HSBC 2006 Annual Report Download - page 392

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
Note 38
390
Number of HSBC
Private Bank France
shares exchangeable
for HSBC Holdings
ordinary shares Period of exercise Exercise price
31 December 2006 ............................................... 411,675 2007 to 2012 €10.84 – €22.22
31 December 2005 ................................................ 612,479 2006 to 2012 €10.84 – €22.22
31 December 2004................................................. 1,132,060 2005 to 2012 €10.84 – €22.22
On the acquisition of Banque Hervet in 2001, Banque Hervet shares were held in a Plan d’Epargne Entreprise on
behalf of Banque Hervet employees to vest and be released to employees over a 5 year period. It was agreed to
exchange these Banque Hervet shares, on vesting, for HSBC Holdings ordinary shares in the ratio of 3.46 HSBC
Holdings ordinary shares for each Banque Hervet share. During 2006, 163,369 (2005: 7,670) Banque Hervet shares
were released in connection with the vesting of interests in the Plan d’Epargne Entreprise and exchanged for 565,151
(2005: 26,539) HSBC Holdings ordinary shares, such shares being delivered from The CCF Employee Benefit Trust
2001 (Banque Hervet). At 31 December 2006, The CCF Employee Benefit Trust 2001 (Banque Hervet) held no
(2005: 586,213) HSBC Holdings ordinary shares.
Banque Hervet shares to be exchanged for HSBC Holdings ordinary shares under this arrangement were as follows:
Number of Banque
Hervet shares
exchangeable for
HSBC Holdings
ordinary shares Period of vesting
31 December 2006 ............................................................................................... – –
31 December 2005 ................................................................................................ 169,416 2006
31 December 2004................................................................................................. 177,086 2005 – 2006
Following the acquisition of HSBC Finance Corporation in 2003, all outstanding options and equity-based awards
over HSBC Finance Corporation common shares were converted into rights to receive HSBC Holdings ordinary
shares in the same ratio as the share exchange offer for HSBC Finance Corporation (2.675 HSBC Holdings ordinary
shares for each HSBC Finance Corporation common share) and the exercise prices per share adjusted accordingly.
During 2006, options over 10,484,937 (2005: 3,563,020) HSBC Holdings ordinary shares were exercised and
9,781,228 (2005: 2,638,816) HSBC Holdings ordinary shares delivered from The HSBC (Household) Employee
Benefit Trust 2003 and the HSBC (Household) Employee Benefit Trust 2003 (No.2) to satisfy the exercise of these
options. During 2006, options over 300,555 (2005: 152,936) HSBC Holdings ordinary shares lapsed. At 31
December 2006, The HSBC (Household) Employee Benefit Trust 2003 and the HSBC (Household) Employee
Benefit Trust 2003 (No.2) held a total of 8,670,335 (2005: 9,173,100) HSBC Holdings ordinary shares and 198,665
(2005: 2,198,829) ADSs, each of which represents five HSBC Holdings ordinary shares, which may be used to
satisfy the exercise of these options and equity-based awards under the HSBC Finance Corporation share plans.
Options and equity-based awards outstanding over HSBC Holdings ordinary shares under the HSBC Finance
Corporation share plans are as follows:
Number of
HSBC Holdings
ordinary shares Period of exercise Exercise price
31 December 2006 ............................................... 27,322,438 2007 to 2012 nil – US$21.37
31 December 2005 ................................................ 38,107,930 2006 to 2012 nil – US$21.37
31 December 2004 ................................................ 41,823,886 2005 to 2021 nil – US$25.40
Prior to its acquisition by HSBC Holdings, HSBC Finance Corporation issued 8.875 per cent Adjustable Conversion-
Rate Equity Security Units (‘Units’) which included a contract under which the holder agreed to purchase, for US$25
each, HSBC Finance Corporation common shares on 15 February 2006, with an option for early settlement. The
Units which remained outstanding following the acquisition of HSBC Finance Corporation were converted into
contracts to purchase HSBC Holdings ordinary shares. Units exercised at maturity, 15 February 2006, entitled the
holder to receive a number of shares based on the market value of HSBC Holdings ordinary shares at the time, which
was 2.6041 HSBC Holdings ordinary shares for each Unit. During 2006, 3,424,742 (2005: 324,726) HSBC Holdings
ordinary shares were issued in connection with the maturity of 1,315,140 (2005: 124,698) Units.