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## Notes to the financial statements (cont’d) 

For the year ended 30 June 2012 

## Goodwill 

Goodwill has been recognised as a result of the acquisition as follows: 

<img src='content_image/200805.jpg'>

The Group’s existing interest in the acquiree was as a component of the acquisition of Australian Wealth Management Ltd at 30 April 2009 at $12,001,000. The remeasurement of the existing holding to fair value resulted in a gain of $9,587,000, which has been recognised in profit or loss (refer note 7). 

The goodwill is attributable mainly to the skilled workforce and the synergies expected to be achieved from integrating DKN into the Group. 

## Acquisition-related costs 

The Group incurred acquisition costs of $3,119,000 relating to external legal fees and due diligence costs. These amounts have been included in other costs disclosed in note 8. 

## 31 Share-based payments 

The Group operates a number of employee share and option schemes under the IOOF Executive Share Option Plan, the IOOF Executive Performance Share Plan and the Non-Executive Director Deferred Share Purchase Plan and the IOOF Deferred Share Plan for the Managing Director. 

## IOOF Executive Share Option Plan 

The Group has an ownership-based compensation scheme for executives and senior employees of the Group. The establishment of the employee share option plans were approved by the Board of Directors. 

Selected employees may be granted options which entitle them to purchase ordinary fully paid shares in IOOF at a price fixed at the time the options are granted. Voting and dividend rights will be attached to the unissued ordinary shares when the options have been exercised. Options may be exercised at any time from the date of vesting to the date of their expiry. 

The Remuneration and Nominations Committee regards the grant of options to employees as an appropriate long-term incentive and retention component of total remuneration for executives and senior employees. It is expected that future 

annual grants of options will be made, the vesting of which will be subject to attainment of appropriate performance hurdles and on the basis of continuing employment with the Group. 

Options granted under the plan carry no dividend or voting rights. All plans are equity-settled. 

## IOOF Executive Performance Share Plan 

The IOOF Executive Performance Share Plan is the vehicle used to deliver equity based incentives to executives and senior employees of the Group. 

Each employee receives ordinary shares of the Company on vesting of the performance rights. No amounts are paid or payable by the recipient on receipt of the performance rights or on vesting. The performance rights carry neither rights to dividends nor voting rights prior to vesting. 

The Remuneration and Nominations Committee regards the grant of performance rights to employees as an appropriate long-term incentive and retention component of total remuneration for executives and senior employees. It is expected that future annual grants of performance rights will be made, subject to the Board’s determination of the overall performance of the Company and market conditions. The vesting of any performance rights awarded will be subject to attainment of appropriate performance hurdles and on the basis of continuing employment with the Group. 

Performance rights granted under the plan carry no dividend or voting rights. All plans are equity-settled. 

## Non-Executive Director Share Purchase Plan 

Each Non-Executive Director is eligible to participate in the Non-Executive Director Share Purchase Plan. The Non- Executive Director Share Purchase Plan is a salary sacrifice plan and is not captured as a share based payment expense. 

## Deferred Share Plan 

A Short Term Incentive (STI) mandatory deferral program exists with equity deferral relating to a third of the Managing Directors’ STI for each year. 

