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CIMIC Group Limited Annual Report 2016 |
Financial Report
Notes continued
for the 12 months to 31 December 2016
36. EMPLOYEE BENEFITS
CONTINUED
a) Rights plans
continued
1
Each 2013 LTI performance hurdle is tested over a three year performance period, which runs from 1 January. Performance hurdles are to
be tested in February following the announcement of full year results for the previous financial year.
2
The fair values were calculated at grant date using Monte-Carlo simulation pricing models. Volatility in share prices and expected dividend
levels were estimated based on historic levels for a period consistent with the relevant performance period.
3
The fair values were calculated at grant date using binomial tree pricing models. Volatility in share prices and expected dividend levels
were estimated based on historic levels for a period consistent with the relevant performance period.
4
This grant represents an amendment to an existing award.
5
The volume weighted average share price during the reporting period to 31 December 2015 was $22.96.
6
The five day volume weighted average share price up to and including 6 May 2016 was $37.26.
7
The performance hurdles for the 2013 LTI were partially met at the test date in February 2016 and as a result 99.26% of the EPS grant
vested and 94.21% of the TSR grant vested in May 2016. The remaining unvested rights lapsed in accordance with the terms of the award.
Long-Term Incentive Plan – 2014 Awards
The Long-Term Incentive Plan (“LTI”) – 2014 Awards performance share rights were granted for no cost to the employee and entitle the
participant to receive one fully paid ordinary share in the Company per right, subject to the terms and conditions determined by the
Remuneration and Nomination Committee, including vesting conditions linked to service and performance over the three year
performance period. All share rights issued expire on the earlier of their vesting date where performance hurdles are not met or
termination of the individual’s employment except in certain special circumstances.
In addition to a continuing employment service condition, the vesting is conditional on the Group achieving Total Shareholder Return
(“TSR”) (i.e. growth in share price plus dividends reinvested) or Earnings Per Share (“EPS”) performance hurdles, as follows:
50% of each grant of share rights will be subject to a TSR performance hurdle (“parcel A”). The TSR hurdle requires the Company’s
TSR percentile ranking against the TSR performance of the companies comprising the ASX 100 (as at 1 January 2014) over the
performance period (from grant date to test date) to be at least at the 51
st
percentile before any parcel A share rights vest (50% vest
at threshold) then pro rata to the 75
th
percentile and then at the 75
th
percentile or greater all parcel A share rights vest; no rights will
vest if TSR is less than or equal to 0%; and
50% of each grant of share rights will be subject to an EPS hurdle (“parcel B”). Annual compound earnings per share growth over the
performance period must be at least 6% per annum before any parcel B share rights vest (50% vest at threshold) then pro rata to
10% per annum and then at 10% per annum all parcel B share rights vest.
Amount recognised during the reporting period: Expense $0.6 million (31 December 2015: Expense $2.4 million).
2014 LTI award
Date of grant
1 January 2014
Date of performance period end
1
31 December 2016
Grant fair value for TSR performance hurdle (“parcel A”)
2
$13.81
Grant fair value for EPS hurdle (“parcel B”)
3
$19.78
Original grant
704,802
Unvested rights at 31 December 2014
704,802
-
Granted
4
14,730
-
Vested
5
-
-
Forfeited/Lapsed
(318,890)
Unvested rights at 31 December 2015
400,642
-
Granted
-
-
Vested
6
-
-
Forfeited/Lapsed
(65,657)
Unvested rights at 31 December 2016
334,985
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