Some Group employees receive compensation in the form of share-based payments, for which payment is made in equity instruments.
In accordance with IFRS 2 “Share-based Payments”, these plans are classified as equity-settled share-based payment transactions and, accordingly, the services compensated by these plans are recognized as an operating expense over the vesting period (i.e. the period in which the service and, where applicable, the performance conditions are fulfilled), with a corresponding entry recorded in shareholders' equity.
The services compensated by these plans are recognized as an expense, with the offset recognized in shareholders’ equity, over the vesting period. The amount of expense recognized in each period is determined by reference to the fair value of the equity instruments granted, as of the grant date.
The fair value of restricted shares is estimated at the date of grant based on the share price at that date after deductions for dividends on the shares that will not be paid to beneficiaries during the vesting period. The fair value of restricted shares subject to a performance condition based on Total Shareholder Return is estimated using a binomial model that takes into account the vesting conditions.
Each year, Sodexo reassesses the number of shares that are likely to be delivered to beneficiaries of restricted shares based on the applicable vesting conditions. The impact of any change in estimates is recognized in the income statement, with the offset recognized in shareholders’ equity.
Rules governing restricted share plans are as follows:
The performance criteria applied are directly linked to the Group's strategic priorities and are intended to measure performance in a global manner:
The table below shows movements in restricted shares in Fiscal 2023 and Fiscal 2022:
| FISCAL 2023 | FISCAL 2022 | |
|---|---|---|
| Outstanding at the beginning of the year | Outstanding at the beginning of the year FISCAL 2023 2,287,665 |
Outstanding at the beginning of the year FISCAL 2022 2,315,627 |
| Granted during the year | Granted during the year FISCAL 2023 852,820 |
Granted during the year FISCAL 2022 834,629 |
| Forfeited during the year | Forfeited during the year FISCAL 2023 (478,279) |
Forfeited during the year FISCAL 2022 (423,329) |
| Delivered during the year | Delivered during the year FISCAL 2023 (337,578) |
Delivered during the year FISCAL 2022 (439,262) |
| Outstanding at the end of the year | Outstanding at the end of the year FISCAL 2023 2,324,628 |
Outstanding at the end of the year FISCAL 2022 2,287,665 |
The weighted average fair value of the restricted shares granted in Fiscal 2023 is 80.68 euros per share (73.48 euros per share granted in Fiscal 2022).
The table below shows the grant dates of restricted shares outstanding as of August 31, 2023, the assumptions used to estimate their fair value at the grant date and the number of restricted shares outstanding at the period end:
| DATE OF GRANT | VESTING PERIOD (in years) | EXPECTED DIVIDEND YIELD (in %) | RISK-FREE INTEREST RATE (in %) | VOLATILITY*(in %) | NUMBER OF SHARES OUTSTANDING AS OF AUGUST 31, 2023 | |
|---|---|---|---|---|---|---|
| November 20, 2020 | November 20, 2020
International |
November 20, 2020 VESTING PERIOD (in years)3 |
November 20, 2020 EXPECTED DIVIDEND YIELD (in %)1.8% |
November 20, 2020RISK-FREE INTEREST RATE (in %)0.0% |
November 20, 2020 VOLATILITY* (in %)38.8% |
November 20, 2020 NUMBER OF SHARES OUTSTANDING AS OF AUGUST 31, 2023727,730 |
| February 1, 2022 | February 1, 2022
International |
February 1, 2022 VESTING PERIOD (in years)3 |
February 1, 2022 EXPECTED DIVIDEND YIELD (in %)3.0% |
February 1, 2022 RISK-FREEINTEREST RATE (in %)0.0% |
February 1, 2022 VOLATILITY* (in %)39.0% |
February 1, 2022 NUMBER OF SHARES OUTSTANDING AS OF AUGUST 31, 2023730,020 |
| June 22, 2022 | June 22, 2022
International |
June 22, 2022 VESTING PERIOD (in years)3 |
June 22, 2022 EXPECTED DIVIDEND YIELD (in %)3.8% |
June 22, 2022 RISK-FREEINTEREST RATE (in %)1.4% |
June 22, 2022 VOLATILITY* (in %)43.7% |
June 22, 2022 NUMBER OF SHARES OUTSTANDING AS OF AUGUST 31, 202325,089 |
| January 31, 2023 | January 31, 2023
International |
January 31, 2023 VESTING PERIOD (in years)3 |
January 31, 2023 EXPECTED DIVIDEND YIELD (in %)3.3% |
January 31, 2023 RISK-FREEINTEREST RATE (in %)2.8% |
January 31, 2023 VOLATILITY* (in %)37.9% |
January 31, 2023 NUMBER OF SHARES OUTSTANDING AS OF AUGUST 31, 2023815,801 |
| June 28, 2023 | June 28, 2023
International |
June 28, 2023 VESTING PERIOD (in years)3 |
June 28, 2023 EXPECTED DIVIDEND YIELD (in %)2.9% |
June 28, 2023 RISK-FREEINTEREST RATE (in %)3.0% |
June 28, 2023 VOLATILITY* (in %)27.8% |
June 28, 2023 NUMBER OF SHARES OUTSTANDING AS OF AUGUST 31, 202325,988 |
| TOTAL | TOTAL
|
TOTAL VESTING PERIOD (in years)
|
TOTAL EXPECTED DIVIDEND YIELD (in %)
|
TOTALRISK-FREE INTEREST RATE (in %)
|
TOTAL VOLATILITY* (in %)
|
TOTAL NUMBER OF SHARES OUTSTANDING AS OF AUGUST 31, 20232,324,628 |
* Applicable for the portion of the restricted share grants subject to the TSR performance condition. Volatility is determined by reference to the share’s historical weighted average volatility over a certain period prior to the grant date and the implicit volatility expected by the market.
