Share-based compensation plans

At December 31, 2018, Belmond had two share-based compensation plans, the 2004 stock option plan and the 2009 share award and incentive plan. The compensation cost that has been charged to selling, general and administrative expense for these plans was $5,364,000 for the year ended December 31, 2018 (2017 - $5,809,000; 2016 - $6,272,000). Cash received from exercised options and vested awards was $7,000 for the year ended December 31, 2018 (2017 - $305,000; 2016 - $17,000). The total compensation cost related to unexercised options and unvested share awards at December 31, 2018 to be recognized over the period January 1, 2018 to December 31, 2022, was $8,798,000 and the weighted average period over which it is expected to be recognized is 31 months. Measured from the grant date, all awards of restricted shares have a maximum vesting period of four years (and those with performance criteria have a maximum vesting period of three years), and all awards of share options have a vesting period of four years with a maximum term of ten years. There were no grants under the 2004 stock option plan during the year ended December 31, 2018.

(a) 2004 stock option plans

Under the Company’s 2004 stock option plan, options to purchase up to 1,000,000 class A common shares could be awarded to employees of Belmond at fair market value at the date of grant. Options are exercisable three years after award and must be exercised ten years from the date of grant. At December 31, 2018, no class A common shares were reserved under the 2004 plan. At December 31, 2018, no shares remain available for future grants under the 2004 plan as these have been transferred to the 2009 plan described below which became effective in 2009.

Details of share option transactions under the 2004 stock option plan are as follows:



	Number of shares subject to options		Weighted average exercise price $

Outstanding — January 1, 2017	66,350		39.63
Exercised	(3,907	)	5.89
Forfeited, canceled or expired	(47,143	)	47.90

Outstanding — December 31, 2017	15,300		15.99
Exercised	(5,022	)	5.89
Forfeited, canceled or expired	(10,278	)	31.02

Outstanding — December 31, 2018	—		—

Exercisable — December 31, 2018	—		—

The fair value of options which were exercised in the year to December 31, 2018 was $10,000. No options vested and no options were granted under the plans during the year ended December 31, 2018.

(b) 2009 share award and incentive plan

The Company's 2009 share award and incentive plan became effective in June 2009 and replaced the 2000 stock option plan, 2004 stock option plan and 2007 performance share plan (the “Pre-existing Plans”). A total of 1,084,500 class A common shares plus the number of class A common shares subject to outstanding awards under the Pre-existing Plans which become available after June 2009 as a result of expirations, cancellations, forfeitures or terminations, were reserved for issuance for awards under the 2009 share award and incentive plan. In 2010, the 2009 plan was amended to increase by 4,000,000 the number of class A shares authorized for issuance under the plan, and in 2012 by another 5,000,000 class A shares.

The 2009 plan permits awards of stock options, stock appreciation rights, restricted shares, deferred shares, bonus shares and awards in lieu of obligations, dividend equivalents, other share-based awards, performance-based awards, or any combination of the foregoing. Each type of award is granted and vests based on its own terms, as determined by the Compensation Committee of the Company’s board of directors.

During the year ended December 31, 2018, the following deferred and restricted share awards were made under the 2009 share award and incentive plan on the following dates:



2009 share award and incentive plan	Class A common shares	Date granted	Vesting date	Purchase price

Restricted shares without performance criteria	20,635	December 20, 2018	December 20, 2019	$0.01
Restricted shares without performance criteria	20,635	December 20, 2018	December 20, 2020	$0.01
Restricted shares without performance criteria	20,635	December 20, 2018	December 20, 2021	$0.01
Restricted shares without performance criteria	20,635	December 20, 2018	December 20, 2022	$0.01
Restricted shares without performance criteria	2,850	June 24, 2018	June 24, 2020	$0.01
Restricted shares without performance criteria	2,850	June 24, 2018	June 24, 2021	$0.01
Restricted shares without performance criteria	2,850	June 24, 2018	June 24, 2022	$0.01
Restricted shares without performance criteria	107,982	June 24, 2018	June 24, 2019	$0.01
Restricted shares without performance criteria	25,232	June 24, 2018	On retirement	$0.01
Restricted shares without performance criteria	59,100	March 24, 2018	March 24, 2019	$0.01
Restricted shares without performance criteria	59,100	March 24, 2018	March 24, 2020	$0.01
Restricted shares without performance criteria	59,100	March 24, 2018	March 24, 2021	$0.01
Restricted shares with performance criteria	342,300	March 24, 2018	March 24, 2021	$0.01
Restricted shares without performance criteria	59,100	March 24, 2018	March 24, 2022	$0.01
Restricted shares without performance criteria	7,750	January 15, 2018	January 15, 2021	$0.01
Restricted shares without performance criteria	7,750	January 15, 2018	January 15, 2022	$0.01
Restricted shares without performance criteria	510	January 1, 2018	January 1, 2019	$0.01
Restricted shares without performance criteria	510	January 1, 2018	January 1, 2020	$0.01
Restricted shares without performance criteria	510	January 1, 2018	January 1, 2021	$0.01
Restricted shares without performance criteria	510	January 1, 2018	January 1, 2022	$0.01

Transactions relating to share options under the 2009 plan have been as follows:



	Number of shares subject to options		Weighted average exercise price $	Weighted average remaining contractual life in years	Aggregate intrinsic value $’000

Outstanding — January 1, 2017	2,644,489		11.17
Granted	581,300		12.59
Exercised	(107,552	)	8.76
Forfeited, canceled or expired	(428,830	)	11.22

Outstanding — December 31, 2017	2,689,407		10.75
Granted	—		—
Exercised	(64,174	)	10.50
Forfeited, canceled or expired	(365,171	)	11.72

Outstanding — December 31, 2018	2,260,062		11.57	6.3	30,418

Exercisable — December 31, 2018	1,595,372		11.39	5.5	21,799

The options outstanding under the 2009 plan at December 31, 2018 were as follows:



Exercise prices $	Outstanding at 12/31/2018	Exercisable at 12/31/2018	Remaining contractual lives in years	Exercise prices for outstanding options $	Exercise prices for exercisable options $


8.91	19,800	19,800	0.9	8.91	8.91
8.37	13,600	13,600	1.4	8.37	8.37
11.44	44,650	44,650	1.9	11.44	11.44
11.69	44,600	44,600	2.4	11.69	11.69
8.06	119,250	119,250	2.9	8.06	8.06
9.95	31,700	31,700	3.2	9.95	9.95
8.42	50,600	50,600	3.4	8.42	8.42
11.32	132,050	132,050	3.9	11.32	11.32
9.95	31,700	31,700	4.1	9.95	9.95
11.74	70,800	70,800	4.4	11.74	11.74
14.51	145,850	145,850	5.0	14.51	14.51
14.08	78,000	78,000	5.5	14.08	14.08
11.57	206,033	206,033	6.0	11.57	11.57
12.50	68,100	50,575	6.5	12.50	12.50
13.75	96,165	72,124	6.7	13.75	13.75
8.98	249,452	182,785	6.9	8.98	8.98
9.64	123,000	61,500	7.5	9.64	9.64
12.75	241,475	116,675	7.9	12.75	12.75
13.45	138,600	34,650	8.5	13.45	13.45
12.25	354,637	88,430	9.0	12.25	12.25

	2,260,062	1,595,372

The fair value of option grants made in the year to December 31, 2018 was $Nil. The fair value of options which became exercisable in the year to December 31, 2018 was $1,055,000. The fair value of options which were exercised in the year was $262,000. The number of options which vested during the year was 363,740.

Transactions relating to deferred shares and restricted shares under the 2009 plan have been as follows:



	Number of shares subject to awards		Weighted average exercise price $	Aggregate intrinsic value $'000

Outstanding — January 1, 2017	1,193,775		0.01
Granted	565,621		0.01
Vested and issued	(334,958	)	0.01
Forfeited, canceled or expired	(152,700	)	0.01

Outstanding — December 31, 2017	1,271,738		0.01
Granted	820,544		0.01
Vested and issued	(351,077	)	0.01
Forfeited, canceled or expired	(182,183	)	0.01

Outstanding — December 31, 2018	1,559,022		0.01	39,007

At December 31, 2018, awards of deferred shares and restricted shares on 1,559,022 class A common shares were reserved under the 2009 plan. Of these awards, 849,322 deferred shares and restricted shares do not specify any performance criteria and will vest up to December 2022. The remaining awards of up to 709,700 deferred shares are subject to performance criteria.

The fair value of deferred shares and restricted shares awarded in the year to December 31, 2018 was $9,247,000. The fair value of deferred shares vested in the year to December 31, 2018 was $4,258,000.

There were no vested and unissued deferred share or restricted shares awards as of December 31, 2018.

Estimates of the fair value of the share options on the grant date using the Black-Scholes options pricing model were based on the following assumptions:



Year ended December 31,	2018	2017	2016

Expected share price volatility	—%	27% - 34%	29% - 40%
Risk-free interest rate	—%	1.50% - 2.14%	0.76% - 1.84%
Expected annual dividends per share	$—	$—	$—
Expected life of share options	- years	2.5 - 5.5 years	2.5 - 5.5 years