The closing mid-market price of ordinary shares in British American Tobacco p.l.c. on 19 March 2003 was 595.0p, 17 March 2004 was 810.5p, 17 May 2005 was 1,030.0p,15 March 2006 was 1,435.0p and 20 March 2006 was 1,448.0p (the vesting date of 19 March 2006 not being a business day).
The vesting of the awards on 19 March 2006 was reported in the Company’s Directors’ Report & Accounts 2005 showing illustrative vesting values based on the mid-market price of ordinary shares of 1,328.0p at 23 February 2006, being the latest practicable date prior to publication of that Report. At the date of this Report, each of the Executive Directors, with the exception of Antonio Monteiro de Castro, had exercised the awards shown above.
The March 2004 award will vest on 17 March 2007 at 100 per cent in the manner described in the Remuneration report. For illustrative purposes only, the share price on 23 February 2007, being the latest practicable date prior to publication, was 1,584.0p, valuing the vesting awards as follows:
Award granted number of shares
Award vesting number of shares
vesting illustrative value £
P N Adams
P A Rayner
A Monteiro de Castro
The performance conditions applicable to the awards that vested on 19 March 2006 and will vest on 17 March 2007 relate to an apportionment between measures relating to Total Shareholder Return (TSR) and earnings per share-based criteria with reference to a three year performance period. TSR combines both the share price and dividend performance of the Company as set against two comparator groups: (a) the FTSE 100 Index at the beginning of the performance period; and (b) a peer group of FMCG companies. A total of 50 per cent of the total award is based upon each of two separate measures (25 per cent for each measure). 25 per cent of the total award vests in full in the event of upper quartile performance by the Company relative to one of the comparator groups, 7.5 per cent of the total award will vest in the event of median performance, and then pro rata between these two points. The earnings per share measure applies to 50 per cent of the award. 50 per cent of the award will vest if earnings per share growth over the three year performance period is an average of at least 8 per cent per annum in excess of inflation; 10 per cent will vest if the same figure is at least 3 per cent in excess of inflation, and an award will vest pro rata between these two points. Similar criteria attach to the awards made on 17 May 2005 and 15 March 2006.
There have been no variations in the terms and conditions of the LTIP interests during the year.
The awards made in May 2005 and March 2006 are due to vest in May 2008 and March 2009 respectively. At 31 December 2006, the performance percentage reflecting performance to date, was 100 per cent for the May 2005 award and 48.3 per cent for the March 2006 award.
British American Tobacco Annual Report and Accounts 2006