Consolidated Financial Statements and Consolidated Management ...

The details of the sensitivity analysis on the fair values of the derivatives contracted by the Group at the 2011 and 2010 year-ends in both net assets
(“efficient hedges”) as well as in Profit (Loss) (“inefficient hedges”) are shown below:
Thousand euros
Sensitivity
Shareholders’ Equity
Profit (Loss)
2011 2010 2011 2010
+0.5% (rise in the rate curve) - 1,406 10 55
-0.5% (fall in the rate curve) - (1,416) (5) (35)
The details of the sensitivity analysis on the fair values of the derivatives contracted by the Group at the year-end 2011 do not include the effect of the
financial instrument contracted by NH Finance, S.A., as it was not significant due to the fact that said derivative matured on 2 February 2012.
19. SHARE-BASED REMUNERATION SCHEMES
A remuneration scheme linked to the listed value of shares approved in May 2007 was in force in the Group at 31 December 2011. The changes in the number
of rights granted within the framework of this Remuneration Scheme in 2011 and 2010 were as follows:
Plan 2007
In force at 31 December 2009 3,407,507
Cancelled options (283,990)
In force at 31 December 2010 3,123,517
Cancelled options (941,913)
In force at 31 December 2011 2,181,604
On 29 May 2007, the General Shareholders’ Meeting announced and approved a stock option plan called “Plan 2007” for specific employees of the Group,
dividing these into two groups. At termination of the Plan, these employees will have received, as appropriate, remuneration equivalent to the difference
between the exercise or “strike” price of the option and the settlement price, this being the list price of the shares over the last ten stock market sessions
prior to the exercise date.
The main characteristics of the plan are as follows:
- Beneficiaries: Employees of NH Hoteles, S.A. and its group of companies who have been designated by the Appointments and Remuneration Committee.
One hundred and ten Group employees were beneficiaries at 31 December 2011. These employees have been awarded a total of 2,181,604 options.
- Number maximum of assignable options: 3,790,000 options.
- Strike price: 17.66 euros for the first group comprising 22 executives and 15.27 euros for the second group made up of 88 executives.
As required by the Plan Regulations, said exercise price have to be reduced by 0.71 euros, the theoretical value of the preferential subscription right of the
increase of capital carried out in June 2009.
This plan is valued and recognised in the consolidated comprehensive profit and loss statement, as indicated in Note 4.16. The impact of the plan on the
consolidated comprehensive profit and loss statement for 2011 led to a reduction in personnel expenses amounting to 136,000 euros (a reduction of 131,000
euros in 2010). The main hypotheses used in this plan’s valuation, which was granted in 2007, are as follows:
- Period of employment before being able to exercise the option: Up to five years, the plan’s maximum term (“equity swap”). The Plan may be exercised in
thirds on an annual basis.
- Risk-free rate: 1.59%
- Return per dividend: 0.16%
The Group entered into an equity swap arrangement in November 2007 to hedge against any possible financial liabilities arising from the exercise of this
Incentive Plan linked to the listed value of shares. Subsequently, a novation amending this agreement was signed on 13 June 2009 to complement the financial
hedge and adjust it to new market conditions.
The main features of this agreement, after it was amended, are as follows:
- The number of shares, which were initially equivalent to the maximum number of options granted, was increased to a total of 6,316,666 after the increase
of capital approved by the Parent Company General Shareholders’ Meeting on 16 June 2009.
- The Group will pay the financial institution a return based on the Euribor rate plus a spread to be applied on the result of multiplying the number of units
by the initial price.
- The Group may totally or partially rescind the agreement in advance, and should this be the case, if the share is listed below its initial price, the Group will
pay the financial institution said difference. Should the list price be above the initial price, but below the strike prices, the Group will receive the difference
between both amounts.
Applying accounting standards, the Group allocated a provision of 43.39 million euros under liabilities in the consolidated balance sheet at 31 December 2011
in order to hedge against any eventual loss the financial institution could suffer as a result of the negative evolution of the price of the shares covered by the
swap (see Note 17). The change in fair value of this financial instrument had a negative effect of 9.2 million euros on the consolidated comprehensive profit
and loss statement in 2011 (a negative effect of 3.6 million euros in 2010).
REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS 89