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Investor Presentaiton

86 A.P. Moller-Maersk Annual Report 2020 Note 12 Share-based payment - continued Financials Consolidated financial statements Notes index Amounts in USD million = Share option plans In addition to the plan described above, A.P. Moller-Maersk has share option plans for members of the Executive Board and other employees. Each share option granted is a call option to buy an existing B share of nominal DKK 1,000 in A.P. Møller-Mærsk A/S. Table 12.2 Members of the Executive Board Employees Total Average exercise price¹ Table 12.2 Outstanding share options 1 January 2019 No. No. No. DKK 9,985 36,707 Granted 7,894 22,444 46,692 30,338 Forfeited 6,080 3,125 9,205 Outstanding 31 December 2019 11,799 56,026 67,825 Exercisable 31 December 2019 18,435 18,435 10,006 7,622 9,141 9,057 10,630 Granted 8,741 31,383 40,124 Exercised Forfeited 18,446 18,446 Outstanding 31 December 2020 Exercisable 31 December 2020 20,540 2,347 1,073 67,890 32,474 1,073 88,430 34,821 8,639 9,968 9,636 8,670 10,187 The following principal assumptions are used in the valuation: Share options granted to employees not members of the Executive Board 2020 2019 The share options are granted at an exercise price cor- responding to 110% of the average of the market price on the first five trading days following the release of A.P. Møller-Mærsk A/S' Annual Report. Exercise of the share options is contingent upon the option holder still being employed at the time of exercise. The share options can be exercised when at least three years and no more than six years (seven years for share options granted to employees not members of the Executive Board) have passed from the time of grant. Special conditions apply regarding illness, death and resignation as well as changes in the company's capital structure, etc. The share options can only be settled in shares. A part of A.P. Møller-Mærsk A/S' holding of own B shares will be used to meet the company's obligations in respect of the share option plans. Table 12.3 The fair value per option granted to members of the Executive Board is calculated at DKK 625 (DKK 1,782) at the time of grant, based on Black & Scholes' option pricing model. The fair value per option granted to em- ployees not members of the Executive Board is calcu- lated at DKK 697 (DKK 1,914) at the time of grant based on the same option pricing model. Table 12.3 Share options granted to 2020 members of the Executive Board 2019 Share price, volume weighted average at the date of grant, 1 April, DKK 5,975 8,668 5,975 8,668 Share price, five days volume weighted average after publication of Annual Report, DKK 7,854 8,682 7,854 8,682 The fair value of awards granted to five (five) members of the Executive Board and 89 (75) employees was USD 4m (USD 9m) at the time of grant. Exercise price, DKK 8,639 9,550 8,639 9,550 Exercise price following the demerger of Maersk Drilling, 2 April 2019, DKK N/A 7,670 N/A 7,605 Expected volatility (based on historic volatility) 31% 32% 31% 32% Expected term (years) 5 5 5.75 5.75 Expected dividend per share, DKK 150 150 150 Risk free interest rate -0.66% -0.36% -0.63% 150 -0.28% The payroll expense related to the share option plan is USD 5m (USD 5m). The weighted average share price at the dates of exercise of share options was DKK 12,389. No share options were exercised during 2019. The average remaining contractual life as per 31 December 2020 is 5.1 years (5.2 years) and the exercise price for out- standing share options is DKK 8,670 (DKK 9,057). 1 Average exercise prices were reduced following the demerger of Maersk Drilling.
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