Notes 26-31
- 26. Authorised and issued share capital
- 27. Equity share owners' funds
- 28. Acquisitions
- 29. Principal subsidiary undertakings
- 30. Related party transactions
- 31. Reconciliation to non-GAAP measures of performance
26. Authorised and issued share capital
| Equity ordinary shares |
Nominal value £m |
|
|---|---|---|
| Authorised | ||
| At 1 January 2006 | 1,750,000,000 | 175.0 |
| At 31 December 2006 | 1,750,000,000 | 175.0 |
| At 31 December 2007 | 1,750,000,000 | 175.0 |
| Issued and fully paid | ||
| At 1 January 2006 | 1,252,899,372 | 125.3 |
| Exercise of share options | 20,984,083 | 2.1 |
| Share cancellations | (33,157,108) | (3.3) |
| Other | (121,160) | (0.0) |
| At 31 December 2006 | 1,240,605,187 | 124.1 |
| Exercise of share options | 7,773,345 | 0.7 |
| Share cancellations | (57,193,623) | (5.7) |
| Acquisitions | 305,354 | 0.1 |
| Other | 1,000 | 0.0 |
| At 31 December 2007 | 1,191,491,263 | 119.2 |
Fully paid ordinary shares, which have a per value of 10p, carry one vote per share and the right to dividends.
Share options
WPP Executive Share Option Scheme
As at 31 December 2007, unexercised options over ordinary shares of 12,379,801 and unexercised options over ADRs of 3,870,415 have been granted under the WPP Executive Share Option Scheme as follows:
| Number of ordinary shares under option |
Exercise price per share (£) |
Exercise dates |
|---|---|---|
| 493,629 | 2.930 | 2001-2008 |
| 5,022 | 3.030 | 2001-2008 |
| 10,950 | 3.270 | 2001-2008 |
| 7,973 | 3.763 | 2006-2013 |
| 42,899 | 3.763 | 2006-2013 |
| 4,239 | 3.763 | 2006-2013 |
| 110,667 | 4.210 | 2005-2012 |
| 1,383,200 | 4.210 | 2005-2012 |
| 53,652 | 4.210 | 2006-2012 |
| 30,658 | 4.210 | 2005-2013 |
| 3,832 | 4.210 | 2005-2012 |
| 32,385 | 4.210 | 2005-2012 |
| 4,597 | 4.210 | 2005-2012 |
| 3,832 | 4.210 | 2005-2012 |
| 77,552 | 4.438 | 2005-2012 |
| 6,759 | 4.438 | 2005-2012 |
| 41,170 | 4.615 | 2006-2013 |
| 51,247 | 4.615 | 2007-2013 |
| 68,817 | 4.865 | 2004-2011 |
| 1,071,242 | 4.865 | 2004-2011 |
| 31,558 | 4.865 | 2005-2011 |
| 38,543 | 5.185 | 2002-2009 |
| 2,000,000 | 5.490 | 2007-2014 |
| 27,288 | 5.520 | 2008-2014 |
| 197,094 | 5.535 | 2007-2014 |
| 1,141,935 | 5.535 | 2007-2014 |
| 942,601 | 5.535 | 2007-2014 |
| 38,524 | 5.535 | 2008-2014 |
| 28,942 | 5.535 | 2007-2008 |
| 6,124 | 5.535 | 2007-2015 |
| 987 | 5.535 | 2007-2014 |
| 24,390 | 5.535 | 2007-2014 |
| 2,469 | 5.535 | 2007-2014 |
| 240,293 | 5.535 | 2007-2014 |
| 235,976 | 5.595 | 2006-2013 |
| 1,807,700 | 5.595 | 2006-2013 |
| 17,194 | 5.595 | 2006-2014 |
| 39,698 | 5.595 | 2007-2013 |
| 18,709 | 5.595 | 2006-2013 |
| 47,660 | 5.595 | 2006-2013 |
| 29,636 | 5.595 | 2006-2013 |
| 291,465 | 5.595 | 2006-2013 |
| 235,251 | 5.700 | 2002-2009 |
| 7,740 | 5.725 | 2007-2014 |
| 9,676 | 5.725 | 2007-2014 |
| 11,423 | 5.775 | 2009-2015 |
| 14,826 | 5.818 | 2008-2015 |
| 2,964 | 5.818 | 2008-2015 |
| 8,940 | 5.895 | 2008-2015 |
| 11,175 | 5.895 | 2008-2015 |
| 2,235 | 5.895 | 2008-2015 |
| 11,980 | 5.895 | 2008-2015 |
| 8,778 | 6.105 | 2008-2015 |
| 25,510 | 6.105 | 2008-2015 |
| 9,828 | 6.105 | 2008-2015 |
| 8,830 | 6.228 | 2010-2017 |
| 7,876 | 6.228 | 2011-2017 |
| 4,280 | 6.718 | 2009-2016 |
| 10,700 | 6.718 | 2009-2016 |
| 4,280 | 6.718 | 2009-2016 |
| 23,480 | 6.718 | 2009-2016 |
| 69,369 | 6.718 | 2009-2016 |
| 19,566 | 6.718 | 2011-2016 |
| 2,062 | 6.938 | 2009-2016 |
| 49,906 | 7.180 | 2005-2012 |
| 33,099 | 7.550 | 2005-2012 |
| 30,294 | 7.550 | 2005-2012 |
| 66,189 | 7.550 | 2005-2012 |
| 317,846 | 7.550 | 2005-2012 |
| 3,741 | 7.550 | 2006-2012 |
| 15,870 | 7.723 | 2010-2017 |
| 22,396 | 8.110 | 2004-2011 |
| 38,566 | 8.110 | 2004-2011 |
| 6,544 | 8.193 | 2004-2011 |
| 19,630 | 8.193 | 2004-2011 |
| 394,774 | 9.010 | 2003-2010 |
| 11,575 | 9.010 | 2004-2010 |
| 115,590 | 9.010 | 2003-2010 |
| 19,428 | 10.770 | 2003-2010 |
| 10,476 | 10.770 | 2003-2010 |
| Number of ADRs under option |
Exercise price per ADR ($) |
Exercise dates |
|---|---|---|
| 12,457 | 30.080 | 2006-2013 |
| 2,692 | 30.080 | 2006-2013 |
| 535,364 | 33.200 | 2005-2012 |
| 8,732 | 33.200 | 2005-2012 |
| 2,881 | 34.702 | 2005-2012 |
| 368,031 | 35.380 | 2004-2011 |
| 195,194 | 46.475 | 2002-2009 |
| 975,375 | 47.410 | 2006-2013 |
| 30,471 | 47.410 | 2006-2013 |
| 630 | 47.410 | 2006-2013 |
| 44,222 | 47.410 | 2006-2013 |
| 3,163 | 47.410 | 2006-2013 |
| 1,548 | 48.450 | 2007-2014 |
| 17,459 | 50.670 | 2008-2015 |
| 197 | 50.670 | 2008-2015 |
| 982,954 | 50.800 | 2007-2014 |
| 196 | 50.800 | 2007-2014 |
| 18,597 | 50.800 | 2007-2014 |
| 2,952 | 50.800 | 2007-2014 |
| 42,460 | 50.800 | 2007-2014 |
| 38,401 | 51.220 | 2007-2014 |
| 15,222 | 53.030 | 2005-2012 |
| 15,096 | 54.050 | 2005-2012 |
| 133,837 | 54.050 | 2005-2012 |
| 18,439 | 54.230 | 2008-2015 |
| 458 | 54.570 | 2008-2015 |
| 4,581 | 54.570 | 2008-2015 |
| 8,973 | 55.740 | 2008-2015 |
| 898 | 55.740 | 2008-2015 |
| 898 | 55.740 | 2008-2015 |
| 2,691 | 57.020 | 2008-2015 |
| 21,992 | 57.020 | 2008-2015 |
| 6,976 | 57.338 | 2003-2010 |
| 20,096 | 58.238 | 2004-2011 |
| 856 | 58.460 | 2009-2016 |
| 22,666 | 58.460 | 2009-2016 |
| 856 | 58.460 | 2009-2016 |
| 10,159 | 58.886 | 2004-2010 |
| 7,249 | 61.290 | 2009-2016 |
| 7,249 | 61.290 | 2010-2016 |
| 7,248 | 61.290 | 2011-2016 |
| 16,210 | 61.690 | 2009-2016 |
| 49,544 | 62.110 | 2003-2010 |
| 2,415 | 62.110 | 2005-2010 |
| 187,950 | 62.263 | 2003-2010 |
| 796 | 62.810 | 2010-2017 |
| 468 | 63.900 | 2009-2016 |
| 2,423 | 63.900 | 2009-2016 |
| 2,007 | 74.720 | 2010-2017 |
| 5,594 | 75.940 | 2010-2017 |
| 12,592 | 84.485 | 2003-2010 |
WPP Worldwide Share Ownership Program
As at 31 December 2007, unexercised options over ordinary shares of 5,838,150 and unexercised options over ADRs of 804,232 have been granted under the WPP Worldwide Share Ownership Program as follows:
| Number of ordinary shares under option |
Exercise price per share (£) |
Exercise dates |
|---|---|---|
| 3,000 | 3.400 | 2001-2008 |
| 235,800 | 3.903 | 2006-2013 |
| 1,400 | 3.903 | 2006-2013 |
| 3,000 | 3.903 | 2006-2013 |
| 6,000 | 3.903 | 2007-2013 |
| 9,275 | 4.210 | 2005-2012 |
| 1,625 | 4.210 | 2005-2013 |
| 1,000 | 5.210 | 2004-2011 |
| 98,675 | 5.315 | 2002-2009 |
| 1,400 | 5.315 | 2003-2009 |
| 12,000 | 5.435 | 2008-2014 |
| 7,125 | 5.435 | 2007-2008 |
| 1,875 | 5.435 | 2007-2011 |
| 385,500 | 5.435 | 2007-2014 |
| 10,375 | 5.435 | 2007-2014 |
| 8,125 | 5.775 | 2008-2015 |
| 3,250 | 5.990 | 2004-2011 |
| 13,375 | 6.195 | 2008-2015 |
| 972,175 | 6.195 | 2008-2015 |
| 8,875 | 6.195 | 2009-2015 |
| 4,500 | 6.195 | 2008-2012 |
| 15,420 | 6.668 | 2009-2017 |
| 109,159 | 6.740 | 2009-2016 |
| 1,010,323 | 6.938 | 2009-2016 |
| 109,270 | 6.938 | 2010-2016 |
| 9,039 | 6.938 | 2010-2016 |
| 5,000 | 6.938 | 2009-2013 |
| 43,500 | 7.005 | 2010-2017 |
| 422,350 | 7.180 | 2005-2012 |
| 8,875 | 7.180 | 2006-2012 |
| 130,875 | 7.478 | 2011-2017 |
| 1,411,714 | 7.718 | 2010-2017 |
| 16,650 | 7.718 | 2010-2014 |
| 10,875 | 7.718 | 2011-2017 |
| 17,750 | 7.718 | 2010-2017 |
| 400,025 | 7.790 | 2003-2010 |
| 5,500 | 7.790 | 2004-2010 |
| 317,600 | 7.960 | 2004-2011 |
| 5,875 | 7.960 | 2005-2011 |
| Number of ADRs under option |
Exercise price per ADR ($) |
Exercise dates |
|---|---|---|
| 54,510 | 30.800 | 2006-2013 |
| 64,605 | 49.880 | 2007-2014 |
| 35,710 | 53.030 | 2005-2012 |
| 33,780 | 56.480 | 2004-2011 |
| 144,995 | 59.520 | 2008-2015 |
| 201,594 | 60.690 | 2009-2016 |
| 269,038 | 75.760 | 2010-2017 |
Young & Rubicam Inc 1997 Incentive Compensation Plan
As of 31 December 2007, unexercised options over ordinary shares of 581,929 and unexercised options over ADRs of 479,920 have been granted under the Young & Rubicam Inc 1997 Incentive Compensation Plan as follows:
| Number of ordinary shares under option |
Exercise price per share (£) |
Exercise dates |
|---|---|---|
| 83,500 | 4.705 | 2000-2008 |
| 208,751 | 6.163 | 2000-2009 |
| 41,750 | 6.328 | 2000-2009 |
| 227,053 | 7.052 | 2000-2010 |
| 10,437 | 7.569 | 2000-2009 |
| 10,438 | 8.996 | 2000-2010 |
| Number of ADRs shares under option |
Exercise price per Adr ($) |
Exercise dates |
|---|---|---|
| 124,437 | 44.611 | 2000-2009 |
| 10,985 | 46.557 | 2000-2009 |
| 11,481 | 48.204 | 2000-2010 |
| 174,156 | 51.048 | 2000-2010 |
| 25,050 | 53.443 | 2000-2009 |
| 83,500 | 54.042 | 2000-2009 |
| 33,400 | 56.287 | 2000-2009 |
| 1,963 | 59.656 | 2000-2010 |
| 6,263 | 60.479 | 2000-2010 |
| 2,923 | 63.772 | 2000-2010 |
| 1,670 | 71.781 | 2000-2010 |
| 1,587 | 72.605 | 2000-2010 |
| 2,505 | 84.731 | 2000-2010 |
Tempus Group plc 1998 Long Term Incentive Plan
As at 31 December 2007, unexercised options over ordinary shares of 106,295 have been granted under the Tempus Group plc 1998 Long Term Incentive Plan as follows:
| Number of ordinary shares under option |
Exercise price per share (£) |
Exercise dates |
|---|---|---|
| 49,827 | 2.260 | 2001-2008 |
| 24,306 | 4.920 | 2001-2011 |
| 12,153 | 5.580 | 2001-2011 |
| 20,009 | 6.000 | 2001-2010 |
The Grey Global Group, Inc 1994 Stock Incentive Plan
As at 31 December 2007, unexercised options over ordinary shares of 54,365 and unexercised options over ADRs of 147,394 have been granted under the Grey Global Group, Inc 1994 Stock Incentive Plan as follows:
| Number of ADRs under option | Exercise price per ADR ($) |
Exercise dates |
|---|---|---|
| 54,365 | 3.499 | 2007-2011 |
| Number of ordinary shares under option |
Exercise price per share (£) |
Exercise dates |
|---|---|---|
| 11,525 | 14.370 | 2005-2009 |
| 20,810 | 19.540 | 2005-2010 |
| 2,914 | 27.290 | 2005-2011 |
| 7,089 | 28.210 | 2006-2013 |
| 1,827 | 28.300 | 2005-2012 |
| 4,545 | 29.410 | 2005-2011 |
| 7,046 | 32.270 | 2007-2011 |
| 5,807 | 30.830 | 2005-2012 |
| 5,785 | 31.220 | 2005-2012 |
| 6,371 | 31.420 | 2005-2012 |
| 21,745 | 31.750 | 2008-2011 |
| 6,264 | 31.940 | 2007-2011 |
| 10,874 | 33.500 | 2007-2011 |
| 21,745 | 34.120 | 2007-2011 |
| 13,047 | 36.110 | 2008-2010 |
24/7 Real Media, Inc 2002 Stock Incentive Plan
As at 31 December 2007, unexercised options over ADRs of 236,822 have been granted under the 24/7 Real Media, Inc 2002 Stock Incentive Plan as follows:
| Number of ADRs under option |
Exercise price per ADR ($) |
Exercise dates |
|---|---|---|
| 8 | 1.340 | 2007-2013 |
| 2,988 | 15.880 | 2007-2014 |
| 427 | 17.150 | 2007-2014 |
| 434 | 18.230 | 2007-2015 |
| 109 | 18.420 | 2007-2015 |
| 114 | 19.250 | 2007-2015 |
| 76 | 19.310 | 2007-2015 |
| 147 | 19.370 | 2007-2015 |
| 296 | 19.440 | 2007-2015 |
| 1,574 | 19.950 | 2007-2015 |
| 69 | 20.010 | 2007-2015 |
| 187 | 20.070 | 2007-2015 |
| 414 | 20.330 | 2007-2015 |
| 137 | 20.640 | 2007-2015 |
| 46 | 20.770 | 2007-2014 |
| 28 | 20.840 | 2007-2014 |
| 250 | 20.960 | 2007-2015 |
| 112 | 21.030 | 2007-2014 |
| 42 | 21.220 | 2007-2014 |
| 89 | 21.600 | 2007-2014 |
| 132 | 22.490 | 2007-2015 |
| 99 | 22.550 | 2007-2015 |
| 66 | 22.870 | 2007-2015 |
| 79 | 23.180 | 2007-2015 |
| 167 | 23.440 | 2007-2015 |
| 289 | 23.820 | 2007-2014 |
| 16 | 23.950 | 2007-2014 |
| 654 | 24.200 | 2007-2014 |
| 246 | 24.330 | 2007-2014 |
| 161 | 25.150 | 2007-2015 |
| 177 | 25.410 | 2007-2014 |
| 118 | 25.600 | 2007-2015 |
| 118 | 25.660 | 2007-2015 |
| 315 | 25.920 | 2007-2015 |
| 157 | 25.980 | 2007-2015 |
| 553 | 26.110 | 2007-2015 |
| 400 | 26.870 | 2007-2015 |
| 1,023 | 27.120 | 2007-2015 |
| 79,771 | 27.500 | 2007-2015 |
| 374 | 28.520 | 2007-2014 |
| 148 | 28.770 | 2007-2015 |
| 170 | 34.620 | 2007-2015 |
| 170 | 34.680 | 2007-2015 |
| 102 | 34.930 | 2007-2015 |
| 205 | 35.060 | 2007-2015 |
| 629 | 37.730 | 2007-2015 |
| 92 | 37.850 | 2007-2015 |
| 89 | 38.870 | 2007-2015 |
| 114,820 | 40.650 | 2007-2015 |
| 110 | 41.470 | 2007-2015 |
| 2,017 | 44.710 | 2007-2015 |
| 533 | 45.290 | 2007-2016 |
| 594 | 45.410 | 2007-2016 |
| 143 | 45.730 | 2007-2015 |
| 341 | 46.050 | 2007-2016 |
| 1,903 | 46.170 | 2007-2015 |
| 190 | 46.300 | 2007-2015 |
| 69 | 46.620 | 2007-2016 |
| 157 | 46.750 | 2008-2017 |
| 95 | 47.000 | 2007-2015 |
| 393 | 48.270 | 2008-2017 |
| 345 | 48.330 | 2007-2016 |
| 597 | 48.590 | 2007-2016 |
| 157 | 48.650 | 2007-2016 |
| 235 | 48.970 | 2008-2017 |
| 143 | 49.100 | 2007-2015 |
| 157 | 49.540 | 2007-2016 |
| 115 | 49.600 | 2007-2016 |
| 314 | 49.670 | 2007-2016 |
| 89 | 50.490 | 2007-2016 |
| 785 | 50.680 | 2007-2016 |
| 393 | 50.750 | 2008-2017 |
| 78 | 51.000 | 2008-2017 |
| 236 | 51.130 | 2007-2016 |
| 550 | 51.380 | 2008-2017 |
| 156 | 52.400 | 2007-2016 |
| 234 | 52.590 | 2008-2017 |
| 99 | 52.910 | 2007-2016 |
| 157 | 53.030 | 2008-2017 |
| 70 | 53.410 | 2007-2016 |
| 157 | 53.480 | 2008-2017 |
| 78 | 53.670 | 2008-2017 |
| 701 | 53.790 | 2007-2016 |
| 314 | 54.110 | 2007-2016 |
| 1,258 | 54.240 | 2007-2016 |
| 974 | 54.560 | 2007-2016 |
| 158 | 54.680 | 2007-2016 |
| 157 | 54.870 | 2007-2016 |
| 393 | 55.130 | 2007-2016 |
| 1,022 | 55.260 | 2007-2016 |
| 78 | 55.380 | 2007-2016 |
| 115 | 55.450 | 2007-2016 |
| 157 | 55.570 | 2007-2016 |
| 179 | 55.640 | 2007-2016 |
| 472 | 55.760 | 2007-2016 |
| 105 | 55.890 | 2007-2016 |
| 549 | 56.270 | 2007-2016 |
| 392 | 56.340 | 2007-2016 |
| 148 | 56.650 | 2007-2016 |
| 574 | 56.720 | 2007-2016 |
| 138 | 56.910 | 2007-2016 |
| 235 | 57.480 | 2008-2017 |
| 157 | 57.670 | 2007-2016 |
| 262 | 57.730 | 2007-2016 |
| 157 | 58.110 | 2007-2016 |
| 354 | 58.680 | 2007-2016 |
| 863 | 58.940 | 2007-2017 |
| 314 | 59.070 | 2007-2016 |
| 157 | 59.190 | 2007-2016 |
| 393 | 60.020 | 2007-2016 |
| 156 | 61.230 | 2008-2017 |
| 78 | 61.800 | 2008-2017 |
| 324 | 61.920 | 2007-2016 |
| 471 | 62.050 | 2007-2016 |
| 157 | 62.240 | 2008-2017 |
| 472 | 62.810 | 2008-2017 |
| 45 | 62.880 | 2007-2014 |
| 786 | 62.940 | 2008-2017 |
| 314 | 63.130 | 2008-2017 |
| 157 | 63.320 | 2008-2017 |
| 314 | 63.640 | 2008-2017 |
| 708 | 63.890 | 2008-2017 |
| 112 | 64.270 | 2007-2016 |
| 54 | 64.650 | 2007-2016 |
| 56 | 64.850 | 2007-2016 |
| 156 | 64.970 | 2007-2016 |
| 78 | 65.540 | 2007-2016 |
| 212 | 66.430 | 2007-2016 |
| 112 | 67.580 | 2007-2016 |
| 157 | 70.500 | 2008-2017 |
| 550 | 74.240 | 2008-2017 |
The aggregate status of the WPP Share Option Schemes during 2007 was as follows:
Movement on options granted (represented in ordinary shares)
| Outstanding | Exercisable | ||||||
|---|---|---|---|---|---|---|---|
| 1 January 2007 number |
Granted number |
Exercised number |
Lapsed number |
31 December 2007 number |
Exercisable 31 December 2007 number |
||
| WPP | 37,198,388 | 76,206 | (3,499,794) | (2,042,924) | 31,731,876 | 30,641,052 | |
| WWOP | 10,380,987 | 3,589,375 | (1,682,202) | (2,428,850) | 9,859,310 | 2,872,550 | |
| Y&R | 4,823,489 | – | (1,740,866) | (101,094) | 2,981,529 | 2,981,529 | |
| Tempus | 273,196 | – | – | (166,901) | 106,295 | 106,295 | |
| Grey | 1,376,015 | – | (584,680) | – | 791,335 | 404,478 | |
| 24/7 | – | 1,543,8801 | (305,620) | (54,150) | 1,184,110 | 291,985 | |
| 54,052,075 | 5,209,461 | (7,813,162) | (4,793,919) | 46,654,455 | 37,297,889 | ||
Note
1 Granted as consideration for acquisition of 24/7.
Weighted-average exercise prie for options over:
| Outstanding | Exercisable | ||||||
|---|---|---|---|---|---|---|---|
| 1 January 2007 |
Granted | Exercised | Lapsed | 31 December 2007 |
Exercisable 31 December 2007 |
||
| Ordinary shares (£) | |||||||
| WPP | 5.298 | 6.956 | 3.844 | 5.805 | 5.454 | 5.431 | |
| WWOP | 6.228 | 7.681 | 4.822 | 6.457 | 6.875 | 6.532 | |
| Y&R | 5.658 | n/a | 4.321 | 6.845 | 6.389 | 6.389 | |
| Tempus | 3.332 | n/a | n/a | 2.938 | 3.952 | 3.952 | |
| Grey | 2.279 | n/a | 1.616 | n/a | 3.499 | 3.499 | |
| ADRs ($) | |||||||
| WPP | 46.402 | 71.338 | 40.852 | 40.127 | 46.940 | 46.485 | |
| WWOP | 54.042 | 75.760 | 48.002 | 62.245 | 62.109 | 46.144 | |
| Y&R | 42.743 | n/a | 30.594 | 14.453 | 50.774 | 50.774 | |
| Grey | 28.124 | n/a | 26.746 | n/a | 29.024 | 25.439 | |
| 24/7 | n/a | 37.169 | 38.094 | 41.030 | 36.753 | 34.789 | |
Options over ordinary shares
| Outstanding | Exercisable | |||||
|---|---|---|---|---|---|---|
| Range of exercise prices £ |
Weighted average exercise price £ |
Weighted average contractual life Months |
Weighted average contractual life Months |
Aggregate intrinsic value £m |
||
| 2.260-10.770 | 5.906 | 84 | 85 | 12.5 | ||
Options over ADRs
| Outstanding | Exercisable | |||||
|---|---|---|---|---|---|---|
| Range of exercise prices $ |
Weighted average exercise price $ |
Weighted average contractual life Months |
Weighted average contractual life Months |
Aggregate intrinsic value $m |
||
| 1.340-84.731 | 48.562 | 86 | 87 | 80.7 | ||
As at 31 December 2007 there was £7.7 million (2006: £12.7 million) of total unrecognised compensation cost related to share options. That cost is expected to be recognised over a weighted average period of 17 months (2006: 16 months).
Share options are satisfied out of newly issued shares.
The weighted average fair value of options granted in the year calculated using the Black-Scholes model, was as follows:
| 2007 | 2006 | 2005 | |
|---|---|---|---|
| Fair value of UK options (shares) | 188.3p | 203.5p | 209.3p |
| Fair value of US options (ADRs) | $17.85 | $20.15 | $18.42 |
| Weighted average assumptions: | |||
| UK Risk-free interest rate | 5.26% | 4.72% | 4.77% |
| US Risk-free interest rate | 4.53% | 4.47% | 4.06% |
| Expected life (months) | 48 | 48 | 48 |
| Expected volatility | 25% | 35% | 40% |
| Dividend yield | 1.5% | 1.7% | 1.4% |
Options are issued at an exercise price equal to market value on the date of grant.
The weighted average share price of the Group for the year ended 31 December 2007 was £7.09 (2006: £6.58, 2005: £5.88) and the weighted average ADR price for the same period was $71.04 (2006: $60.60, 2005: $53.24).
Expected volatility is sourced from external market data and represents the historic volatility in the Group's share price over a period equivalent to the expected option life.
Expected life is based on a review of historic exercise behaviour in the context of the contractual terms of the options, as described in more detail below.
Terms of share option plans
The Worldwide Share Ownership Program is open for participation to employees with at least two years' employment in the Group. It is not available to those participating in other share-based incentive programs or to executive directors. The vesting period for each grant is three years and there are no performance conditions other than continued employment with the Group.
The Executive Stock Option Plan has historically been open for participation to WPP Group Leaders, Partners and High Potential Group. It is not currently offered to parent company executive directors. The vesting period is three years and performance conditions include achievement of various TSR (Total Share Owner Return) and EPS (Earnings per Share) objectives, as well as continued employment. In 2005, the Group moved away from the issuance of stock options for Leaders, Partners and High Potential Group and has since largely made grants of restricted stock instead (note 22).
The Group grants stock options with a life of ten years, including the vesting period. The terms of stock options with performance conditions are such that if, after nine years and eight months, the performance conditions have not been met, then the stock option will vest automatically.