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Annual Report & Accounts 2016 - Notes to the Company Statements
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Company financ 116 ial statements continued GVC Holdings PLC Annual Report 2016 NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED for the year ended 31 December 2016 10. SHARE OPTION SCHEMES CONTINUED The existing share options at 31 December 2016 are held by the following employees and consultants: Option price 1p 422p 467p 422p Grant date 2 June 2014 2 February 2016 2 February 2016 16 December 2016 Total Kenneth Alexander - 6,842,947 - - 6,842,947 Richard Cooper - 3,421,473 - - 3,421,473 Lee Feldman (note d) - - 3,421,473 - 3,421,473 Norbert Teufelberger (note e) - 200,000 - - 200,000 Employees 75,000 - - 6,963,334 7,038,334 Consultants - - - 1,695,000 1,695,000 75,000 10,464,420 3,421,473 8,658,334 22,619,227 Note a: These equity-settled options were granted to third parties as part of the Sportingbet PLC acquisition following underwriting commitments made at the time. The awards vested on the grant date and the options have the exercise price reduced by the value of any dividends declared up to the point of exercise. These options were fully exercised on 12 February 2016 at a weighted average price of £1.263. Note b: These equity-settled options were granted to certain Directors and employees. The awards will vest in full (and become exercisable) on the share price being equal to or exceeding £6.00 per share for a continuous period of 90 calendar days at any time from the date of grant. If there is a change of control, the awards will vest in full immediately unless the share price is less than £5.00 per share, in which case the Awards will lapse in full. The awards have been treated as vesting over a three year period. The Directors' options under this scheme were cash cancelled during the year on the acquisition of bwin.party, and the after-tax proceeds of £5.4m (£10.3m gross) re-invested in new GVC shares. The remaining fair value of these options was transferred to equity and the additional cost has been recognised as an exceptional item in the year. Note c: These equity-settled awards were issued on completion of the acquisition of bwin.party. The options vest and become exercisable, subject to the satisfaction of a performance condition, over 30 months, with one-ninth vesting six months after the date of grant and a further ninth vesting at each subsequent quarter. The options lapse, if not exercised, on 2 February 2026. The performance condition is comparator total shareholder return ("TSR") of the Group against the FTSE 250. Each ninth of the shares will have its TSR condition reviewed from the date of grant until the relevant testing date. To the extent the TSR is not met at that time, it is tested again the following quarter and, if necessary, at the end of the 30 month vesting period. In order to vest, the TSR of the Group must rank at median or above against the FTSE 250. 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 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).