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KUWAIT ENERGY plc
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2014
55
29.
SHARE-BASED PAYMENTS
At an Extraordinary General Meeting held on 14 October 2008 the shareholders of Kuwait Energy K.S.S.C.
approved the issue of shares for nil consideration to employees in accordance with the employee incentive scheme
(“EIS”) approved by the Board of Directors (“BOD”). Following the restructuring the EIS obligations have been
transferred from Kuwait Energy K.S.S.C. to Kuwait Energy plc. The EIS is available to specified employees
employed at the beginning of the financial year and pro-rated for specified employees who have joined before 1
October of the financial year. The entitlement of each employee is determined based on the maximum incentive
entitlement decided by the BOD and the weighted average of corporate performance ratings and individual
performance ratings. The share awards vest in a staggered manner of 30%, 30% and 40% after one, two and three
years respectively. Any unutilised share awards cannot be carried forward. If the employee leaves the Group (other
than due to exceptional circumstances beyond the employee’s control) during the vesting period, the unvested shares
will be forfeited. If the employee leaves the Group due to exceptional circumstances beyond the employee’s control
during the vesting period, the fair value of the unvested share awards will be paid in cash. The unvested shares are
not entitled to dividends or bonus shares.
The EIS has concluded and the Group has issued all the vested shares during the year 2012 to the employees.
The Group records an expense, based on its best estimate related to the fair value determined by reference to the fair
value of the share awards from independent market sources at the dates of the grant 1 January 2008 (139 fils/share),
1 January 2009 (201 fils/share), 1 January 2010 (201 fils/share) and 1 January 2011 (201 fils/share) on a straight-line
basis over the vesting period. During the year 2012, the Company recognised a net expense of USD 742 thousand
(2011: USD 1,229 thousand) including reversal of previously recognised expenses relating to forfeited shares as the
cost of EIS and credited the share-based compensation reserve in equity.
Year 31 December 2012
Year 31 December 2011
Number
Fair value
Number
Fair value
USD 000’s USD 000’s USD 000’s
USD 000’s
Outstanding at beginning of the year
858
2,449
618
1,696
Granted during the year
-
-
514
1,485
Forfeited during the year
(47)
(134)
(42)
(118)
Vesting/issued during the year
(811)
(2,315)
(232)
(614)
Outstanding at the end of the year
-
-
858
2,449
30.
RELATED PARTY TRANSACTIONS
Related parties comprise major shareholders, directors and executive officers of the Group, their families and
companies of which they are the principal owners. Balances and transactions between the Company and its
subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
Kuwait Energy KSSC, the parent company prior to the restructuring has continued to provide staff to the Group at
cost plus a mark-up, representing an arm’s length transaction, whilst the contracts for those staff are transferred to
subsidiaries of the Group. The charge to the Group after completion of the restructuring in this regard was USD 75
thousand (30 June 2013: USD 75 thousand, 31 December 2013: USD 150 thousand, 2012: USD 145 thousand, 2011:
nil,) and USD 478 thousand was owed to Kuwait Energy KSSC in this regard at 30 June 2014 (30 June 2013: USD
610 thousand, 31 December 2013: USD 473 thousand, 31 December 2012: USD 1,148 thousand, 31 December
2011: USD 569 thousand).
The other related party transactions and balances included in the Group’s consolidated financial statements are as
follows: