Annual Report 2017

30. Share-based Payment Plans

The table below shows the total expense of the share-based payment plans as well as the movements in liability and equity.

in thousands of EUR

Equity plan

Long-term incentive plan

Equity

Liability

Equity

At 1 January 2016

25,540

876

27,202

Charges to Income Statement

1,523

95

13,685

Settlements/ Vesting

- 14,769

- 755

- 17,435

Exchange differences

-

-

29

At 31 December 2016

12,294

216

23,481

At 1 January 2017

12,294

216

23,481

Charges to Income Statement

939

76

10,259

Settlements/ Vesting

- 6,017

- 292

- 24,707

Exchange differences

-

-

18

At 31 December 2017

7,216

-

9,051

The long-term incentive plan (LTIP) represents conditional share and option awards. Option awards are in the form of stock-settled share appreciation rights, meaning that at exercise the participant receives shares which are in total equal in value to the total value of the exercised options.

The number of participants of the share-based payment plans per year-end 2017 is 154 (2016: 153).

The phantom plans issued in 2011, 2012, 2013 and 2014 were converted from cash-settled to equity-settled long-term incentive plans on the listing of GrandVision N.V. on Euronext Amsterdam in 2015. The phantom plans issued in 2009, 2010 and certain but limited plans relating to 2012, 2013 and 2014 remained cash-settled. The cash-settled plans were fully settled in 2017.

No new shares were issued in 2017 (2016: none) related to the share-based-payment plans.

The table shows the valuation method of the Group's share-based payment plans:

Classification

Share awards

Option awards

Equity plan

Cash-settled

Share price at 31 December

Black-Scholes-Merton option model

n/a

Equity-settled

Share price at conversion and grant date

Black-Scholes-Merton option model

Share price at grant date

The equity and phantom plans are no longer granted since the listing of the Company's shares. Only share and option awards under the long-term incentive plans are being awarded since then.

The table below shows the movements in the number of shares of the equity plan for key management and employees:

Th. A. Kiesselbach (CEO)

P.J. de Castro Fernandes (CFO)

Employees

Total

At 1 January 2016

21,600

251,020

1,808,404

2,081,024

Settled

- 9,600

- 125,510

- 881,362

- 1,016,472

At 31 December 2016

12,000

125,510

927,042

1,064,552

At 1 January 2017

12,000

125,510

927,042

1,064,552

Settled

- 12,000

- 125,510

- 467,292

- 604,802

At 31 December 2017

-

-

459,750

459,750

Of those shares outstanding under the equity plan at 31 December 2017, for 168,930 shares (2016: 480,920 shares) the vesting period has ended. In 2017, the shares that were vested and unrestricted have been settled.

The table below shows the movements in the long-term incentive plan for key management and employees:

Th. A. Kiesselbach (CEO)

P.J. de Castro Fernandes (CFO)

Employees

Total LTIP awards

At 1 January 2016

265,708

162,746

2,511,438

2,939,892

Adjusted for performance conditions

22,234

13,536

226,838

262,608

Granted

23,125

10,580

366,634

400,339

Settled

- 76,175

- 26,242

- 980,477

- 1,082,894

Forfeited

-

-

- 221,104

- 221,104

At 31 December 2016

234,892

160,620

1,903,329

2,298,841

At 1 January 2017

234,892

160,620

1,903,329

2,298,841

Granted

-

63,433

564,362

627,795

Settled

- 69,744

- 138,462

- 1,292,324

- 1,500,530

Forfeited

-

-

- 161,403

- 161,403

At 31 December 2017

165,148

85,591

1,013,964

1,264,703

The table below shows the movements in the number of awards of the long-term incentive plan:

Share
awards

Option
awards

Weighted average
exercise price in
EUR per share

At 1 January 2016

1,361,642

1,578,250

6.94

Adjusted for performance conditions

76,105

186,503

6.66

Granted

256,165

144,174

27.47

Settled

- 324,903

- 757,991

6.10

Forfeited

- 125,809

- 95,295

6.64

At 31 December 2016

1,243,200

1,055,641

10.33

At 1 January 2017

1,243,200

1,055,641

10.33

Granted

264,474

363,321

25.43

Settled

- 785,097

- 715,433

6.59

Forfeited

- 106,893

- 54,510

24.53

At 31 December 2017

615,684

649,019

21.71

The weighted average fair value of the share awards granted in 2017 at grant date is €23.50 (2016: €23.32). The weighted average fair value of the option awards granted in 2017 at grant date is €3.20 (2016: €2.83).

The weighted average share price used for the exercise of the option awards during 2017 was €23.12 (2016: €24.97).

Of those option awards outstanding at 31 December 2017, 139,736 were exercisable (2016: 130,232). The weighted average exercise price of these exercisable option awards was €6.37 (2016: €5.99). As of 31 December 2017 the weighted average remaining contractual life for outstanding option awards was 3 years (2016: 1.1 years).

As a result of LTIP plans being settled, 1,291,032 shares were delivered to participants or became unrestricted in 2017 (2016: 2,483,832).

Most of the option awards related to 2011, 2012 and 2013 were converted to equity-settled on the listing. The fair value of the option awards is based on the Black-Scholes-Merton option pricing model. The following assumptions were used:

Option awards

LTIP 2012
(equity settled)

LTIP 2013
(equity settled)

LTIP 2015
(equity settled)

LTIP 2016
(equity settled)

LTIP 2017
(equity settled)

Number of options outstanding

58,961

80,775

53,691

144,174

311,418

Exercise price in EUR

5.98

6.66

24.59

27.47

25.43

Share price in EUR

20.00

20.00

22.72

23.32

23.50

Volatility

23.4%

22.1%

24.0%

25.2%

24.1%

Dividend yield

0.7%

1.1%

1.4%

1.6%

1.7%

Expected remaining option life in years

3.30

4.30

5.00

5.00

5.00

Annual risk-free interest rate %

-0.19%

-0.18%

0.15%

-0.36%

-0.28%

The option awards can only be exercised at vesting and at distinct moments 1 and 2 years after vesting. Therefore no impact of early exercise is included in the valuation model. Volatility is determined by calculating a weighted average of historical volatility of closing prices of the company itself and, due to limited historical share price data of GrandVision N.V., its peer group.

There were no option awards granted in 2014.

The following tables summarize the status of the outstanding equity and LTIP plans during 2017 for the individual Management Board members:

Outstanding share-based awards

Award

Awards per
1 January 2017

Granted in 2017

Settled in 2017

Awards per
31 December 2017

Exercise price option awards

Fair value
at grant

Share price at vesting

Th. A. Kiesselbach (CEO)

GrandVision BV - Equity Plan 2012

Shares

12,000

-

- 12,000

-

-

8.12

23.32

GrandVision BV - LTIP 2012

Options

58,961

-

-

58,961

5.98

13.81

23.32

GrandVision BV - LTIP 2013

Shares

24,344

-

- 24,344

-

-

20.00

23.60

GrandVision BV - LTIP 2013

Options

59,650

-

-

59,650

6.66

12.81

23.60

GrandVision BV - LTIP 2014

Shares

45,400

-

- 45,400

-

-

20.00

23.60

GrandVision NV - LTIP 2015

Shares

23,412

-

-

23,412

-

22.76

-

GrandVision NV - LTIP 2016

Shares

23,125

-

-

23,125

-

23.32

-

Total

246,892

-

- 81,744

165,148

Outstanding share-based awards

Award

Awards per
1 January 2017

Granted in 2017

Settled in 2017

Awards per
31 December 2017

Exercise price option awards

Fair value
at grant

Share price at vesting

P.J. de Castro Fernandes (CFO)

GrandVision BV - Equity Plan 2012

Shares

125,510

-

- 125,510

-

-

8.12

23.32

GrandVision BV - LTIP 2012

Options

64,326

-

- 64,326

-

5.98

13.81

23.32

GrandVision BV - LTIP 2013

Shares

14,824

-

- 14,824

-

-

20.00

23.60

GrandVision BV - LTIP 2013

Options

36,312

-

- 36,312

-

6.66

12.81

23.60

GrandVision BV - LTIP 2014

Shares

23,000

-

- 23,000

-

-

20.00

23.60

GrandVision NV - LTIP 2015

Shares

11,578

-

-

11,578

-

22.76

-

GrandVision NV - LTIP 2016

Shares

10,580

-

-

10,580

-

23.32

-

GrandVision NV - LTIP 2017

Shares

-

11,530

-

11,530

-

23.50

-

GrandVision NV - LTIP 2017

Options

-

51,903

-

51,903

25.43

3.20

-

Total

286,130

63,433

- 263,972

85,591

The vested option awards under GrandVision BV - LTIP 2012 and GrandVision BV - LTIP 2013 were exercised in 2017, resulting in the delivery of 74,897 shares. The vesting of the share awards under the GrandVision BV - LTIP 2013 and GrandVision BV - LTIP 2014 plans in 2017, resulted in the delivery of 107,568 shares.

Outstanding share-based awards

Award

Status per 31 December 2017

Vesting year

Holding
period end

Performance conditions

GrandVision BV - Equity Plan 2012

Shares

Vested

2016

2017 (50%)

No

GrandVision BV - LTIP 2012

Options

Vested

2016

-

0-200% on Rev/EBITA 2014

GrandVision BV - LTIP 2013

Shares

Vested

2017

-

0-200% on Rev/EBITA 2015

GrandVision BV - LTIP 2013

Options

Vested

2017

-

0-200% on Rev/EBITA 2015

GrandVision BV - LTIP 2014

Shares

Vested

2017

-

No

GrandVision NV - LTIP 2015

Shares

Conditional

2018

2020

0-150% on Rev/EPS 2015-2017

GrandVision NV - LTIP 2016

Shares

Conditional

2019

2021

0-150% on Rev/EPS 2016-2018

GrandVision NV - LTIP 2017

Shares

Conditional

2020

2022

0-150% on Rev/EPS 2017-2019

GrandVision NV - LTIP 2017

Options

Unconditional

2022

-

No

Outstanding share-based awards

Award

Minimum
# of shares

Maximum
# of shares

Minimum
# of shares

Maximum
# of shares

Th. A. Kiesselbach (CEO)

P.J. de Castro Fernandes (CFO)

GrandVision BV - LTIP 2012

Options

42,420

42,420

-

-

GrandVision BV - LTIP 2013

Options

41,000

41,000

-

-

GrandVision NV - LTIP 2015

Shares

23,412

35,118

11,578

17,367

GrandVision NV - LTIP 2016

Shares

23,125

34,688

10,580

15,870

GrandVision NV - LTIP 2017

Shares

-

-

11,530

17,295

GrandVision NV - LTIP 2017

Options

-

-

51,903

51,903

The option awards under GrandVision NV - LTIP 2017 are not conditional on meeting performance targets. The minimum and maximum numbers of shares resulting from option awards is calculated based on the share price ultimo 2017 (€21.30).