Bodycote Incentive Plan (BIP)

The Company operates the BIP under which Executive Directors and senior executives received a conditional award of Bodycote shares up to a maximum of 175% of base salary. Vesting of awards are based upon two performance measures, over a three year period.

Fifty per cent of the award is subject to a return on capital employed (ROCE) performance condition and 50% of the award is subject to an earnings per share (EPS) performance condition.

In the event that threshold performance for both EPS and ROCE is not achieved none of the conditional awards will vest.

The number of outstanding share awards is as follows:

At 1 January2,060,5702,003,996
Granted during the year759,058896,894
Exercised during the year(90,533)(745,089)
Expired during the year(522,808)(95,231)
At 31 December2,206,2872,060,570
Average fair value of share awards granted during the year at date of grant (pence)757.6543.3
Fair value of awards granted during the year (£)5,750,6234,873,094

Exercise Price = £nil.

The inputs to the Black–Scholes simulation model, used to determine the charge to the income statement for BIP, are as follows:

Weighted average share pricepence757.6543.3
Weighted average exercise pricepencenilnil
Expected lifeyears3.03.0
Expected dividend yields%1.91.9

The Group recognised a total charge to the income statement of £7.8m (2016: £0.5m) related to equity-settled share-based payment transactions.

The Group previously operated a Co-investment plan (CIP) which closed in 2016. This closed for share awards in 2016 and currently 29,858 shares are outstanding.