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FINANCIAL STATEMENTS
10 EMPLOYEE BENEFITS continued During the year to 31 December 2019, awards of LTIPs were made on 16 May 2019. The weighted-average fair value and assumptions used to determine the fair value of options granted during the year under the LTIP are as follows:
£0.51
Fair value at grant date Option pricingmodels used Share price at grant date
Black-Scholes, Stochastic, Finnerty
£0.60
Nil
Exercise price
40.03% 43.48%
Expected volatility – TSR performance Expected volatility – holding period
2-3 years + 2 year holding period
Option life Dividends
Nil
0.70% 0.81%
Risk-free interest rate – TSR performance Risk-free interest rate – holding period
A Black-Scholes option pricing model is used where vesting is related to an earnings per share target, a Stochastic model is used where vesting is related to a total shareholder return target, and a Finnerty model is used to model the holding period. Deferred share bonus plan (“DSBP”) The DSBP is operated in conjunction with the Group’s short-term incentive plan for Executive Directors and other senior managers of the Company or any of its subsidiaries, as explained in the Directors’ Remuneration Report. Awards are made in the form of nil-cost options which become exercisable on the third anniversary, and until the tenth anniversary, of the grant date.
The options are accounted for as equity-settled schemes.
The number and weighted-average remaining contractual life of outstanding options under the DSBP are as follows:
Year ended 31 December 2019 Number of options 1,635,528 (503,412) (708,981)
Year ended 31 December 2018 Number of options
3,864,558 2,959,716
Outstanding at 1 January
Granted Forfeited Exercised
925,734
–
(20,892)
Outstanding at 31 December Exercisable at 31 December
4,287,693 3,864,558 1,656,365 1,641,831
0.60 0.94
Weighted-average share price at exercise (£) Weighted-average remaining contractual life (years)
0.74 1.02
The exercise price for options granted under the DSBP is nil.
During the year to 31 December 2019, awards of DSBPs were made on 28 March 2019. The weighted-average fair value and assumptions used to determine the fair value of options granted during the year under the DSBP are as follows:
£0.62
Fair value at grant date Option pricing model used Share price at grant date
Black-Scholes
£0.62
Nil Nil
Exercise price
Expected volatility
3 years
Option life Dividends
Nil Nil
Risk-free interest rate
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