Notes to the Consolidated Financial Statements
Notes 16-20
- 16. Inventory
- 17. Trade and other receivables
- 18. Cash and cash equivalents
- 19. Called up share capital
- 20. Share-based payments
20. Share-based payments
The Company currently uses a number of equity settled share plans to grant options and shares to its directors and employees.
The maximum aggregate number of ordinary shares which may be issued in respect of share options or share plans will not (without shareholder approval) exceed:
- 10% of the ordinary share capital of the Company in issue immediately prior to the date of grant, when aggregated with the total number of ordinary shares which have been allocated in the preceding ten year period under all plans; and
- 5% of the ordinary share capital of the Company in issue immediately prior to the date of grant, when aggregated with the total number of ordinary shares which have been allocated in the preceding ten year period under all plans, other than any plans which are operated on an all-employee basis.
Share options
Vodafone Group Sharesave Scheme
The Vodafone Group 1998 Sharesave Scheme (the “Sharesave Scheme”) enables UK staff to acquire shares in the Company through monthly savings of up to £250 over a three or five year period, at the end of which they also receive a tax free bonus. The savings and bonus may then be used to purchase shares at the option price, which is set at the beginning of the invitation period and usually at a discount of 20% to the then prevailing market price of the Company’s shares.
Vodafone Group executive schemes
The Vodafone Global Incentive Plan is a discretionary plan under which share options are granted to directors and certain employees. Some of the share options are subject to performance conditions. Options are normally exercisable between three and ten years from the date of grant.
The Company has a number of discretionary share option plans, under which awards are no longer made: the Vodafone Group 1998 Company Share Option Scheme and Vodafone Group 1988 Executive Share Option Scheme (which are UK HM Revenue and Customs approved); the Vodafone Group 1998 Executive Share Option Scheme and the Vodafone 1988 Share Option Scheme (which are unapproved); and the Vodafone Group 1999 Long Term Incentive Plan. Some of the options are subject to performance conditions. Options are normally exercisable between three and ten years from the date of grant. For grants made to US employees, prior to 7 July 2003 the options have phased vesting over a four year period and are exercisable in respect of ADSs. For grants made from 7 July 2003, options are normally exercisable between three and ten years from the date of grant, subject to the satisfaction of predetermined performance conditions and are exercisable in respect of ADSs.
Other share option schemes
Share option schemes are operated by certain of the Group’s subsidiary undertakings although awards are no longer made under these schemes.
Share plans
Vodafone Share Incentive Plan
The Share Incentive Plan enables UK staff to acquire shares in the Company through monthly purchases of up to £125 per month or 5% of salary, whichever is lower. For each share purchased by the employee, the Company provides a free matching share.
Vodafone Group AllShares
All permanent employees at 1 April 2007 received a conditional award of 320 shares (2007: 340) in Vodafone Group Plc on 2 July 2007, under the Vodafone Global Incentive Plan. The awards vest after two years and are not subject to performance conditions but are subject to continued employment.
Vodafone Group executive plans
Under the Vodafone Global Incentive Plan and its predecessor the Vodafone Group Plc 1999 Long Term Stock Incentive Plan, awards of performance shares are granted to directors and certain employees. The release of these shares is conditional upon achievement of performance targets measured over a three year period.
Under the Vodafone Group Deferred Share Bonus Plan, directors and certain employees may defer their annual bonus into shares. Subject to continued employment and retention of the deferred shares for two years, additional shares are released at the end of this two year period if a performance condition has been satisfied.
Movements in ordinary share options and ADS options outstanding
| ADS | Ordinary | ||||||
|---|---|---|---|---|---|---|---|
| 2008 Millions |
2007 Millions |
2006 Millions |
2008 Millions |
2007 Millions |
2006 Millions |
||
| 1 April | 3 | 8 | 11 | 584 | 787 | 1,123 | |
| Granted during the year | – | – | – | 46 | 65 | 64 | |
| Forfeited during the year | – | – | – | (30) | (31) | (40) | |
| Exercised during the year | (1) | (3) | (2) | (204) | (179) | (325) | |
| Expired during the year | (1) | (2) | (1) | (23) | (58) | (35) | |
| 31 March | 1 | 3 | 8 | 373 | 584 | 787 | |
| Weighted average exercise price: | |||||||
| 1 April | $21.46 | $26.53 | $24.49 | £1.35 | £1.32 | £1.25 | |
| Granted during the year | – | – | – | £1.63 | £1.12 | £1.35 | |
| Forfeited during the year | – | – | – | £1.67 | £1.26 | £1.46 | |
| Exercised during the year | $19.52 | $18.50 | $15.08 | £1.20 | £1.05 | £0.93 | |
| Expired during the year | $28.50 | $41.86 | $36.83 | £1.72 | £1.68 | £1.83 | |
| 31 March | $18.15 | $21.46 | $26.53 | £1.42 | £1.35 | £1.32 | |
Summary of options outstanding and exercisable at 31 March 2008
| Outstanding | Exercisable | ||||||
|---|---|---|---|---|---|---|---|
| Outstanding shares Millions |
Weighted average exercise price |
Weighted average remaining contractual life Months |
Exercisable shares Millions |
Weighted average exercise price |
Weighted average remaining contractual life Months |
||
| Vodafone Group Savings Related and Sharesave Scheme: | |||||||
| £0.01 – £1.00 | 12 | £0.93 | 27 | – | – | – | |
| £1.01 – £2.00 | 12 | £1.21 | 32 | – | – | – | |
| 24 | £1.07 | 30 | – | – | – | ||
| Vodafone Group Executive Schemes: | |||||||
| £1.01 – £2.00 | 5 | £1.60 | 6 | 5 | £1.60 | 6 | |
| £2.01 – £3.00 | 23 | £2.75 | 25 | 23 | £2.75 | 25 | |
| 28 | £2.53 | 22 | 28 | £2.53 | 22 | ||
| Vodafone Group 1999 Long Term Stock Incentive Plan: | |||||||
| £0.01 – £1.00 | 69 | £0.90 | 51 | 69 | £0.90 | 51 | |
| £1.01 – £2.00 | 247 | £1.47 | 70 | 141 | £1.49 | 46 | |
| 316 | £1.34 | 66 | 210 | £1.29 | 48 | ||
| Other Share Option Plans: | |||||||
| £1.01 – £2.00 | 2 | £1.21 | 43 | 2 | £1.21 | 43 | |
| £2.01 – £3.00 | 2 | £2.05 | 47 | 2 | £2.05 | 47 | |
| Greater than £3.01 | 1 | £3.20 | 33 | 1 | £3.20 | 33 | |
| 5 | £1.78 | 43 | 5 | £1.78 | 43 | ||
| Vodafone Group 1999 Long Term Stock Incentive Plan: | |||||||
| $10.01 – $30.00 | 1 | $18.15 | 48 | 1 | $17.59 | 46 | |
Fair value
| ADS options | Ordinary share options | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Other | Board of directors and Executive Committee |
Other | |||||||||
| 2008 | 2007 | 2006 | 2008 | 2007 | 2006 | 2008 | 2007 | 2006 | |||
| Expected life of option (years) | 4-5 | 5-6 | 8-9 | 4-5 | 5-6 | 6-7 | 4-5 | 5-7 | 8-9 | ||
| Expected share price volatility | 25.5-33.5% | 27.3-28.3% | 17.9-18.9% | 25.7-27.7% | 24.0-27.7% | 17.6-18.6% | 25.5-33.5% | 25.5-28.3% | 17.9-18.9% | ||
| Dividend yield | 3.8-4.2% | 5.1-5.5% | 2.8-3.2% | 4.0-4.4% | 4.8-5.5% | 2.6-3.0% | 3.8-4.2% | 5.1-6.1% | 2.8-3.2% | ||
| Risk free rates | 4.4-5.7% | 4.8% | 4.2% | 5.5% | 4.7-4.9% | 4.2% | 4.4-5.7% | 4.6-4.9% | 4.2% | ||
| Exercise price(1) | £1.67-1.76 | £1.15 | £1.36 | £1.68 | £1.15-1.36 | £1.45 | £1.67-1.76 | £1.14-1.16 | £1.36 | ||
| Note: | |
|---|---|
| (1) | In the years ended 31 March 2008 and 31 March 2007, there was more than one option grant. |
The fair value of options is estimated at the date of grant using a lattice-based option valuation model, which incorporates ranges of assumptions for inputs as disclosed above. Certain options granted to the Board of directors and Executive Committee have a market based performance condition attached and hence the assumptions are disclosed separately.
Share awards
Movements in non-vested shares during the year ended 31 March 2008 are as follows:
| All shares | Other | Total | ||||||
|---|---|---|---|---|---|---|---|---|
| Millions | Weighted average fair value at grant date |
Millions | Weighted average fair value at rant date |
Millions | Weighted average fair value at grant date |
|||
| 1 April 2007 | 33 | £1.13 | 197 | £1.04 | 230 | £1.05 | ||
| Granted | 19 | £1.55 | 89 | £1.38 | 108 | £1.41 | ||
| Vested | (15) | £1.26 | (50) | £1.11 | (65) | £1.15 | ||
| Forfeited | (3) | £1.26 | (23) | £1.09 | (26) | £1.11 | ||
| 31 March 2008 | 34 | £1.30 | 213 | £1.16 | 247 | £1.18 | ||
Other information
The weighted average grant date fair value of options granted during the 2008 financial year was £0.34 (2007: £0.22, 2006: £0.30).
The total fair value of shares vested during the year ended 31 March 2008 was £75 million (2007: £41 million, 2006: £18 million).
The compensation cost included in the Consolidated Income Statement in respect of share options and share plans for continuing operations was £107 million (2007: £93 million, 2006: £109 million), which is comprised entirely of equity-settled transactions. Including discontinued operations, the compensation cost included in the Consolidated Income Statement in respect of share options and share plans in total was £107 million (2007: £93 million, 2006: £114 million).
The average share price for the year ended 31 March 2008 was 166 pence.