33 Share compensation plans

Employee share purchase plan

Holcim has an employee share ownership plan for all employees of Swiss subsidiaries and some executives from Group companies. This plan entitles employees to acquire a limited amount of discounted Holcim shares generally at 70 percent of the market value based on the prior-month average share price. The shares cannot be sold for a period of two years from the date of purchase. The total expense arising from this plan amounted to CHF 5.2 million in 2014 (2013: 4.4).

Share plan for management of Group companies

Part of the variable, performance-related compensation for management of Group companies is paid in Holcim shares, which are granted based on the market price of the share in the following year. The shares cannot be sold by the employee for the next three years. The total expense arising from this share plan amounted to CHF 5.6 million in 2014 (2013: 4.5).

Senior management share plans

Part of the variable, performance-related compensation of senior management is paid in Holcim shares, which are granted based on the market price of the share in the following year. The shares cannot be sold nor pledged by the employee for the next five years. The total expense arising from these share plans amounted to CHF 2.2 million in 2014 (2013: 2.3).

Share option plans

Two types of share options are granted to senior management of the Holcim Group, the ones, which are granted as part of the annual variable compensation and those, that are allotted to the Executive Committee upon appointment. In both cases, each option represents the right to acquire one registered share of Holcim Ltd at the market price of the shares at the date of grant (see explanations).

The contractual term of the first type of option plan is eight years, with immediate vesting but exercise restrictions for a period of three years following the grant date.

The contractual term of the second type of option plan is twelve years and the options have a vesting period (service-related only) of nine years from the date of grant, with sale and pledge restrictions.

The Group has no legal or constructive obligation to repurchase or settle the options in cash.

Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:

 

Weighted average
exercise price1

Number1
2014

Number1
2013

1

Adjusted to reflect former share splits and/or capital increases.

January 1

CHF

68.65

1,461,609

1,550,131

Granted and vested (individual component of variable compensation)

CHF

69.15

99,532

122,770

Granted and vested (single allotment)

CHF

71.50

33,550

11,183

Forfeited

 

 

0

5,083

Exercised

CHF

76.90

182,490

183,842

Lapsed

CHF

77.01

252,733

33,550

December 31

CHF

68.85

1,159,468

1,461,609

Of which exercisable at the end of the year

 

 

511,239

796,699

Share options outstanding at the end of the year have the following expiry dates and give the right to acquire one registered share of Holcim Ltd at the exercise prices as listed below:

Option grant date

Expiry date

Exercise price1

Number1
2014

Number1
2013

1

Adjusted to reflect former share splits and/or capital increases.

2

Due to trade restrictions in 2008, the expiry date of the annual options granted for the years 2003 to 2005 has been extended by one year.

2002

2014

CHF

67.15

0

122,737

2003

20152

CHF

67.15

0

33,550

2004

20162

CHF

67.15

23,550

33,550

2005

20142

CHF

74.54

0

71,423

2006

2014

CHF

100.69

0

58,573

2007

2015

CHF

125.34

49,674

49,674

2008

2016

CHF

104.34

71,083

71,083

2008

2020

CHF

67.15

33,550

33,550

2009

2017

CHF

38.26

153,482

224,478

2010

2018

CHF

71.15

99,493

131,631

2010

2022

CHF

75.40

33,550

33,550

2010

2022

CHF

81.45

33,550

33,550

2011

2019

CHF

67.15

113,957

149,763

2011

2023

CHF

71.50

67,100

67,100

2012

2020

CHF

58.50

179,894

179,894

2012

2024

CHF

67.15

33,550

33,550

2013

2021

CHF

71.90

122,770

122,770

2013

2025

CHF

71.50

11,183

11,183

2014

2022

CHF

69.15

99,532

0

2014

2026

CHF

71.50

33,550

0

Total

 

 

 

1,159,468

1,461,609

In 2014, options exercised resulted in 182,490 shares (2013: 183,842) being issued at a weighted average share price of CHF 76.90 (2013: 72.52).

The fair value of options granted for the year 2014 using the Black Scholes valuation model is CHF 14.44 (2013: 18.26). The significant inputs into the model are the share price and an exercise price of CHF 72.05 (2013: 69.15) at the date of grant, an expected volatility of 28.0 percent (2013: 33.5), an expected option life of 6 years (2013: 6), a dividend yield of 1.80 percent (2013: 1.70) and an annual risk-free interest rate of -0.3 percent (2013: 0.4). Expected volatility was determined by calculating the historical volatility of the Group’s share price over the respective vesting period.

All shares granted under these plans are either purchased from the market or derived from treasury shares. The total personnel expense arising from the granting of options based on the individual component of variable compensation amounted to CHF 2.0 million in 2014 (2013: 2.0).