KUWAIT ENERGY plc GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
F-153
54.
SHARE-BASED PAYMENTS
At an Extraordinary General Meeting held on 14 October 2008 the shareholders of Kuwait Energy K.S.S.C. (see
note 1) approved the issue of shares for nil consideration to employees in accordance with the employee incentive
scheme (“EIS”) approved by the Board of Directors (“BOD”). The EIS is available to specified employees
employed at the beginning of the financial year and pro-rated for specified employees who have joined before 1
October of the financial year. The entitlement of each employee is determined based on the maximum incentive
entitlement decided by the BOD and the weighted average of corporate performance ratings and individual
performance ratings. The share awards vest in a staggered manner of 30%, 30% and 40% after one, two and three
years respectively. Any unutilised share awards cannot be carried forward. If the employee leaves the Group
(other than due to exceptional circumstances beyond the employee’s control) during the vesting period, the
unvested shares will be forfeited. If the employee leaves the Group due to exceptional circumstances beyond the
employee’s control during the vesting period, the fair value of the unvested share awards will be paid in cash. The
unvested shares are not entitled to dividends or bonus shares.
The EIS is operational for 10 years (effective 1 January 2008). The source of the shares granted under the EIS
will be through issues of new shares before the Company gets listed and through treasury shares of the Company
once it gets listed. The total number of shares to be granted under the EIS is not to exceed 10% of the paid-up
share capital.
The Group records an expense, based on its best estimate related to the fair value determined by reference to the
fair value of the share awards from independent market sources at the dates of the grant 1 January 2008 (139
fils/share), 1 January 2009 (201 fils/share), 1 January 2010 (201 fils/share) and 1 January 2011 (201 fils/share) on
a straight-line basis over the vesting period. At 31 December 2011, management has estimated that all 183
employees will be entitled to the shares under the EIS and recognised an expense of USD 1,229 thousand (2010:
USD 886 thousand) including reversal of previously recognised expenses relating to forfeited shares as the cost of
EIS and credited the share-based compensation reserve in equity. The share-based compensation reserve will be
reversed and share capital/share premium credited on issue of the vested shares. Prior to the restructuring
described in note 1, Kuwait Energy K.S.S.C issued 916 thousand shares (2010: 361 thousand shares) to
employees who exercised their entitlements as at 1 January 2010 under the EIS.
Following the restructuring described in note 1, the EIS obligations have been transferred from Kuwait Energy
K.S.S.C. to Kuwait Energy plc. The fair values of awards made up to and including 2010 are unchanged
following the restructuring, however the disclosures below have been restated to reflect the relevant number of
Kuwait Energy plc shares.
As at 31 December 2011, the entitlement of employees under the EIS was as follows:
Vesting dates
Number
of
employees
Total share
awards
granted
(thousands)
1 January 2012
183
334
1 January 2013
183
318
1 January 2014
183
206
Total number of granted shares
858
Year ended
31 December 2011
Year ended
31 December 2010
Number
Fair value
Number
Fair value
000’s
USD 000’s
000’s
USD 000’s
Outstanding at beginning of the year
618
1,696
264
670
Granted during the year
514
1,485
460
1,291
Forfeited during the year
(42)
(118)
(16)
(41)
Vesting during the year
(232)
(614)
(90)
(224)
Outstanding at the end of the year
858
2,449
618
1,696
