The Group operates two equity-settled share option schemes under which certain employees have been issued with share options as described below.
The Performance Share Plan (PSP) is the active plan under which option awards may be granted. Details of the award and vesting conditions are set out in the Report of the Remuneration Committee. Vesting is contingent on market conditions such as total shareholder return and non-market conditions such as earnings per share, free cash flow and return on average capital employed. During the year, 1,552,500 (2021: 1,042,500) options were granted under the PSP with a vesting period of three years.
The 2009 Share Option Plan remains in place with respect to outstanding grants made prior to 2016 but no new grants will be made following the adoption of the PSP. The number of shares over which options may be granted may not exceed 10 per cent of the shares of the Company in issue.
Options are forfeited where the grantee ceases employment with the Group unless retention, is permitted by the Remuneration Committee under good leaver rules. The Scheme Rules allow for the early exercise of outstanding options upon a change in control of the Company.
The number and weighted average exercise price of share options granted under the above plans is as follows:
|
2022 |
2021 |
||
|
Number of share options |
Weighted average exercise price |
Number of share options |
Weighted average exercise price |
|
|
€ |
|
€ |
Outstanding at 1 January |
5,646,854 |
1.47 |
5,756,140 |
1.59 |
Granted during the year |
1,552,500 |
0.065 |
1,042,500 |
0.065 |
Exercised during the year |
(1,060,856) |
1.25 |
(637,530) |
1.25 |
Forfeited during the year |
(608,962) |
0.35 |
(514,256) |
0.065 |
Outstanding at 31 December |
5,529,536 |
1.25 |
5,646,854 |
1.47 |
Exercisable at 31 December |
1,910,000 |
3.52 |
2,790,000 |
2.94 |
|
|
|
|
|
Weighted average share price at date of exercise of options |
|
3.51 |
|
4.35 |
Weighted average remaining contractual life of options outstanding at year-end |
|
1.6 years |
|
1.8 years |
In settlement of the options exercised during the year, the Company issued 34,978 (2021: 379,177) new ICG units with the balance of 1,025,878 (2021: 258,353) settled through market purchase.
The exercise prices of options outstanding at 31 December are as follows:
|
2022 |
2021 |
Price |
|
Options |
Options |
€ |
Exercisable: |
|
|
|
2009 Share Option Plan |
|
|
|
Vested Options |
- |
825,000 |
1.57 |
Vested Options |
200,000 |
205,000 |
2.97 |
Vested Options |
1,710,000 |
1,760,000 |
3.58 |
Exercisable at 31 December |
1,910,000 |
2,790,000 |
|
|
|
|
|
Not Exercisable: |
|
|
|
Performance Share Plan |
3,619,536 |
2,856,854 |
0.065 |
Outstanding at 31 December |
5,529,536 |
5,646,854 |
|
Options issued under the 2009 Share Option Plan were market priced options with a maximum life of 10 years. These had been measured at fair value using a binomial option pricing model. All options issued under the 2009 Option Plan have vested to participants and the fair value of these has been expensed to the Income Statement over the period from date of grant to date of vesting determination.
Options granted under the PSP are priced at the nominal price of the shares comprised in an ICG unit. Vesting of options under the PSP are contingent on the achievement of certain market and non-market performance hurdles. The fair value of options subject to market conditions is estimated using Monte-Carlo simulation. The fair value of options subject to non-market conditions is estimated based on the market value at date of grant adjusted for the effects of non-transferability, exercise restrictions and behavioural considerations. The fair value is expensed to the Income Statement evenly over a vesting period of three years with an adjustment made at each reporting period for the estimated vesting rate for those options subject to non-market vesting conditions.
Outstanding options had been granted on 1 September 2014, 5 March 2015, 6 March 2020, 12 March 2021 and 11 March 2022. The estimated fair values of the options are as follows:
Year of Grant |
2022 |
2021 |
2020 |
2015 |
2015 |
2014 |
2014 |
Share Plan |
PSP |
PSP |
PSP |
2009 Plan |
2009 Plan |
2009 Plan |
2009 Plan |
|
- |
- |
- |
Basic Tier |
Second Tier |
Basic Tier |
Second Tier |
Fair value of option: |
|
|
|
|
|
|
|
Options subject to market performance conditions |
€1.29 |
€2.15 |
€0.96 |
€0.4528 |
€0.5581 |
€0.2992 |
€0.4449 |
Options subject to non-market performance conditions |
€2.30 |
€3.63 |
€3.07 |
- |
- |
- |
- |
The inputs into the valuation model in the respective years of grant were as follows:
Year of Grant |
2022 |
2021 |
2020 |
2015 |
2015 |
2014 |
2014 |
|
|
|
|
Basic Tier |
Second Tier |
Basic Tier |
Second Tier |
At date of grant: |
|
|
|
|
|
|
|
Weighted average share price |
€3.36 |
€4.26 |
€3.77 |
€3.580 |
€3.580 |
€2.970 |
€2.970 |
Weighted average exercise price |
€0.065 |
€0.065 |
€0.065 |
€3.580 |
€3.580 |
€2.970 |
€2.970 |
Expected volatility |
45% |
43% |
29% |
29% |
31% |
27% |
30% |
Expected life |
3 years |
3 years |
3 years |
7 years |
9 years |
7 years |
9 years |
Risk free rate |
(0.141%) |
(0.562%) |
(0.462%) |
0.090% |
0.299% |
0.439% |
0.765% |
Expected dividend yield |
4.41% |
2.15% |
3.70% |
5.16% |
4.72% |
5.83% |
4.89% |
Expected volatility was determined by calculating the historical volatility of the Company’s share price.
In 2022, the share-based payment expense recognised in the Consolidated Income Statement was €3.0 million (2021: €1.3 million).
The share-based payment expense has been classified in the Consolidated Income Statement as follows:
|
2022 |
2021 |
|
€m |
€m |
Employee benefits expense |
3.0 |
1.3 |
Share-based payment expense of €1.1 million (2021: €0.5 million) relates to the Directors of the Company. The balance on the share option reserve in the Consolidated Statement of Financial Position at 31 December 2022 is €6.3 million (2021: €4.7 million).