | 2,490 |
| Granted | 5,545 | 3,465 |
| Forfeited | (1,669) | (352) |
| Expired | – | (902) |
| End of year | 8,577 | 4,701 |
| Weighted average remaining contractual life (years) | 1.8 | 2.1 |