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

For the year ended 31 December 2010

26. Authorised and issued share capital

  Equity
ordinary
shares
Nominal
value
£m
Authorised    
1 January 2009 1,750,000,000 175.0
31 December 2009 1,750,000,000 175.0
31 December 2010 1,750,000,000 175.0
     
Issued and fully paid    
1 January 2009 1,255,343,263 125.5
Exercise of share options 1,148,051 0.1
31 December 2009 1,256,491,314 125.6
Exercise of share options 7,899,907 0.8
31 December 2010 1,264,391,221 126.4

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 2010 was 22,083,378 (2009: 24,941,529), and £174.3 million (2009: £152.0 million) respectively. The number and market value of ordinary shares held in treasury at 31 December 2010 was 2,172,126 (2009: 2,435,288) and £17.1 million (2009: £14.8 million) respectively.

Share options
WPP Executive Stock Option Plan

As at 31 December 2010, unexercised options over ordinary shares of 6,206,412 and unexercised options over ADRs of 1,700,034 have been granted under the WPP Executive Stock Option Plan 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
42,154 4.210 2005-2012
502,077 4.210 2005-2012
22,994 4.210 2005-2013
3,832 4.210 2005-2012
19,161 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
51,247 4.615 2007-2013
22,533 4.865 2004-2011
345,570 4.865 2004-2011
2,000,000 5.490 2007-2014
27,288 5.520 2008-2014
94,777 5.535 2007-2014
578,542 5.535 2007-2014
447,676 5.535 2007-2014
6,124 5.535 2008-2014
6,124 5.535 2007-2015
24,390 5.535 2007-2014
2,469 5.535 2007-2014
167,935 5.535 2007-2014
143,400 5.595 2006-2013
725,343 5.595 2006-2013
17,194 5.595 2006-2014
7,853 5.595 2007-2013
2,680 5.595 2006-2013
13,572 5.595 2006-2013
224,473 5.595 2006-2013
2,902 5.725 2007-2014
2,419 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
4,470 5.895 2008-2015
2,235 5.895 2008-2015
9,834 5.895 2008-2015
4,268 5.903 2011-2018
6,402 5.903 2011-2018
4,268 5.903 2011-2018
5,959 6.105 2008-2015
4,914 6.105 2008-2015
7,876 6.228 2011-2017
2,140 6.718 2009-2016
6,420 6.718 2009-2016
3,913 6.718 2009-2016
69,369 6.718 2009-2016
45,153 7.180 2005-2012
24,123 7.550 2005-2012
20,196 7.550 2005-2012
34,921 7.550 2005-2012
201,805 7.550 2005-2012
3,741 7.550 2006-2012
11,109 7.723 2010-2017
17,788 8.110 2004-2011
30,886 8.110 2004-2011
4,929 8.193 2004-2011
14,446 8.193 2004-2011

Number of ADRs
under option
Exercise price
per ADR ($)
Exercise
dates
3,844 26.010 2012-2019
1,662 30.080 2006-2013
2,692 30.080 2006-2013
1,644 30.410 2011-2018
282,563 33.200 2005-2012
3,764 33.200 2005-2012
164,040 35.380 2004-2011
454,270 47.410 2006-2013
14,338 47.410 2006-2013
21,610 47.410 2006-2013
1,548 48.450 2007-2014
10,061 50.670 2008-2015
197 50.670 2008-2015
487,784 50.800 2007-2014
196 50.800 2007-2014
9,938 50.800 2007-2014
2,952 50.800 2007-2014
25,486 50.800 2007-2014
18,252 51.220 2007-2014
8,624 53.030 2005-2012
10,878 54.050 2005-2012
99,855 54.050 2005-2012
4,581 54.570 2008-2015
4,486 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
13,178 58.238 2004-2011
856 58.460 2009-2016
14,113 58.460 2009-2016
856 58.460 2009-2016
8,324 58.886 2004-2011
844 59.170 2011-2018
1,267 59.170 2011-2018
1,641 63.900 2009-2020
4,278 75.940 2010-2017

WPP Worldwide Share Ownership Program

As at 31 December 2010, unexercised options over ordinary shares of 9,339,277 and unexercised options over ADRs of 1,334,208 have been granted under the WPP Worldwide Share Ownership Program as follows:

Number of ordinary
shares under option
Exercise price
per share (£)
Exercise
dates
110,300 3.903 2006-2013
1,000 3.903 2006-2013
3,000 3.903 2007-2013
4,625 4.210 2005-2012
625 4.210 2005-2013
35,340 4.819 2011-2018
250 5.210 2004-2011
185,000 5.435 2007-2014
1,529,987 5.483 2012-2019
29,041 5.483 2012-2016
12,250 5.483 2012-2020
9,375 5.483 2013-2019
274,363 5.483 2013-2019
45,738 5.483 2012-2019
143,375 5.608 2012-2019
2,875 5.775 2008-2015
29,400 5.913 2011-2018
108,000 5.917 2011-2018
1,000 5.990 2004-2011
1,089,954 6.028 2011-2018
428,500 6.195 2008-2015
6,375 6.668 2009-2017
81,125 6.740 2009-2016
718,550 6.938 2009-2016
23,596 7.005 2010-2017
2,548,001 7.113 2013-2020
58,250 7.113 2013-2020
19,375 7.113 2013-2017
33,750 7.113 2014-2020
329,750 7.113 2014-2020
292,525 7.180 2005-2012
6,000 7.180 2006-2012
76,457 7.478 2011-2017
878,225 7.718 2010-2017
223,300 7.960 2004-2011

Number of ADRs
under option
Exercise price
per ADR ($)
Exercise
dates
27,640 30.800 2006-2013
279,490 44.560 2012-2019
38,075 49.880 2007-2014
23,715 53.030 2005-2012
22,890 56.480 2004-2011
381,100 56.560 2013-2020
193,853 59.500 2011-2018
92,020 59.520 2008-2015
123,575 60.690 2009-2016
151,850 75.760 2010-2017

Tempus Group plc 1998 Long Term Incentive Plan

As at 31 December 2010, unexercised options over ordinary shares of 24,306 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

The Grey Global Group, Inc 1994 Stock Incentive Plan

As at 31 December 2010, unexercised options over ordinary shares of 54,365 and unexercised options over ADRs of 27,639 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
7,089 28.2100 2006-2013
1,827 28.3000 2007-2012
3,632 30.8300 2007-2012
6,371 31.4200 2005-2012
8,720 31.7500 2008-2011

24/7 Real Media, Inc 2002 Stock Incentive Plan

As at 31 December 2010, unexercised options over ADRs of 54,020 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
552 15.8800 2007-2014
427 17.1500 2007-2014
69 20.0100 2007-2015
187 20.0700 2007-2015
69 20.3300 2007-2015
12 20.8400 2007-2014
66 22.4900 2007-2015
79 23.1800 2007-2015
78 23.4400 2007-2015
19 23.8200 2007-2014
263 24.2000 2007-2014
50 25.1500 2007-2015
315 25.9200 2007-2015
79 26.1100 2007-2015
787 27.1200 2007-2015
14,852 27.5000 2007-2015
148 28.7700 2007-2015
170 34.6200 2007-2015
82 35.0600 2007-2015
89 38.8700 2007-2015
26,410 40.6500 2007-2016
110 41.4700 2007-2015
110 45.2900 2007-2016
118 46.0500 2007-2016
69 46.6200 2007-2016
345 48.3300 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
92 53.1000 2006-2017
157 53.4800 2008-2017
78 53.6700 2008-2017
314 54.1100 2007-2016
944 54.2400 2007-2016
472 54.5600 2007-2016
314 55.2600 2007-2016
74 55.6400 2007-2016
59 55.7600 2007-2016
105 55.8900 2007-2016
157 56.2700 2007-2016
574 56.7200 2007-2016
78 57.4800 2008-2017
235 58.9400 2007-2017
393 60.0200 2007-2016
78 61.2300 2008-2017
108 61.9200 2007-2016
314 62.0500 2007-2016
759 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
112 67.5800 2007-2016
157 70.5000 2008-2017

Taylor Nelson Sofres plc

2005 Long Term Incentive Plan

As at 31 December 2010, unexercised options over ordinary shares of 62,828 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
29,849 2012
32,979 2013

2008 New Share Plan

As at 31 December 2010, 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 2010, 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 2010, unexercised options over ordinary shares of 1,315,225 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
1,115 1.2700 2011
797,386 1.7300 2013-2015
258,353 1.9500 2011-2012
22,940 2.2900 2009-2011
5,226 2.5600 2009-2012
142,653 2.6500 2012-2014
2,236 2.9900 2010-2011
85,316 3.0000 2011-2013

The aggregate status of the WPP Share Option Plans during 2010 was as follows:

Movements on options granted (represented in ordinary shares)

  1
January
2010
number
Granted
number
Exercised
number
Lapsed
number
Outstanding
31
December
2010
number
Exercisable
31
December
2010
number
WPP 23,551,894 (6,133,058) (2,712,254) 14,706,582 14,633,578
WWOP 13,593,366 5,022,250 (417,951) (2,187,348) 16,010,317 5,442,153
Y&R 862,676 (668,610) (194,066)
Tempus 56,468 (32,162) 24,306 24,306
Grey 392,950 (178,645) (21,745) 192,560 192,560
24/7 616,205 (293,095) (53,010) 270,100 222,220
TNS 1,657,024 (175,246) (70,557) 1,411,221 31,517
  40,730,583 5,022,250 (7,898,767) (5,238,980) 32,615,086 20,546,334

Weighted-average exercise price for options over:

  1
January
2010
Granted Exercised Lapsed Outstanding
31
December
2010
Exercisable
31
December
2010
Ordinary shares (£)
WPP 5.566 5.147 6.934 5.489 5.492
WWOP 6.306 7.113 5.700 5.512 6.218 6.954
Y&R 7.052 7.052
Tempus 5.445 4.920 4.920
Grey 3.499 3.499 3.499
TNS 1.870 2.046 2.116 1.836 2.348
ADRs ($)
WPP 46.939 37.307 54.148 45.814 45.857
WWOP 56.187 56.560 36.712 55.704 56.457 62.076
Y&R 52.298 57.376
Grey 30.949 30.733 36.110 30.417 30.417
24/7 38.578 37.920 42.054 38.610 38.121

Options over ordinary shares

Outstanding

Range of
exercise prices
£
Weighted average
exercise price
£
Weighted average
contractual life
Months
nil – 8.193 5.763 69

Options over ADRs

Outstanding

Range of
exercise prices
$
Weighted average
exercise price
$
Weighted average
contractual life
Months
1.340 – 76.940 50.110 61

As at 31 December 2010 there was £6.8 million (2009: £5.8 million) of total unrecognised compensation cost related to share options. That cost is expected to be recognised over a weighted average period of 21 months (2009: 20 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:

  2010 2009 2008
Fair value of UK options (shares) 144.5p 115.5p 129.5p
Fair value of US options (ADRs) $10.97 $8.95 $8.36
Weighted average assumptions:      
     UK Risk-free interest rate 1.76% 2.27% 3.93%
     US Risk-free interest rate 1.05% 1.85% 2.25%
     Expected life (months) 48 48 48
     Expected volatility 30% 30% 25%
     Dividend yield 2.5% 2.5% 1.75%

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 2010 was £6.78 (2009: £4.72, 2008: £5.12) and the weighted average ADR price for the same period was $52.51 (2009: $37.23, 2008: $48.26).

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.