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NOTES
Consolidated financial statements • 89
2.4 SHARE-BASED PAYMENTS, CONTINUED
Granted in 2012
In 2012, PANDORA granted 1,009,977 share options
in two programmes. One programme, for the Executive
Management, comprises 154,808 share options with
a vesting period of five years. The second programme
comprised 855,169 share options for other employees
and vested in 2015.
Share plan
PANDORA has established a share plan for the members of
the Board of Directors whereby the Chairman and the other
members of the Board are each required to own a minimum
number of shares corresponding to the amount of their
respective initial gross annual compensation. The members
of the Board of Directors must hold the shares for as long as
they are members of the Board of Directors of PANDORA.
Accounting policies
Selected employees of PANDORA receive remuneration
in the form of share-based payment transactions, whereby
programme participants render services as consideration for
equity instruments (“equity-settled transactions”).
Equity-settled transactions
The cost of equity-settled transactions with employees is
measured by reference to the fair value at the grant date.
The calculated fair values are based on the Black-Scholes
model for measuring share options. The cost of equity-
settled transactions is recognised as staff costs together with
a corresponding increase in equity over the period in which
the performance and/or service conditions are fulfilled.
The cumulative expense recognised for equity-settled
transactions at each reporting date until the vesting date
reflects the extent to which the vesting period has expired
and Management’s best estimate of the number of equity
instruments that will ultimately vest. The income statement
expense or income for a period represents the movement in
cumulative expenses recognised at the beginning and end
of that period.
Assumptions
Given that the exercise price for one option equals 1% of
the market price of one share at grant date, the fair value
of one option almost equals the market value of one share
at grant date. The assumptions listed below therefore have
a very limited impact on the estimated fair value of options
granted.
Exercise
Expected Risk-free Dividend
Year of grant
price volatility interest rate per share
2016 5-year
8.50
31% 0.10% 13.00
2016 3-year
8.50
31% -0.15% 13.00
2015 5-year
5.00
33% -0.22% 9.00
2015 3-year
5.00
33% 0.02% 9.00
2014 3-year
1
2.99
46% 0.47% 6.50
2013 3-year
1
1.25
48% 0.16% 5.50
1
As the effect of recalculating the 5-year programmes is immaterial, new
values have not been calculated for share options allocated for 5-year pro-
grammes regarding previous years.
For the above programmes, volatility is based on the
historical volatility of the PANDORA share in the preceding
two years.
SECTION 2: RESULTS FOR THE YEAR, CONTINUED