ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 | 97
26. Share-based payments continued
(ii) F&C Investment Funds At the discretion of the Board, the cash bonus may be deferred on a mandatory basis into certain F&C Funds (Compulsory Purchased Equity) subject to continued service over either three or four years. This option is available as an alternative to the Compulsory PEP into FCAM plc shares. The main benefit of this arrangement is to incentivise fund managers to invest in the funds they manage, thereby further aligning employee interests with those of clients.
The settlement of awards from the Compulsory PEP (F&C Investment Funds) is made by realisation of the holding in the fund at the vesting date and purchase of FCAM plc shares at that date. The value of the investment in F&C Funds, the FCAM plc share price and hence the ultimate number of FCAM plc shares to be settled is only known with certainty at the vesting date. Any dividends paid by F&C Funds during the vesting period are re-invested in F&C Investment Funds.
The awards meet the criteria of IFRS 2: Share-based Payment. However, as the awards are ultimately settled in FCAM plc shares, it is not considered possible to reliably estimate the fair value of these awards at the grant date. This is due to the number of market-based criteria which ultimately combine to determine the number and value of FCAM plc shares settled. Settlement of these awards to employees is satisfied by the purchase of FCAM plc shares in the market.
The fair value of these awards at the year end has been determined by measurement of the equity instruments at intrinsic value, being the quoted price of the relevant F&C Funds, both at the grant date and at each subsequent reporting date. The intrinsic value is then spread over the vesting period. The value of the services provided is measured using the ultimate value of awards which vest.
The underlying investments are held within an Employee Benefit Trust. Note Value of F&C Investments held within the Purchased Equity Plan
Number of FCAM plc shares which would be settled as at the reporting date (based on year-end share price)
18(a)(i)(2)
31 December 31 December 2011 £m
2010 £m
1.5 No.
2,218,877
4.0 No.
4,709,271
(i) Deferred Share Awards The Group has made some deferred share awards which are not subject to ongoing performance conditions, but have a time-vesting period.
The number of share awards is as follows:
2011 No.
Outstanding at 1 January Granted during the year Exercised during the year
Outstanding at 31 December
No awards were exercisable at either 31 December 2011 or 31 December 2010. At 31 December 2011 the following Deferred Share Awards were outstanding:
Grant date
1 September 2010 1 April 2011
No. of options outstanding
1,068,959 22,200
Earliest
exercise date 1 March 2012
1 April 2014 The awards outstanding at 31 December 2011 have a weighted average outstanding term of 0.2 years (31 December 2010: 1.2 years).
Exercise price
0.0p 0.0p
1,108,959 22,200
(40,000) 1,091,159
2010 No.
40,000
1,068,959 –
1,108,959
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