Notes to the accounts - Group |
Page 96
19 Share-based payments (continued)
The expected volatility is based on historical volatility over the last three years. The expected life is the average expected period to exercise. The risk free rate of return is the yield on zero-coupon UK government bonds of a term consistent with the assumed award life. A reconciliation of award movements over the year is shown below:
| Number ’000s |
2007 Weighted price average £ |
Number ’000s |
2006 Weighted price average £ |
|
|---|---|---|---|---|
| Outstanding at 1 October | 4,554 | – | 2,142 | – |
| Awarded | 3,028 | – | 2,531 | – |
| Forfeited | (388) | – | (119) | – |
| Exercised | – | – | – | – |
| Outstanding at 30 September | 7,194 | – | 4,554 | – |
| Exercisable at 30 September | – | – | – | – |
| Range of exercise prices | Weighted average exercise price £ |
Number of shares |
2007 Weighted average remaining life years |
Weighted average exercise price £ |
Number of shares |
2006 Weighted average remaining life years |
||
|---|---|---|---|---|---|---|---|---|
| Expected | Contractual | Expected | Contractual | |||||
| N/a | – | 7,194 | 1.5 | 1.5 | – | 4,554 | 1.9 | 1.9 |
The Sage Group Savings-related Share Option Plan (the “SAYE Plan”)
In February 1996, the Company introduced an Inland Revenue approved savings-related share option scheme allowing all UK employees to apply for an option to acquire ordinary shares in the Company (“Shares”) at a price per Share which was not less than 80% of the market value of those Shares when invitations for options were made. The acquisition of the Shares was funded by the proceeds of a savings account with a bank or building society. The original scheme adopted in 1996 continued in accordance with its terms for ten years and expired in February 2006. A new scheme was approved by the members at the Annual General Meeting held on 2 March 2006.
Eligibility
All UK employees, including executive directors, of the Company and its participating subsidiaries who have completed at least one year’s continuous service and are assessable to employment income tax are eligible to participate in the SAYE Plan. The directors may offer participation to other employees and may alter the length of service required to qualify to a different period, not exceeding five years.
Employee contributions
An employee who wishes to participate in the SAYE Plan will enter into a contract (the “SAYE contract”) with a savings body, designated by the directors for the purpose of the SAYE Plan, to make monthly contributions by deduction from their pay of not more than the maximum contribution permitted from time to time by HMRC (currently £250).
A tax-free bonus (currently equivalent to 1.4x or 4.4x the monthly contribution) will be paid on completion of 36 or 60 monthly savings contributions respectively and another tax-free bonus (currently 8.4x the monthly contribution) (including the payment at the end of 60 months) will be paid after a further two years if the savings plus the initial bonus are not withdrawn prior to that date.
Exercise price
An employee who applies for the grant of an option to acquire Shares will do so at a price (the “Exercise Price”) which is determined by the directors but which is not less than the greater of:
- 80% of the middle market quotation of a Share on the dealing day prior to the date of invitation as derived from the London Stock Exchange Daily Official List (or, if the directors so decide, 80% of the average of the middle market quotations over the three dealing days prior to the date of the invitation or 80% of the middle market quotations at such other time or times agreed in advance with HMRC), and;
- In the case of an option over unissued Shares, the nominal value of a Share.