HSBC 2009 Annual Report Download - page 405

403
Restricted Share awards
Awards of Restricted Shares are made to employees on the basis of their performance, potential and retention
requirements, to aid recruitment or as a part-deferral of annual bonuses. Shares are awarded without corporate
performance conditions and generally vest between one and three years from the date of award, providing the
employees have remained continually employed by HSBC for this period.
2009 2008
Number Number
(000s) (000s)
Outstanding at 1 January ......................................................................................................................... 122,206 79,256
Additions during the year ......................................................................................................................... 108,439 72,120
Adjustment for rights issue ...................................................................................................................... 26,119 –
Released in the year ................................................................................................................................. (49,718) (17,092)
Forfeited in the year ................................................................................................................................. (22,728) (12,078)
Outstanding at 31 December ................................................................................................................... 184,318 122,206
The weighted average fair value of Restricted Share awards in 2009 was US$6.31 (2008: US$14.64).
Share options
A small number of discretionary share options were granted in 2005 under the HSBC Share Plan rules, after the
expiry of the Group Share Option Plan rules. The options granted in 2005 were awarded exclusively to individuals
employed by HSBC France.
Nil-cost share options were granted to senior executives on the basis of their performance in the previous year. The
share options were subject to the achievement of the same corporate performance conditions as the 2005 Performance
Share awards, which consisted of an absolute earnings per share measure and a TSR measure based on HSBC
Holdings’ ranking against a comparator group of 28 major banks. The options vested after three years in the same
proportion as the 2005 Performance Shares but were only exercisable up to the fourth anniversary of the date of
grant. These options have now lapsed and there are currently no options with outstanding performance conditions.
Additionally, share options were awarded to a number of employees under the HSBC Share Plan rules. These options
may vest after three years and are exercisable up to the tenth anniversary of the date of the grant, after which they
will lapse.
2009 2008
Number
Weighted
average
exercise
price Number
Weighted
average
exercise
price
(000s) £ (000s) £
Outstanding at 1 January .......................................................... 300 8.89 524 8.85
Adjustment for rights issue ....................................................... 44 7.75 – –
Forfeited and expired in the year .............................................. (258) 7.66 (224) 8.79
Outstanding and exercisable at 31 December .......................... 86 7.99 300 8.89
No share options were granted in 2009 and 2008. The weighted average remaining contractual life of options
outstanding at the balance sheet date was 5.8 years (2008: 2.1 years). The exercise price of options outstanding at the
balance sheet date was £7.99 (2008: £8.79 – £9.17).
Savings-related share option plans
Savings-related share option plans invite eligible employees to enter into savings contracts to save up to £250 per
month (or its equivalent in US dollars, Hong Kong dollars or euros), with the option to use the savings to acquire
shares. The aim of the plans is to align the interests of all employees with the creation of shareholder value. The
options are exercisable within three months following the first anniversary of the commencement of a one-year
savings contract or within six months following either the third or the fifth anniversaries of the commencement of
three-year or five-year savings contracts, respectively. The exercise price is set at a 20 per cent (2008: 20 per cent)
discount to the market value immediately preceding the date of invitation (except for the one-year options granted
under the US sub-plan where a 15 per cent discount is applied).