92 | FINANCIAL STATEMENTS | Notes to the Consolidated Financial Statements
25. Share-based payments continued At 31 December 2012 the following TRC MIP awards were outstanding:
Grant date
1 September 2010 1 September 2010
No. of awards outstanding
3,994,779 3,994,779
Earliest exercise date*
1 September 2015 1 September 2016
* Assuming performance criteria satisfied. The awards outstanding at 31 December 2012 have a weighted average outstanding term of 3.2 years (31 December 2011: 3.5 years).
(g) Thames River Capital Commutation arrangements (TRC Commutation arrangements) The Divisional Members of Investment Teams have entered into put and call options which, if exercised, will transfer value to F&C by way of variation of the entitlements to the allocation of management fee profits (as defined in the underlying legal agreements) and capital profits in the respective LLP. The exercise of these options will increase TRC UK’s share of the management fee profits of the respective Investment Teams by up to 20%.
These options are exercisable:
• 18 months after Completion: At the option of the Investment Teams, TRC UK will purchase an additional 10% of the management fee profits of each Investment Team. The option for Investment Teams to exercise this put option is conditional on that team’s respective net fund flows being positive for the twelve months preceding the option exercise period.
• 36 months after Completion:
FCAM has a call option to purchase, through TRC UK, typically, an additional 20% of the management fee profits of each of the Investment Teams. The level of 20% is reduced by the percentage of any profits which have already been commuted at an earlier date.
The 18/36 months options to acquire such management fee profits may be deferred for a period of twelve months if the F&C EBITDA Multiple, which is one of the components used to quantify the Commutation consideration, is less than five.
The Commutation consideration may be satisfied in two tranches, at F&C’s sole discretion, by:
• The allotment and issue at the relevant Commutation completion date to each Divisional Member of such number of F&C shares as shall have a value equal to 50% of the consideration, or the payment to the Divisional Members of 50% of the consideration in cash at the relevant Commutation completion date; and
• The allotment and issue at the relevant Commutation completion date to a Nominee of such number of F&C shares as shall have a value equal to 50% of the consideration (Deferred Commutation Shares), or in certain circumstances the payment of 50% of the consideration in cash on the date falling 24 months after the relevant Commutation completion date. Deferred Commutation Shares shall be released by the Nominee 24 months after the Commutation completion date, provided the Member continues to provide services to the respective LLP or has ceased to do so in certain “good leaver” circumstances.
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.
Exercise price
0.0p 0.0p
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