Notes to the consolidated financial statements

During the year to 31 March 2010, various equity-settled share-based payment arrangements existed, which are described below:

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Performance share plan

Executive share option scheme

Deferred bonus share plan

Sharesave scheme

Type of arrangement

Duration
in years

 

 

Timing of grant

Bi-annually in June and November

Annually in June (note a)

Annually in July

 

Annually in June

Annually in December

Number of options/shares granted in year to 31 March 2010

5 001 896

3

85 632

 

 

 

 

5

45 453

 

 

 

 

 

 

 

Number of options/shares granted in year to 31 March 2009

2 478 568

19 026

3

66 029

148 132

 

 

 

 

5

31 340

61 893

 

 

 

 

 

 

 

Fair value per share for 2010 grant (pence)

234

3

90

 

 

 

 

5

97

 

 

 

 

 

 

 

Fair value per share for 2009 grant (pence)

170

215

3

66

67

 

 

 

 

5

75

76

 

 

 

 

 

 

 

Valuation basis

Monte Carlo

Binomial Lattice

Monte Carlo

 

Black-Scholes

Black-Scholes

Contractual life

10 years

10 years

3 years

 

3/5 years

3/5 years

Vesting conditions

(note b)

(note c)

(note d)

 

(note e)

(note e)

  1. (a)The last grant under this scheme was made in June 2004.
  2. (b)For the year ended 31 March 2010, exercise of 419,403 shares is not subject to any performance conditions, exercise of 269,616 shares is dependent on total shareholder return and the exercise of 4,312,877 shares is dependent 50% on total shareholder return and 50% on earnings per share.
  3. For the year ended 31 March 2009, exercise was dependent on total shareholder return by reference to a competitor group over a three-year period following grant.
  4. (c)Exercise is dependent on earnings per share performance relative to inflation over a three-year period following grant. Participants are not entitled to dividends prior to the exercise of options.
  5. (d)Executives have previously had the opportunity to defer up to 50% of their annual cash bonus (after deduction of tax, national insurance or other social security payments) and invest the amount deferred in the Company’s shares. Subject to the satisfaction of employment conditions and a performance target over the performance period as described in (b) above, participants received awards of matching shares based on the number of shares which could have been acquired from the gross bonus amount deferred by the participant. During the performance period, dividends were paid on the deferred shares but not on matching shares. This plan was suspended during the year ended 31 March 2009.
  6. (e)Options granted in the years to 31 March 2009 and 31 March 2010 were by invitation at a 10% discount to the market price. Options are exercisable at the end of a three-year or five-year savings contract.

The Group recognised total expenses before tax of £5 million (2009 – £5 million) related to equity-settled share-based payment transactions during the year.

Details of the movements for equity-settled share option schemes during the year to 31 March were as follows:

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31 March 2010

31 March 2009

 

Shares
number

Weighted average exercise price
pence

Shares
number

Weighted average exercise price
pence

Outstanding at 1 April

9 783 526

111

11 664 517

117

Granted

5 132 981

11

2 804 988

42

Exercised

(1 064 000)

174

(1 732 598)

149

Lapsed

(2 552 549)

38

(2 953 381)

48

Outstanding at 31 March

11 299 958

76

9 783 526

111

The weighted average Tate & Lyle PLC share price at the date of exercise for share options exercised during the year was 377 pence (2009 – 467 pence). At 31 March 2010, 1,891,485 (2009 – 3,017,439) of the outstanding options were exercisable at a weighted average exercise price of 329 pence (2009 – 280 pence). A detailed breakdown of the range of exercise prices for options outstanding at 31 March is shown in the table below:

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Year to 31 March 2010

Year to 31 March 2009

 

Number outstanding at end of year

Weighted average remaining contractual life in months

Weighted average exercise price pence

Number outstanding at end of year

Weighted average remaining contractual life in months

Weighted average exercise price pence

At nil cost

8 846 512

55.6

6 649 565

52.9

£0.01 to £1.99

£2.00 to £3.99

2 207 816

41.6

340

2 910 196

53.5

338

£4.00 to £7.99

245 630

36.5

443

223 765

23.2

466

Total

11 299 958

52.5

76

9 783 526

52.3

93

The fair value of grants is measured using the valuation technique that is considered to be the most appropriate to value each class of grant. These include Binomial Lattice models, Black-Scholes calculations and Monte Carlo simulations. These valuations take into account factors such as non-transferability, exercise restrictions and behavioural considerations. Key assumptions are detailed below:

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At 31 March 2010

Performance share plan

Sharesave scheme December

Expected volatility

40%

35%

Expected life

n/a

3.3/5.3 years

Risk-free rate

3%/3.4%

Expected dividend yield

5.15%-7.8%

5.7%

Forfeiture rate

0%

10%

Correlation with comparators

35%

n/a

Volatility of comparators

26%-144%

n/a

Expectations of meeting performance criteria

100%

n/a

Weighted average market price at date of grant (pence)

346

418

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At 31 March 2009

Deferred bonus plan

Performance share plan

Sharesave scheme
June

Sharesave scheme
December

Expected volatility

30%

30%

30%

30%

Expected life

n/a

n/a

3.5/5.5 years

3.5/5.5 years

Risk-free rate

5.3%

4.5%/4.6%

Expected dividend yield

5.6%

5.7%

5.7%

4.9%

Forfeiture rate

0%

0%

10%

10%

Correlation with comparators

30%

30%

n/a

n/a

Volatility of comparators

17-56%

17-53%

n/a

n/a

Expectations of meeting performance criteria

100%

100%

n/a

n/a

Weighted average market price at date of grant (pence)

401

392

398

400

The expected volatility is based on the Company’s historical volatility over the three-year period prior to each award date.