96 | FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements


26. Share-based payments continued


(g) Thames River Capital Commutation arrangements (TRC Commutation arrangements) Note 15(a) outlines the key aspects of the Commutation arrangements which were established at the date of the acquisition of TRC by the F&C Group. Under these arrangements, the Divisional Members of TRC Investment Teams entered into put and call options, which if exercised will typically transfer up to 20% of their entitlement to management fee profits to the F&C Group. The members of the LLPs are considered to be providing services to the Group and as a result, the share element of the Commutation consideration is required to be accounted for as a share-based payment.


It is the intention of the Directors to settle these awards in equity and therefore they have been treated as equity-settled awards.


The maximum payable under Commutation arrangements is £81.4m and F&C has authority to issue a maximum of 122,511,485 shares to settle the consideration payable on exercise of the options.


The options are re-measured at intrinsic value at each reporting date and the total expense is spread over the respective vesting period. The options are considered to have non-market performance conditions – if the options are not exercised, then there is no charge to the Income Statement.


31 December 31 December 2011 £m


2010 £m


Cumulative TRC Commutation expense, recognised in equity Total intrinsic value of unexercised Commutation options


Potential number of FCAM plc shares which would be settled as at the reporting date (based on Commutation Consideration Share Issue share price at 31 December)


10.5 14.9


No. 4.8 20.1 No. 23,527,481 25,449,030


No Commutation options were exercisable at either 31 December 2011 or 31 December 2010. However, at 31 December 2011 some 10.9 million of the shares which would be issued to settle Commutation arrangements relate to options potentially exercisable by the Divisional Members, and 12.6 million shares relate to the options potentially exercisable by the Group.


The Commutation arrangements are exercisable at dates between 1 March 2012 and 1 September 2016.


(h) Purchased Equity Plan (PEP) (i) F&C Asset Management plc shares The PEP operated in conjunction with the discretionary bonus scheme and was intended to encourage shareholding by management and employees of the Group by providing for the compulsory purchase of shares using annual bonus above a threshold level.


At the Board’s discretion, eligible employees who were awarded in a financial year an aggregate bonus in excess of a threshold level, typically £100,000, were required to defer one-third of the element exceeding the threshold into shares (comprising either a range of investment products managed by the Group or the Company’s shares) (Compulsory PEP) for three years.


The Compulsory PEP is subject to forfeiture in the event that the employee leaves the Group for any reason (other than as a good leaver) in the three-year retention period.


The number of Compulsory PEP share awards is as follows:


2011 No.


Outstanding at 1 January Granted during the year Exercised during the year Forfeited during the year


Outstanding at 31 December Exercisable at 31 December


The awards exercisable at 31 December 2011 and 31 December 2010 relate to good leavers.


At 31 December 2011 the following awards granted under the PEP to acquire Ordinary Shares were outstanding: No. of options


Grant date 2 April 2009


31 March 2010


outstanding 197,388


493,810 Earliest


exercise date 2 April 2012


31 March 2013 The awards outstanding at 31 December 2011 have a weighted average outstanding term of 0.9 years (31 December 2010: 1.8 years).


Exercise price


0.0p 0.0p


783,727 –


(66,716) (25,813)


691,198 2,728


2010 No.


1,396,860 493,810


(1,105,055) (1,888)


783,727 13,145


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