Section image

Cherries
oil on canvas
22 x 20 in
1981

Penny Machines
oil on canvas
23¾ x 29¾ in
1961

Stack of Books
oil on canvas
30 x 24 in
n.d.

Seven Suckers
oil on canvas
19 x 23 in
1970

Twin Jackpots
oil on canvas
30 x 46 in
1962

Ties
oil on canvas
20 x 26 in
1980

Cake Slices
oil on canvas
20 x 16 in
n.d.

Notes 26 - 31

26. Authorised and issued share capital

  Equity
ordinary
shares
Nominal
value
£m
Authorised    
1 January 2008 – WPP 2008 Limited (formerly WPP Group plc) 1,750,000,000 175.0
31 December 2008 – WPP plc (formerly Project Air Limited) 1,750,000,000 175.0
31 December 2009 – WPP plc (formerly Project Air Limited) 1,750,000,000 175.0
     
Issued and fully paid    
1 January 2008 1,191,491,263 119.2
Exercise of share options 2,103,054 0.2
Acquisitions 77,879,143 7.8
Share cancellations (18,820,814) (1.9)
19 November 2008 – shares in WPP 2008 Limited (formerly WPP Group plc) of 10p each 1,252,652,646 125.3
     
On formation of WPP plc    
Group reconstruction – shares in WPP 2008 Limited (formerly WPP Group plc) exchanged for shares in WPP plc of 10p each 1,252,652,646 125.3
Exercise of share options 49,827 0.0
Acquisitions 2,640,790 0.2
31 December 2008 1,255,343,263 125.5
Exercise of share options 1,148,051 0.1
31 December 2009 1,256,491,314 125.6

On 19 November 2008 under a scheme of arrangement between WPP 2008 Limited (formerly WPP Group plc), the former holding company of the Group, and its shareholders under Part 26 of the Companies Act 2006, and as sanctioned by the High Court, all the issued shares in that company were cancelled and the same number of new shares were issued to WPP plc in consideration for the allotment to shareholders of one ordinary share in WPP plc for each ordinary share in WPP 2008 Limited held on the record date, 18 November 2008.

In the above table the figures up to 19 November 2008 relate to shares in WPP 2008 Limited. Subsequent movements relate to shares in WPP plc.

WPP plc was incorporated on 12 September 2008 with an authorised share capital of £10,000 and 20 issued ordinary shares of 10 pence each. The authorised share capital of WPP plc was increased by written resolution from £10,000 to £175,000,000 by the creation of an additional 1,749,900,000 ordinary shares of 10 pence each.

On 19 November 2008 as part of the scheme of arrangement noted above, a further 1,252,652,646 ordinary shares were issued at a price of 340.75 pence each, whereby WPP plc became the new holding company of the WPP Group.

On 24 November 2008 the entire balance standing to the credit of the share premium account was transferred to retained earnings as sanctioned by The Royal Court of Jersey. As a result £4,143.1 million was added to retained earnings for both WPP plc and the Group. For the Company this amount is distributable.

Company’s own shares

The Company’s holdings of own shares are stated at cost and represent shares held in treasury and purchases by the Employee Share Ownership Plan (‘ESOP’) trusts of shares in WPP plc for the purpose of funding certain of the Group’s share-based incentive plans, details of which are disclosed in the Compensation Committee report.

The trustees of the ESOP purchase the Company’s ordinary shares in the open market using funds provided by the Company. The Company also has an obligation to make regular contributions to the ESOP to enable it to meet its administrative costs. The number and market value of the ordinary shares of the Company held by the ESOP at 31 December 2009 was 24,941,529 (2008: 33,167,446), and £152.0 million (2008: £133.5 million) respectively. The number and market value of ordinary shares held in treasury at 31 December 2009 was 2,435,288 (2008: nil) and £14.8 million (2008: £nil million) respectively.

Share options

WPP Executive Share Option Scheme
As at 31 December 2009, unexercised options over ordinary shares of 8,957,974 and unexercised options over ADRs of 2,918,784 have been granted under the WPP Executive Share Option Scheme as follows:
Number of ordinary
shares under option
Exercise price
per share (£)
Exercise
dates
12,195 3.414 2012 - 2018
21,197 3.763 2006 - 2013
72,551 4.210 2005 - 2012
906,872 4.210 2005 - 2012
15,329 4.210 2006 - 2012
30,658 4.210 2005 - 2013
3,832 4.210 2005 - 2012
32,385 4.210 2005 - 2012
3,065 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
38,022 4.865 2004 - 2011
674,431 4.865 2004 - 2011
10,519 4.865 2005 - 2011
2,000,000 5.490 2007 - 2014
27,288 5.520 2008 - 2014
155,562 5.535 2007 - 2014
916,167 5.535 2007 - 2014
675,059 5.535 2007 - 2014
21,929 5.535 2008 - 2014
6,124 5.535 2007 - 2015
24,390 5.535 2007 - 2014
2,469 5.535 2007 - 2014
227,947 5.535 2007 - 2014
189,644 5.595 2006 - 2013
1,334,633 5.595 2006 - 2013
17,194 5.595 2006 - 2014
23,775 5.595 2007 - 2013
7,987 5.595 2006 - 2013
24,680 5.595 2006 - 2013
277,848 5.595 2006 - 2013
2,902 5.725 2007 - 2014
4,838 5.725 2007 - 2014
11,423 5.775 2009 - 2015
14,826 5.818 2008 - 2015
2,964 5.818 2008 - 2015
6,705 5.895 2008 - 2015
6,705 5.895 2008 - 2015
2,235 5.895 2008 - 2015
10,907 5.895 2008 - 2015
4,268 5.903 2011 - 2018
6,402 5.903 2011 - 2018
4,268 5.903 2011 - 2018
11,396 6.105 2008 - 2015
4,914 6.105 2008 - 2015
7,876 6.228 2011 - 2017
2,140 6.718 2009 - 2016
8,560 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
45,153 7.180 2005 - 2012
26,367 7.550 2005 - 2012
21,879 7.550 2005 - 2012
34,921 7.550 2005 - 2012
214,432 7.550 2005 - 2012
3,741 7.550 2006 - 2012
12,696 7.723 2010 - 2017
19,836 8.110 2004 - 2011
32,934 8.110 2004 - 2011
4,929 8.193 2004 - 2011
14,446 8.193 2004 - 2011
253,102 9.010 2003 - 2010
6,314 9.010 2004 - 2010
78,162 9.010 2003 - 2010
18,540 10.770 2003 - 2010
8,404 10.770 2003 - 2010
Number of ADRs
under option
Exercise price
per ADR ($)
Exercise
dates
3,844 26.010 2012 - 2019
2,825 30.080 2006 - 2013
2,692 30.080 2006 - 2013
1,644 30.410 2011 - 2018
441,626 33.200 2005 - 2012
4,517 33.200 2005 - 2012
2,881 34.702 2005 - 2012
271,166 35.380 2004 - 2011
785,606 47.410 2006 - 2013
27,520 47.410 2006 - 2013
34,472 47.410 2006 - 2013
1,548 48.450 2007 - 2014
13,513 50.670 2008 - 2015
197 50.670 2008 - 2015
818,468 50.800 2007 - 2014
196 50.800 2007 - 2014
12,398 50.800 2007 - 2014
2,952 50.800 2007 - 2014
35,818 50.800 2007 - 2014
30,060 51.220 2007 - 2014
14,280 53.030 2005 - 2012
12,099 54.050 2005 - 2012
104,431 54.050 2005 - 2012
458 54.570 2008 - 2015
4,581 54.570 2008 - 2015
6,550 55.740 2008 - 2015
898 55.740 2008 - 2015
898 55.740 2008 - 2015
2,691 57.020 2008 - 2015
14,925 57.020 2008 - 2015
6,976 57.338 2003 - 2010
13,693 58.238 2004 - 2011
856 58.460 2009 - 2016
14,113 58.460 2009 - 2016
856 58.460 2009 - 2016
8,460 58.886 2004 - 2011
844 59.170 2011 - 2018
1,267 59.170 2011 - 2018
28,535 62.110 2003 - 2010
2,415 62.110 2005 - 2010
796 62.810 2010 - 2017
163,911 63.263 2003 - 2010
312 63.900 2009 - 2016
1,641 63.900 2009 - 2016
2,007 74.720 2010 - 2017
4,936 75.940 2010 - 2017
11,412 84.485 2003 - 2010
WPP Worldwide Share Ownership Program
As at 31 December 2009, unexercised options over ordinary shares of 7,988,371 and unexercised options over ADRs of 1,120,999 have been granted under the WPP Worldwide Share Ownership Program as follows:
Number of ordinary
shares under option
Exercise price
per share (£)
Exercise
dates
167,350 3.903 2006 - 2013
2,400 3.903 2006 - 2013
3,600 3.903 2007 - 2013
7,725 4.210 2005 - 2012
1,250 4.210 2005 - 2013
46,830 4.819 2011 - 2018
750 5.210 2004 - 2011
296,775 5.435 2007 - 2014
1,788,700 5.483 2012 - 2019
61,875 5.483 2012 - 2016
15,649 5.483 2012 - 2020
18,250 5.483 2013 - 2019
315,256 5.483 2013 - 2019
159,125 5.608 2012 - 2019
60,625 5.608 2012 - 2019
6,375 5.775 2008 - 2015
30,600 5.913 2011 - 2018
117,472 5.917 2011 - 2018
2,625 5.990 2004 - 2011
1,275,833 6.028 2011 - 2018
713,875 6.195 2008 - 2015
6,972 6.668 2008 - 2017
87,581 6.740 2009 - 2016
807,207 6.938 2009 - 2016
30,033 7.005 2010 - 2017
325,350 7.180 2005 - 2012
6,375 7.180 2006 - 2012
93,280 7.478 2011 - 2017
974,258 7.718 2010 - 2017
315,900 7.790 2003 - 2010
248,475 7.960 2004 - 2011
Number of ADRs
under option
Exercise price
per ADR ($)
Exercise
dates
33,490 30.800 2006 - 2013
344,292 44.560 2012 - 2019
43,545 49.880 2007 - 2014
25,305 53.030 2005 - 2012
24,720 56.480 2004 - 2011
233,006 59.500 2011 - 2018
101,325 59.520 2008 - 2015
138,084 60.690 2009 - 2016
177,232 75.760 2010 - 2017
Young & Rubicam Inc 1997 Incentive Compensation Plan
As at 31 December 2009, unexercised options over ordinary shares of 133,811 and unexercised options over ADRs of 145,773 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
133,811 7.0523 2000 - 2010
Number of ADRs
under option
Exercise price
per ADR ($)
Exercise
dates
11,481 48.2036 2000 - 2010
121,014 51.0479 2000 - 2010
6,263 60.4790 2000 - 2010
2,923 63.7725 2000 - 2010
1,587 72.6048 2000 - 2010
2,505 84.7305 2000 - 2010
Tempus Group plc 1998 Long Term Incentive Plan
As at 31 December 2009, unexercised options over ordinary shares of 56,468 have been granted under the Tempus Group plc 1998 Long Term Incentive Plan as follows:
Number of ordinary
shares under option
Exercise price
per share (£)
Exercise
dates
24,306 4.920 2001 - 2011
12,153 5.580 2001 - 2011
20009 6.000 2001 - 2010
The Grey Global Group, Inc 1994 Stock Incentive Plan
As at 31 December 2009, unexercised options over ordinary shares of 54,365 and unexercised options over ADRs of 67,717 have been granted under the Grey Global Group, Inc 1994 Stock Incentive Plan as follows:
Number of ordinary
shares under option
Exercise price
per share (£)
Exercise
dates
54,365 3.499 2007 - 2011
Number of ADRs
under option
Exercise price
per ADR ($)
Exercise
dates
3,414 19.5400 2005 - 2010
7,089 28.2100 2006 - 2013
1,827 28.3000 2007 - 2012
4,545 29.4100 2005 - 2011
7,046 30.2700 2008 - 2011
3,632 30.8300 2007 - 2012
6,371 31.4200 2005 - 2012
17,396 31.7500 2008 - 2011
6,264 31.9400 2007 - 2011
10,133 36.1100 2008 - 2010
24/7 Real Media, Inc 2002 Stock Incentive Plan
As at 31 December 2009, unexercised options over ADRs of 123,241 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 1.3400 2007 - 2013
715 15.8800 2007 - 2014
427 17.1500 2007 - 2014
30 19.3700 2007 - 2015
151 19.4400 2007 - 2015
69 20.0100 2007 - 2015
187 20.0700 2007 - 2015
69 20.3300 2007 - 2015
46 20.7700 2007 - 2014
12 20.8400 2007 - 2014
90 20.9600 2007 - 2015
20 21.6000 2007 - 2014
66 22.4900 2007 - 2015
66 22.8700 2007 - 2015
79 23.1800 2007 - 2015
78 23.4400 2007 - 2015
19 23.8200 2007 - 2014
6 23.9500 2007 - 2014
327 24.2000 2007 - 2014
146 24.3300 2007 - 2014
50 25.1500 2007 - 2015
177 25.4100 2007 - 2014
315 25.9200 2007 - 2015
316 26.1100 2007 - 2015
98 26.8700 2007 - 2015
787 27.1200 2007 - 2015
27,437 27.5000 2007 - 2015
74 28.5200 2007 - 2014
148 28.7700 2007 - 2015
170 34.6200 2007 - 2015
102 34.9300 2007 - 2015
82 35.0600 2007 - 2015
92 37.8500 2007 - 2015
89 38.8700 2007 - 2015
77,754 40.6500 2007 - 2016
110 41.4700 2007 - 2015
343 44.7100 2007 - 2015
424 45.2900 2007 - 2016
314 45.4100 2007 - 2016
118 46.0500 2007 - 2016
69 46.6200 2007 - 2016
345 48.3300 2007 - 2016
472 48.5900 2007 - 2016
157 49.5400 2007 - 2016
115 49.6000 2007 - 2016
314 49.6700 2007 - 2016
89 50.4900 2007 - 2016
157 50.6800 2007 - 2016
236 50.7500 2008 - 2017
472 51.3800 2008 - 2017
156 52.5900 2008 - 2017
99 52.9100 2007 - 2016
92 53.1000 2006 - 2017
70 53.4100 2007 - 2016
157 53.4800 2008 - 2017
78 53.6700 2008 - 2017
591 53.7900 2007 - 2016
314 54.1100 2007 - 2016
944 54.2400 2007 - 2016
758 54.5600 2007 - 2016
419 55.2600 2007 - 2016
74 55.6400 2007 - 2016
59 55.7600 2007 - 2016
105 55.8900 2007 - 2016
157 56.2700 2007 - 2016
78 56.3400 2007 - 2016
574 56.7200 2007 - 2016
138 56.9100 2007 - 2016
78 57.4800 2008 - 2017
157 58.1100 2007 - 2016
549 58.9400 2007 - 2017
393 60.0200 2007 - 2016
78 61.2300 2008 - 2017
324 61.9200 2007 - 2016
471 62.0500 2007 - 2016
786 62.9400 2008 - 2017
157 63.3200 2008 - 2017
708 63.8900 2008 - 2017
112 64.2700 2007 - 2016
54 64.6500 2007 - 2016
78 64.9700 2007 - 2016
78 65.5400 2007 - 2016
49 66.4300 2007 - 2016
112 67.5800 2007 - 2016
157 70.5000 2008 - 2017
Taylor Nelson Sofres plc
2005 Long Term Incentive Plan

As at 31 December 2009, unexercised options over ordinary shares of 74,410 have been granted under the Taylor Nelson Sofres plc 2005 Long Term Incentive Plan as follows:
Number of ordinary
shares under option
Exercise price
per share (£)
Exercise
dates
11,582 2011
29,849 2012
32,979 2013
2008 New Share Plan
As at 31 December 2009, unexercised options over ordinary shares of 28,649 have been granted under the Taylor Nelson Sofres plc 2008 New Share Plan as follows:
Number of ordinary
shares under option
Exercise price
per share (£)
Exercise
dates
28,649 2012
2005 Key Employee Equity Plan
As at 31 December 2009, unexercised options over ordinary shares of 4,519 have been granted under the Taylor Nelson Sofres plc 2005 Key Employee Equity Plan as follows:
Number of ordinary
shares under option
Exercise price
per share (£)
Exercise
dates
245 2011
4,274 2012
1999 Worldwide Employee Sharesave Plan
As at 31 December 2009, unexercised options over ordinary shares of 1,549,446 have been granted under the Taylor Nelson Sofres plc 1999 Worldwide Employee Sharesave Plan as follows:
Number of ordinary
shares under option
Exercise price
per share (£)
Exercise
dates
44,039 1.2700 2010
837,174 1.7300 2013 - 2015
282,043 1.9500 2011 - 2012
28,626 2.2900 2009 - 2011
89,080 2.5600 2009 - 2012
153,955 2.6500 2012 - 2014
22,822 2.9900 2010 - 2011
91,707 3.0000 2011 - 2013

The aggregate status of the WPP Share Option Schemes during 2009 was as follows:

Movements on options granted (represented in ordinary shares)
  1
January
2009
number
Granted
number
Exercised
number
Lapsed
number
Outstanding
31
December
2009
Exercisable
WPP 27,777,551 19,220 (601,400) (3,643,477) 23,551,894 23,407,933
WWOP 11,213,314 4,258,925 (27,150) (1,851,723) 13,593,366 4,832,930
Y&R 2,337,074 (1,474,398) 862,676 862,676
Tempus 56,468 56,468 56,468
Grey 542,995 (135,475) (14,570) 392,950 335,110
24/7 820,340 (158,035) (46,100) 616,205 524,845
TNS 1,951,773 (227,131) (67,618) 1,657,024 117,706
  44,699,515 4,278,145 (1,149,191) (7,097,886) 40,730,583 30,137,668
Weighted-average exercise price for options over:
  1
January
2009
Granted Exercised Lapsed Outstanding
31
December
2009
Exercisable
31
December
2009
Ordinary shares (£)          
WPP 5.543 n/a 4.452 5.680 5.566 5.562
WWOP 6.632 5.494 3.920 6.438 6.306 6.620
Y&R 6.673 n/a n/a 6.257 7.052 7.052
Tempus 5.445 n/a n/a n/a 5.445 5.445
Grey 3.499 n/a n/a n/a 3.499 3.499
TNS 1.931 n/a 2.323 2.109 1.870 2.494
ADRs ($)          
WPP 46.948 26.010 33.241 45.184 46.939 46.894
WWOP 61.202 44.560 30.800 60.342 56.187 55.538
Y&R 50.485 n/a n/a 49.570 52.298 52.298
Grey 28.289 n/a 21.746 27.290 30.949 30.450
24/7 38.409 n/a 36.852 41.475 38.578 37.841
Options over ordinary shares
Outstanding
Range of
exercise prices
£
Weighted average
exercise price
£
Weighted average
contractual life
Months
nil – 10.770 5.559 63
Options over ADRs
Outstanding
Range of
exercise prices
$
Weighted average
exercise price
$
Weighted average
contractual life
Months
1.340 – 84.731 49.003 56

As at 31 December 2009 there was £5.8 million (2008: £5.5 million) of total unrecognised compensation cost related to share options. That cost is expected to be recognised over a weighted average period of 20 months (2008: 17 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:
  2009 2008 2007
Fair value of UK options (shares) 115.5p 129.5p 188.3p
Fair value of US options (ADRs) $8.95 $8.36 $17.85
Weighted average assumptions:      
UK Risk-free interest rate 2.27% 3.93% 5.26%
US Risk-free interest rate 1.85% 2.25% 4.53%
Expected life (months) 48 48 48
Expected volatility 30% 25% 25%
Dividend yield 2.5% 1.75% 1.5%

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 2009 was £4.72 (2008: £5.12, 2007: £7.09) and the weighted average ADR price for the same period was $37.23 (2008: $48.26, 2007: $71.04).

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.

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