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Annual Report & Accounts 2016 - Notes
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98 Financial statements continued GVC Holdings PLC Annual Report 2016 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED for the year ended 31 December 2016 24. SHARE OPTION SCHEMES CONTINUED Note d: These equity-settled awards were issued on the same basis as the awards in note c but at a higher exercise price which represents the market value of the shares as at the date the scheme became effective. In order to compensate Lee Feldman for the higher exercise price, the Company has agreed to pay him a cash bonus of £2.0m over the 30 month vesting period of the option, but only upon option vesting and satisfaction of the performance condition described above, and he has to reinvest 50% of this in GVC shares. In the year two-ninths of the options had vested. Having received the Directors notice to exercise, the Remuneration Committee exercised its discretion to make a cash alternative payment to the Directors in respect of that portion of shares. The cash alternative payment was calculated by deducting the option price from the market value of a share on the day prior to the date the Company received the exercise note. Note e: These awards were issued on completion of the acquisition of bwin.party. The equity-settled options, which are not subject to a performance condition, vest and become exercisable over 24 months, with one-seventh vesting six months after the date of grant and a further seventh vesting at each subsequent quarter. The options lapse, if not exercised, on 2 February 2026. Note f: These equity-settled awards were issued on the same basis as the awards in note c and granted on 16 December 2016. The charge to share-based payments within the consolidated income statement in respect of these options in 2016 was €31.1m, with a further charge of €12.8m within exceptional items relating to the cashing-out of the 2014 scheme. Of the 2016 share-based payment charge, €24.0m related to equity-settled options (2015: €0.1m) and €7.1m to cash-settled options (2015: €0.1m credit). 24.1 Liability for cash-settled options During 2015, options granted under a previous scheme were surrendered and in light of this surrender, a new retention plan was put in place. The liability under this plan at 31 December 2015 was €11.7m. In addition there was a cash-settled option liability in respect of the 2014 scheme of €0.2m. As a result of the acquisition of bwin.party, these liabilities were settled in the period and the after-tax proceeds were re-invested in new GVC shares. During the period a new liability was recognised for the cash-settled bonus scheme as set out in note d above. Under the annual share bonus plan, the Group has recognised a cash-settled option liability of €6.0m. The movements in cash-settled share option liabilities are set out in the table below: €m Balance at 1 January 2016 (11.8) Charged under the 2 June 2014 scheme (note b above) (0.2) Settled on the acquisition of bwin.party 11.9 Charged under the 2 February 2016 scheme (note d above) (1.0) Charged under the annual bonus plan (6.0) Balance at 31 December 2016 (7.1) 24.2 Weighted average exercise price of options The number and weighted average exercise prices of share options is as follows: Weighted average exercise price 31 December 2016 Number of options 31 December 2016 Weighted average exercise price 31 December 2015 Number of options 31 December 2015 Outstanding at the beginning of the year 11p 3,481,947 94p 6,806,947 Granted during the year 422p 26,621,149 - - Exercised during the year 126p (834,723) - - Surrendered/bought out in the year 422p (2,450,000) 184p (3,200,000) Forfeited in the year - - 1p (125,000) Outstanding at the end of the year 416p 26,818,373 11p 3,481,947 Exercisable at the end of the year 5,236,844 156,947 The options outstanding at 31 December 2016 have a weighted average contractual life of 9.1 years (31 December 2015: 8.4 years).