RBS 2013 Annual Report Download - page 399
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Notes on the consolidated accounts
397
The market value of awards exercised in 2013 was £37 million (2012 -
£10 million; 2011 - £5 million). There are vested options over 13 million
shares exercisable up to 2019 (2012 - 18 million shares up to 2019;
2011 - 5 million shares up to 2019).
At 31 December 2013, a provision of £1 million had been made in respect
of 0.1 million options over shares that may be cash-settled (2012 - £1
million in respect of 0.1 million share awards and 0.3 million options over
shares; 2011 - £3 million in respect of 0.4 million share awards and
1.4 million options over shares).
The fair value of options granted in 2013 was determined using a pricing
model that included: expected volatility of shares determined at the grant
date based on historic volatility over a period of up to seven years;
expected option lives that equal the vesting period; no dividends on
equity shares; and a risk-free interest rate determined from the UK gilt
rates with terms matching the expected lives of the options.
Variable compensation awards
The following tables analyse the Group and Markets variable compensation awards for 2013 (1).
Group Markets
2013 2012 Change 2013 2012 Change
£m £m %£m £m %
Non-deferred cash awards (2) 67 73 (8) 9 10 (10)
Non-deferred share awards —27 (100) — 17 (100)
Total non-deferred variable compensation 67 100 (33) 9 27 (67)
Deferred bond awards 188 497 (62) 43 212 (80)
Deferred share awards 321 82 291 185 48 285
Total deferred variable compensation 509 579 (12) 228 260 (12)
Total variable compensation (3) 576 679 (15) 237 287 (17)
Variable compensation as a % of operating profit (4) 19% 19% 27% 16%
Proportion of variable compensation that is deferred 88% 85% 96% 91%
- Of which deferred bond awards 37% 86% 19% 82%
- Of which deferred share awards 63% 14% 81% 18%
2013 2012 2011
Reconciliation of variable compensation awards to income statement charge £m £m £m
Variable compensation awarded 576 679 789
Less: deferral of charge for amounts awarded for current year (245) (262) (298)
Income statement charge for amounts awarded in current year 331 417 491
A
dd: current year charge for amounts deferred from prior years 294 355 484
Less: forfeiture of amounts deferred from prior years (37) (56) —
Income statement charge for amounts deferred from prior years 257 299 484
Income statement charge for variable compensation (3) 588 716 975
Actual Expected
2015
2011 2012 2013 2014 and beyond
Year in which income statement charge is expected to be taken
for deferred variable compensation £m £m £m £m £m
Variable compensation deferred from 2011 and earlie
r
484 414 105 5 —
Variable compensation deferred from 2012 — — 199 39 24
Clawback of variable compensation deferred from prior years — (59) (10) (3) —
Less: forfeiture of amounts deferred from prior years — (56) (37) — —
Variable compensation for 2013 deferred — — — 170 76
484 299 257 211 100
Notes:
(1) The tables above relate to continuing businesses only. There are no amounts relating to discontinued businesses in 2013 (2012 - £24 million; 2011 - £32 million).
(2) Cash payments to all employees are limited to £2,000.
(3) Excludes other performance related compensation.
(4) Reported operating profit excluding the impact of RCR and before variable compensation expense and one-off and other items.