HSBC 2004 Annual Report Download - page 341

339
2004 2003 2002
Exercise price range (£) ............. 2.17 – 6.00 6.01 – 7.87 2.17 – 6.00 6.01 – 7.87 2.17 – 6.00 6.01 – 7.87
Number (000’ s) ......................... 1,233 42,744 1,882 57,731 3,094 76,551
Weighted average exercise
price (£) ................................. 4.31 6.83 4.12 6.81 4.01 6.79
Weighted average remaining
contractual life (years) ........... 1.78 4.63 2.66 5.61 3.59 6.59
Of which exercisable:
Number (000’ s) ..................... 1,233 42,744 1,882 57,731 3,094 47,344
Weighted average exercise
price (£) ............................. 4.31 6.83 4.12 6.81 4.01 6.38
Group Share Option Plan
The Group Share Option Plan is a long-term incentive plan available to certain HSBC employees that was
adopted by HSBC during 2000. The aim of the plan is to align the interest of those employees assessed as higher
performing to the creation of shareholder value. This is achieved by setting certain Total Shareholder Return
targets which must normally be attained in order for the awards to vest. Options are granted at market value and
are normally exercisable between the third and tenth anniversaries of the date of grant, subject to vesting
conditions.
2004 2003 2002
Number
Weighted
average
exercise
price Number
Weighted
average
exercise
price Number
Weighted
average
exercise
price
(000’s) £ (000’ s) £ (000’ s) £
Outstanding at 1 January ............ 163,997 8.00 106,164 8.55 50,825 8.72
Granted in the year .................... 63,682 8.28 62,118 7.07 57,236 8.40
Exercised in the year .................. (1,460) 8.59 (2) 8.52 – –
Forfeited in the year ................... (5,549) 8.00 (4,283) 8.19 (1,897) 8.62
Outstanding at 31 December....... 220,670 8.07 163,997 8.00 106,164 8.55
The weighted average fair value of options granted in the year as at the date of grant was US$2.96 (2003:
US$3.13; 2002: US$2.33)
The number of options, weighted average exercise price, and the weighted average remaining contractual life for
options outstanding at the balance sheet date, analysed by exercise price range, are set out below:
2004 2003 2002
Exercise price range (£) ............. 6.00 – 8.00 8.01 – 10.00 6.00 – 8.00 8.01 – 10.00 6.00 – 8.00 8.01 – 10.00
Number (000’ s) ......................... 55,246 165,243 56,980 107,017 469 105,695
Weighted average exercise
price (£) ................................. 6.91 8.46 6.91 8.57 7.46 8.55
Weighted average remaining
contractual life (years) ........... 6.46 7.86 9.33 7.66 9.66 8.83
Of which exercisable:
Number (000’ s) ..................... – 45,463 –396 – –
Weighted average exercise
price (£) ............................. –8.72 –9.64 – –
Savings-Related Share Option Plans
The Savings-Related Share Option Plans invite eligible employees to enter into savings contracts to save up to
£250 per month, with the option to use the savings to acquire shares. The aim of the plan is to align the interests
of all employees to the creation of shareholder value. The options are exercisable within six months following
either the third or the fifth anniversary of the commencement of the savings contract depending on conditions set
at grant. The exercise price is at a 20 per cent (2003 and 2002: 20 per cent) discount to the market value at the
date of grant.
The employee has the right to withdraw their accumulated savings and withdraw from the plan at any time. Upon
voluntary withdrawal, any remaining unamortised compensation expense is recognised in the current period.