Greencore Group plc – Annual report – 30 September 2024
Industry: food and drink
6. Share-based payments
The Group operates a number of employee share award schemes which are equity settled share-based payments. A recognised valuation methodology as set out in IFRS 2 Share-based payments is employed to determine the fair value of awards granted. The relevant valuation methodology is described in the following sections for each share scheme. The charge incurred relating to these awards is recognised within operating costs, unless specified as an exceptional item. Details of each of the employee share schemes operated by the Group are set out below.
Annual Bonus Plan
Members of the Group Executive team and certain senior management participate in the Annual Bonus Plan as outlined in the Report on Directors’ Remuneration. In accordance with this plan, a deferred share award equal to a proportion of the cash bonus is awarded to the participating executives. The number of shares is calculated at market value on the date of allocation, to be held by a Trustee for the benefit of individual participants without any additional performance conditions other than three years of service. The shares vest after three years but are forfeit should an executive voluntarily leave the Group within the three-year time period, subject to normal ‘good leaver’ provisions. The charge recognised in the Group Income Statement was £0.5m (2023: £0.9m) all recognised within operating costs (2023: £0.6m recognised within operating costs and £0.3m within exceptional items).
The share price on the grant date, for awards granted in December 2023 was £0.98 (December 2022: £0.68).
On 1 December 2023 and 1 December 2022 respectively, 689,409 and 766,481 awards were granted to members of the Group Executive Team and certain senior management under the Annual Bonus Plan.
The following table illustrates the number of, and movements in, share awards during the financial year under the plan:
Awards will be granted to members of the Group Executive Team of the Group under the Annual Bonus Plan in respect of the financial year ended 27 September 2024. A charge amounting to £0.2m (2023: £0.1m) relating to awards to Executive Directors has been included in the Group Income Statement in respect of the estimated 2024 charge. The total fair value of the awards will be taken as a charge to the Group Income Statement over the vesting period of the awards.
Performance Share Plan
Certain employees participate in a long-term incentive scheme, the Performance Share Plan. In accordance with the scheme rules, participants are awarded an allotment of shares which will vest over three years subject to vesting conditions based on growth in Adjusted Earnings per Share, Return on Invested Capital and relative Total Shareholder Return (‘TSR’). An additional two-year future service period will apply to Executive Directors’ vested shares before they are released.
The number of shares granted is calculated based on the market value on the date of allocation. Share awards are forfeited should a participating employee voluntarily leave the Group prior to the vesting date, subject to normal ‘good leaver’ provisions. The fair value of the award has attributed a value to each vesting condition. The relative TSR is fair valued using a Monte Carlo simulation as described further in this note. A charge amounting to £2.2m (2023: £0.6m) was included in the Group Income Statement in the year ended 27 September 2024 relating to these awards for all Performance Share Plan awards granted from December 2021 onwards.
The following table illustrates the number of, and movements in, share awards during the financial year under the plan:
ShareSave Schemes
The Group operates savings-related share option schemes where options are granted at a discount of between 20% and 25% of the market price at the date of invitation over a three year savings contract. Options are exercisable during the six month period following completion of the savings contract. The charge recognised in the Group Income Statement in respect of these options was £0.9m (2023: £1.1m). Grant date fair value was arrived at by applying a trinomial model, which is a lattice option-pricing model.
During the financial year ended 27 September 2024, ShareSave Scheme options were granted 2,851,819 shares in the UK only, which will ordinarily be exercisable at an exercise price of £1.36 per share, during the period 1 September 2027 to 28 February 2028. The weighted average fair value of options granted during the financial year ended 27 September 2024 was £0.29.
During the financial year ended 29 September 2023, ShareSave Scheme options were granted 12,209,146 shares in the UK only, which will ordinarily be exercisable at an exercise price of £0.63 per share, during the period 1 September 2026 to 28 February 2027. The weighted average fair value of share options granted during the year ended 29 September 2023 was £0.14.
Number and weighted average exercise price for the UK ShareSave Scheme (expressed in sterling)
The following table sets out the number and weighted average exercise prices (expressed in sterling) of, and movements in, share options during the financial year under the UK ShareSave Scheme:
Range of exercise prices for the UK ShareSave Scheme (expressed in sterling)
Number and weighted average exercise prices for the Irish ShareSave Scheme (expressed in euro)
The following table sets out the number and weighted average exercise prices (expressed in euro) of, and movements in, share options during the financial year under the Irish ShareSave Scheme:
Range of exercise prices for the Irish ShareSave Scheme (expressed in euro)
Employee Share Incentive Plan
The Group operates an Employee Share Incentive Plan for all UK employees. This was a once off grant of share awards in January 2022 and the number of shares was calculated at market value on the date of allocation, and was to be held by a Trustee for the benefit of individual participants without any additional performance conditions other than three years of service. The shares vest after three years but are forfeit should an employee voluntarily leave the Group within the three year time period, subject to normal ‘good leaver’ provisions. The charge recognised in the Group Income Statement was £0.8m (2023: £0.5m).
The share price on the grant date, for awards granted in January 2022 was £1.35.
The following table illustrates the number of, and movements in, share awards during the financial year under the plan:
Restricted Share Plan
In 2023, the Group launched a Restricted Share Plan to assist with the recruitment and retention of employees in the UK and Ireland below the Group Executive Team level. The number of shares granted is calculated at the market value on the date of allocation, without any additional performance conditions other than continuous service for a period of one year and two years, with 50% of the awards vesting one year after the grant date, and the remainder vesting after two years. There are no holding periods applicable after the vesting date. The charge recognised in the Group Income Statement was £1.3m (2023: £0.5m).
In December 2023, 162,682 shares were awarded when the share price as £0.98, in March 2024 a further 134,083 shares were awarded when the share price was £1.12 and in July 2024 a further 30,206 shares were awarded when the share price was £1.66.
In June 2023, 2,506,236 shares were awarded when the share price was £0.80, and a further 117,537 shares were awarded in September 2023 when the share price was £0.77.
The following table illustrates the number of, and movements in, share awards during the financial year under the plan
Weighted average assumptions used to value the share schemes
Annual Bonus Plan, Employee Share Incentive Plan and Restricted Share Plan
The fair value of awards granted under the Annual Bonus Plan, Employee Share Incentive Plan and Restricted Share Plan is equal to the share price on the grant date.
Performance Share Plan
All vesting conditions relating to the awards will be equally weighted when assessing the fair value at grant date. The relative TSR component has been valued using a Monte Carlo simulation model which also incorporates the relative volatility of the identified peer group with whom the Group are compared to assess the relative TSR vesting condition. The following table shows the weighted average assumptions used to fair value the equity settled awards granted.
ShareSave Schemes
The ShareSave Schemes equity settled options are also valued at the fair value on grant date and are calculated by applying a trinomial model.
The following table shows the weighted average assumptions used to fair value the equity settled options granted.
The expected volatility is estimated based on the historic volatility of the Company’s share price over a period equivalent to the life of the relevant option. The risk-free rate of return is the yield on a government bond of a term consistent with the life of the option.
The range of the Company’s share price during the year was £0.68 – £1.89 (2023: £0.61 – £0.92). The average share price during the 2024 financial year was £1.31 (2023: £0.77).
Accounts examples 