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McPHERSON’S LIMITED
ANNUAL REPORT 2015
NOTE 25. RESERVES AND RETAINED EARNINGS (CONTINUED)
(C) NATURE AND PURPOSE OF RESERVES
Hedging reserve – cash flow hedges
The hedging reserve is used to record gains or losses on hedging instruments in cash flow hedges that are recognised in other comprehensive
income as described in Note 1(O). Amounts are recognised in profit or loss when the associated hedged transaction affects profit or loss.
Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options issued at grant date but not exercised.
Foreign currency translation reserve
Exchange differences arising on translation of foreign controlled entities are taken to the foreign currency translation reserve, as described in Note
1(D). The reserve is recognised in profit or loss when the net investment is disposed of.
NOTE 26. SHARE-BASED PAYMENTS
(A) EMPLOYEE PERFORMANCE RIGHTS PLAN
The McPherson’s Limited Employee Performance Rights Plan was introduced and approved by shareholders at the 2013 Annual General Meeting.
The Performance Rights Plan is designed to provide long-term incentives for senior executives to deliver long-term shareholder returns. Under this
plan, participants are granted performance rights which only vest if certain performance conditions (relating to compound annual growth in
earnings per share) are met and the executive is still employed by the Group at the end of the vesting period. Participation in the plan is at the
discretion of the Nomination and Remuneration Committee and no individual has a contractual right to receive any guaranteed benefits.
Performance rights are issued to the Managing Director and certain other senior executives as part of their remuneration. Each right is entitled to
acquire one share for no consideration subject to the satisfaction of the vesting conditions which are based on performance and time related
conditions. The number of rights that will vest are determined proportionately on a straight line basis based on the compound annual growth rate
(CAGR) of the Group’s earnings per share (EPS) over a two to three year period. The rights will vest proportionately from no rights vesting if the
Group’s EPS CAGR is 3.0% or less to 100% of rights vesting if the Group’s EPS CAGR is 8.0% or higher. The performance rights carry no dividend or
voting rights.
Set out below is a summary of rights granted under the plan:
2015
2014
AVERAGE FAIR VALUE
AT GRANT DATE
NUMBER
OF RIGHTS
AVERAGE FAIR VALUE
AT GRANT DATE
NUMBER
OF RIGHTS
As at 1 July
$1.26
416,000
-
-
Granted during the year
$1.11
320,000
$1.26
416,000
As at 30 June
$1.19
736,000
$1.26
416,000
Vested and exercisable
-
-
-
-
The fair value at grant date was independently valued using the market price of the Company’s shares on grant date and the Company’s dividend
yield (both historic and future yield estimates) as key inputs.
Performance rights outstanding at the end of the year have the following expiry dates:
NUMBER OF RIGHTS
GRANT DATE
VESTING DATE
30 JUNE 2015
30 JUNE 2014
20 November 2013
16 September 2015
208,000
208,000
20 November 2013
16 September 2016
208,000
208,000
24 November 2014
18 September 2017
320,000
-
Total
736,000
416,000
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS CONTINUED