## Note 33 Employee equity participation continued 

Options granted vest in three equal tranches after the second, third and fourth anniversaries of the date of allocation of the options. Subject to the MGESOP rules and the Company’s personal dealing policy, options can be exercised after the vesting period during an options exercise period up to expiry. In individual cases, such as where an employee leaves with the Company’s agreement towards the end of a vesting period, the Company’s Executive Committee has the power to waive the remainder of any vesting period and allow exercise of some or all of the relevant options. 

For options granted to the members of MBL and MGL’s Executive Committees, Executive Voting Directors and other Executive Directors where the invitation to apply for the options was sent to the Executive on or after 30 June 2006, in respect of each tranche of vested options, options will only be exercisable if the Company’s average annual return on ordinary equity for the three previous financial years is above the 65th (Executive Committee and Executive Voting Directors) and 50th (other Executive Directors) percentiles, of the corresponding figures for all companies in the then S&P/ASX 100 Index, with the conditions to be examined only upon vesting. During the year ended 31 March 2013 the final tranches of these options failed to meet the performance hurdles and consequently did not vest. 

If fully paid ordinary shares issued on the exercise of options rank pari passu with all other fully paid MGL ordinary shares than on issue. 

The options do not confer any right to directly participate in any share issue or interest issue by MGL or any other body corporate or scheme and carry no dividend or voting rights. The options include terms that provide for the adjustment of the number options, the exercise price and/or the number of shares to be issued on the exercise of options, in the following circumstances: 

– an issue of new shares by way of capitalisation of profits or reserves; 

– an issue to holders or shares of rights (pro-rata with existing shareholdings) to subscribe for further shares; 

– a pro-rata bonus issue; 

– a subdivision, consolidation, cancellation or return of capital; and 

– other reorganisations. 

These terms are consistent with the ASX Listing Rules for the adjustment of options in these circumstances, which are 

intended to ensure that these types of transactions do not result in either a dilution of option holders’ interests or an advantage to option holders of ordinary shares do not receive. 

For the year ended 31 March 2014, compensation expense relating to exchangeable shares, retention securities and option plans totalled $0.1 million (2013: credit of $15 million). 

## Employee Share Plan 

Following shareholder approval at the 1997 Annual General Meeting, MBL introduced the Macquarie Bank Employee Share Plan whereby each financial year, eligible employees were offered up to $1,000 worth of fully paid ordinary MBL shares for no cash payment. The Company has since introduced the Macquarie Group Employee Share Plan (ESP) on the same terms. 

Shares allocated under the ESP cannot be sold until the earlier of three years after allocation or the time when the participant is no longer employed by the Company or a subsidiary of the Company. In all other respects, shares allocated rank equally with all other fully paid ordinary shares then on issue. 

The latest offer under the ESP was made during November 2013. A total of 966 (2013: 826) staff participated in this offer. On 6 December 2013, the participants were each allocated 18 (2013: 30) fully paid ordinary shares based on the offer amount of $1,000 and the then calculated average market share price of $53.70 (2013: $32.85); a total of 17,388 (2013: 24,780) shares were allocated. The shares were allocated to staff for no cash consideration. The aggregate value of the shares allocated was deducted from staff profit share and commissions. 

## Historical Share Plans 

Shares are no longer being issued under the Staff Share Acquisition Plan nor the Non-Executive Director Share Acquisition plan. However employees and Non-Executive Directors still hold shares issued in previous years. 

## Other plans 

The Consolidated Entity operates other local share-based compensation plans, none of which, individually or in aggregate are material. 

