NOTE F35 Share-based payments

Stock Option Plan

As every year since 1999, in 2017 the Board of Directors renewed the share option plan offered to executive staff (54 beneficiaries) with a view to involving them more closely in the long-term development of the Group. The plan is an equity-settled share-based plan. The majority of the managers involved subscribed to the options offered to them in 2017 with an exercise price of €111.27 representing the average stock market price of the share for the 30 days prior to the offer. The three-year vesting period is followed by a five-year exercise period, at the end of which any unexercised options expire. The settlement method is in equity.

At the end of December 2017, the Group held 2,557,895 treasury shares, which have been deducted from consolidated shareholders’ equity.

The share options resulted in a charge in 2017 of €10 million calculated by third parties according to the Black-Scholes model and recognized in the consolidated income statement under commercial and administrative costs.

The value of the option 2017 is based on:

• the price of the underlying asset (Solvay share): €115.20 at February 23, 2017,
• the time outstanding until the option maturity: exercisable from January 1, 2021 until February 23, 2025, taking into account the fact that some of them will be exercised before the option maturity,
• the option exercise price: €111.27,
• the risk-free return: 0.26% (on average),
• the volatility of the underlying yield, inferred from option price: 24.26%, and 
• a dividend yield of 2.07%.

Weighted average remaining contractual life:

Performance Share Units Plan (PSU)

Since 2013, the Board of Directors renewed a yearly Performance Share Unit Plan, offered to executive staff with the objective of involving them more closely in the development of the Group, making this part of the long-term incentive policy. All the managers involved subscribed the PSU offered them in 2017 with a grant price of €114.70. The Performance Share Units Plan is a cash-settled share-based plan through which beneficiaries will obtain cash benefit based upon the Solvay share price, as well performance conditions.

Each plan has a three-year vesting period, after which a cash settlement will take place, if vesting conditions are met.

In 2017 the impact on the consolidated income statement regarding PSU (net of hedging) amounts to €21 million, as against €32 million in 2016. The carrying amount of the PSU liability at the end of 2017 amounts to €58 million, as against €62 million at the end of 2016.