The Company has a share option scheme that entitles senior management personnel to purchase shares in the Company. Options are exercisable at a price equal to the lower of the mid-market price of the Company’s shares the day before the option is granted or the average mid-market price for the three dealing days before the option is granted. The vesting period is three years. If the options remain unexercised after a period of ten years from the date of grant, the options will expire. Depending on the circumstances, options are normally forfeited if the employee leaves the Company before the options vest.
In 2007, the Company introduced a Long-Term Incentive Plan (LTIP) scheme for senior management personnel. Shares are awarded in the Company and vest after three years to the extent that performance conditions are met. Dependent on the circumstances, awards are normally forfeited if the employee leaves the Company before the award vests. A new LTIP scheme was introduced in 2017, which operates in a similar way to the LTIP scheme introduced in 2007. No new awards are made under the 2007 scheme. Depending on the circumstances, options are normally forfeited if the employee leaves the Company before the options vest.
In 2007, the Company introduced a Deferred Bonus Share Plan (DBSP). Under the terms of this plan, executive bonuses with a value equivalent to over 40% of eligible salary were held as deferred shares for three years. In 2014, the Remuneration Committee amended the DBSP for bonuses awarded since 2014, such that 25% of executive bonuses are held as deferred shares for three years with no minimum value. Depending on the circumstances, awards are normally forfeited if the employee leaves the Company before the award vests. A new Deferred Bonus Share Plan scheme was introduced in 2017, which operates in a similar way to the old DBSP introduced in 2007, as amended in 2014. No new awards are made under the 2007 DBSP. Depending on the circumstances, awards are normally forfeited if the employee leaves the Company before the award vests.
Details of the vesting conditions for the share, share option and LTIP awards are given in the Directors’ Remuneration report.
Movements in share options during the year are as follows:
The options outstanding at 31 December 2025 have an exercise price between 236.8p and 432.5p and a weighted contractual life of eight years (2024: eight years).
There were no cancellations or modifications to the awards in 2025 or 2024.
The fair value received in return for share options granted is measured by reference to the fair value of share options granted using a Black-Scholes-Merton model. The contractual life of the option (ten years) is used as an input into this model. No allowance is made for early leavers.
Movements in HMRC awards are as follows:
2025 | 2024 | ||||
|---|---|---|---|---|---|
Number of share | Weighted average exercise price (p) | Number of share | Weighted average exercise price (p) | ||
Outstanding at the beginning of the year | 102,037 | 351 | 127,415 | 345 | |
Exercised during the year | (15,406) | 324 | (17,265) | 359 | |
Granted during the year | 78,354 | 327 | 9,537 | 419 | |
Forfeited during the year | (14,304) | 348 | (17,650) | 340 | |
Outstanding at the end of the year | 150,681 | 342 | 102,037 | 351 | |
Exercisable at the end of the year | 64,826 | 343 | 59,035 | 345 | |
Movements in LTIP awards during the year are as follows:
2025 | 2024 | ||||
|---|---|---|---|---|---|
Number of share | Weighted average exercise price (p) | Number of share | Weighted average exercise price (p) | ||
Outstanding at the beginning of the year | 1,296,632 | – | 1,181,012 | – | |
Exercised during the year | (180,522) | – | (68,437) | – | |
Granted during the year | 656,217 | – | 418,894 | – | |
Dividend on granted | 9,974 | – | – | – | |
Forfeited during the year | (83,317) | – | (234,837) | – | |
Failed to vest | (88,993) | – | – | – | |
Outstanding at the end of the year | 1,609,991 | – | 1,296,632 | – | |
Exercisable at the end of the year | 317,014 | – | 147,734 | – | |
Movement in Deferred Bonus Share Plan awards during the year are as follows:
2025 | 2024 | ||||
|---|---|---|---|---|---|
Number of share | Weighted average exercise price (p) | Number of share | Weighted average exercise price (p) | ||
Outstanding at the beginning of the year | 139,980 | – | 77,510 | – | |
Exercised during the year | (12,726) | – | (12,870) | – | |
Granted during the year | 111,636 | – | 75,340 | – | |
Dividend on granted | 533 | – | – | – | |
Outstanding at the end of the year | 239,423 | – | 139,980 | – | |
Exercisable at the end of the year | – | – | – | – | |
Fair value of share options and assumptions
The expected volatility is based on historic volatility for a three-year period prior to the award.
| 18-Apr-23 | 8-Apr-24 | 8-Apr-25 |
|---|---|---|---|
Share price (p) | 394.0 | 419.3 | 327.3 |
Exercise price (p) | 394.0 | 359.1 | 324.5 |
Expected volatility | 39% | 46% | 46% |
Option life | Three years | Three years | Three years |
Expected dividends (p) (assumed to be increasing at 2.5% p.a.) | 7.1 | 7.5 | 7.8 |
Risk-free interest rate (based on national government bonds) | 3.75% | 3.75% | 3.75% |
Fair value at grant date (p) | 106.0 | 80.6 | 102.3 |
The Company’s employee share option awards are granted under a service condition and a performance condition. There are no market conditions associated with the share options. The LTIP awards are granted under a service condition and a performance condition, part of which is a market condition. The Deferred Bonus Share Plan awards are granted under a service condition.
The amounts recognised in the income statement for equity-settled share-based payments are as follows:
2025 £’000 | 2024 £’000 | |
|---|---|---|
Within administrative expenses | ||
– share-based payment charge | 1,328 | 1,077 |
– related National Insurance | 346 | 105 |
Of the above, amounts relating to Directors of Zotefoams plc aggregate to £1,028k (2024: £966k).