Notes to the consolidated
financial statements
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 executive plans
No share options have been granted to any directors or employees under the Company’s discretionary share option plans in the year ended 31 March 2010.
There are options outstanding under a number of plans: the Vodafone Group 1998 Executive Share Option Scheme and the Vodafone Group 1988 Share Option Scheme, the Vodafone Group 1999 Long-Term Incentive Plan and the Vodafone Global Incentive Plan. These options are normally exercisable between three and ten years from the date of grant. The vesting of some of these options is subject to satisfaction of performance conditions. Grants made to US employees are made in respect of ADSs.
Vodafone Group Sharesave Plan
The Vodafone Group 2008 Sharesave Plan and its predecessor the Vodafone Group 1998 Sharesave Scheme enable 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.
Other share option plans
Share option plans are operated by certain of the Group’s subsidiaries although awards are no longer made under these plans.
Share plans
Vodafone Group executive plans
Under the Vodafone Global Incentive Plan awards of shares are granted to directors and certain employees. The release of these shares is conditional upon continued employment and for some awards achievement of certain performance targets measured over a three year period.
Under the Vodafone Group Deferred Share Bonus Plan, directors and certain employees were able to defer their 2007 annual bonuses into shares. These shares were released in 2009 together with additional shares based on the outcome of a two year performance condition.
Vodafone Share Incentive Plan
The Vodafone 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 Global AllShare Plan
A significant number of employees received a conditional award of 340 shares (2009: 290) in the Company on 30 June 2009 under the Vodafone Group Global AllShare Plan. The awards vest after two years and are not subject to performance conditions but are subject to continued employment. There will be no further grants under this plan.
Movements in ordinary share options and ADS options outstanding
| ADS options | Ordinary share options | ||||||
|---|---|---|---|---|---|---|---|
| 2010 Millions | 2009 Millions | 2008 Millions | 2010 Millions | 2009 Millions | 2008 Millions |
||
| 1 April | 1 | 1 | 3 | 334 | 373 | 584 | |
| Granted during the year | – | – | – | 13 | 7 | 46 | |
| Forfeited during the year | – | – | – | (2) | (11) | (30) | |
| Exercised during the year | – | – | (1) | (47) | (16) | (204) | |
| Expired during the year | – | – | (1) | (32) | (19) | (23) | |
| 31 March | 1 | 1 | 1 | 266 | 334 | 373 | |
| Weighted average exercise price: | |||||||
| 1 April | $15.37 | $18.15 | $21.46 | £1.41 | £1.42 | £1.35 | |
| Granted during the year | – | – | – | £0.94 | £1.21 | £1.63 | |
| Forfeited during the year | – | – | – | £1.50 | £1.47 | £1.67 | |
| Exercised during the year | – | – | $19.52 | £1.11 | £1.09 | £1.20 | |
| Expired during the year | – | – | $28.50 | £1.67 | £1.55 | £1.72 | |
| 31 March | $15.07 | $15.37 | $18.15 | £1.41 | £1.41 | £1.42 | |
Summary of options outstanding and exercisable at 31 March 2010
| 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 Plan: | |||||||
| £0.01 – £1.00 | 14 | £0.94 | 40 | – | – | – | |
| £1.01 – £2.00 | 8 | £1.24 | 24 | – | – | – | |
| 22 | £1.04 | 35 | – | – | – | ||
| Vodafone Group executive plans: | |||||||
| £1.01 – £2.00 | 8 | £1.58 | 16 | 8 | £1.58 | 16 | |
| £2.01 – £3.00 | 14 | £2.79 | 4 | 14 | £2.79 | 4 | |
| 22 | £2.36 | 8 | 22 | £2.36 | 8 | ||
| Vodafone Group 1999 Long-Term Stock Incentive Plan: | |||||||
| £0.01 – £1.00 | 55 | £0.90 | 27 | 55 | £0.90 | 27 | |
| £1.01 – £2.00 | 165 | £1.49 | 42 | 139 | £1.46 | 33 | |
| £2.01 – £3.00 | 1 | £2.92 | 4 | 1 | £2.92 | 4 | |
| 221 | £1.36 | 38 | 195 | £1.31 | 31 | ||
| Other share option plans: | |||||||
| £1.01 – greater than £3.01 | 1 | £2.63 | 20 | 1 | £2.63 | 20 | |
| Vodafone Group 1999 Long-Term Stock Incentive Plan: | |||||||
| $10.01 – $30.00 | 1 | $15.07 | 30 | 1 | $14.76 | 29 | |
Fair value of options granted
| ADS options | Ordinary share options | ||||||
|---|---|---|---|---|---|---|---|
| Other(1) | Board of directors and Executive Committee(1) | Other | |||||
| 2008 | 2008 | 2010 | 2009 | 2008 | |||
| Expected life of option (years) | 4-5 | 4-5 | 3-5 | 3-5 | 4-5 | ||
| Expected share price volatility | 25.5-33.5% | 25.7-27.7% | 32.5-33.5% | 30.9-31.0% | 25.5-33.5% | ||
| Dividend yield | 3.8-4.2% | 4.0-4.4% | 6.62% | 5.04% | 3.8-4.2% | ||
| Risk free rates | 4.4-5.7% | 5.5% | 2.5-3.0% | 4.9% | 4.4-5.7% | ||
| Exercise price(2) | £1.67-1.76 | £1.68 | £0.94 | £1.21 | £1.67-1.76 | ||
- Notes:
- (1)
- There were no options granted in the years ended 31 March 2010 and 31 March 2009.
- (2)
- In the year ended 31 March 2008 there was more than one option grant.
The fair value of options granted 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 as a result the assumptions are disclosed separately.
Share awards
Movements in non-vested shares during the year ended 31 March 2010 are as follows:
| Global AllShare Plan | Other | Total | ||||||
|---|---|---|---|---|---|---|---|---|
| Millions | Weighted average fair value at grant date | Millions | Weighted average fair value at grant date | Millions | Weighted average fair value at grant date |
|||
| 1 April 2009 | 32 | £1.43 | 288 | £1.11 | 320 | £1.15 | ||
| Granted | 21 | £1.02 | 147 | £0.90 | 168 | £0.92 | ||
| Vested | (17) | £1.53 | (74) | £1.00 | (91) | £1.10 | ||
| Forfeited | (2) | £1.19 | (21) | £1.00 | (23) | £1.02 | ||
| 31 March 2010 | 34 | £1.15 | 340 | £1.05 | 374 | £1.06 | ||
Other information
The weighted average grant date fair value of options granted during the 2010 financial year was £0.26 (2009: £0.39; 2008: £0.34).
The total fair value of shares vested during the year ended 31 March 2010 was £100 million (2009: £84 million; 2008: £75 million).
The compensation cost included in the consolidated income statement in respect of share options and share plans was £150 million (2009: £128 million; 2008: £107 million) which is comprised entirely of equity-settled transactions.
The average share price for the year ended 31 March 2010 was 132 pence.
© Copyright Vodafone 2010
