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Authorised and issued share capital | 12 Months Ended
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Dec. 31, 2019
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Authorised and issued share capital | 28. Authorised and issued share capital
|  | Equity ordinary shares |  |  | Nominal value £m |
Authorised |  |  |  |  |  |  |  |
At 1 January 2017 |  |  | 1,750,000,000 |  |  |  | 175.0 |
At 31 December 2017 |  |  | 1,750,000,000 |  |  |  | 175.0 |
At 31 December 2018 |  |  | 1,750,000,000 |  |  |  | 175.0 |
At 31 December 2019 |  |  | 1,750,000,000 |  |  |  | 175.0 |
Issued and fully paid |  |  |  |  |  |  |  |
At 1 January 2017 |  |  | 1,331,880,730 |  |  |  | 133.2 |
Exercise of share options |  |  | 630,822 |  |  |  | 0.1 |
At 31 December 2017 |  |  | 1,332,511,552 |  |  |  | 133.3 |
Exercise of share options |  |  | 166,675 |  |  |  | - |
At 31 December 2018 |  |  | 1,332,678,227 |  |  |  | 133.3 |
Exercise of share options |  |  | 75,625 |  |  |  | - |
Share cancellations |  |  | (4,586,039 | ) |  |  | (0.5 | )
At 31 December 2019 |  |  | 1,328,167,813 |  |  |  | 132.8 |
Company’s own shares The Company’s holdings of own shares are stated at cost and represent shares held in treasury and purchases by the Employee Share Ownership Plan (‘ESOP’) trusts of shares in WPP plc for the purpose of funding certain of the Group’s share-based incentive plans. The trustees of the ESOP purchase the Company’s ordinary shares in the open market using funds provided by the Company. The Company also has an obligation to make regular contributions to the ESOP to enable it to meet its administrative costs. The number and market value of the ordinary shares of the Company held by the ESOP at 31 December 2019 was 9,219,837 (2018: 14,820,994), and £98.3 million (2018: £125.5 million) respectively. The number and market value of ordinary shares held in treasury at 31 December 2019 was 70,787,730 (2018: 70,854,553) and £755.0 million (2018: £599.9 million) respectively. Share options WPP Executive Share Option Scheme (WPP) As at 31 December 2019, unexercised options over ordinary shares of 6,741 have been granted under the WPP Executive Share Option Scheme as follows:
Number of ordinary shares under option |  | Exercise price per share (£) |  |  | Exercise dates |
3,696 |  |  | 8.333 |  |  |  | 2015 - 2022 |
3,045 |  |  | 10.595 |  |  |  | 2016 - 2023 |
WPP Worldwide Share Ownership Programme (WWOP) As at 31 December 2019, unexercised options over ordinary shares of 2,757,654 and unexercised options over ADRs of 388,854 have been granted under the WPP Worldwide Share Ownership Programme as follows:
Number of ordinary shares under option |  | Exercise price per share (£) |  |  | Exercise dates |
82,650 |  |  | 6.268 |  |  |  | 2014 - 2021 |
36,500 |  |  | 6.268 |  |  |  | 2015 - 2021 |
53,150 |  |  | 7.113 |  |  |  | 2013 - 2020 |
25,750 |  |  | 7.113 |  |  |  | 2014 - 2020 |
194,079 |  |  | 8.458 |  |  |  | 2015 - 2022 |
43,000 |  |  | 13.145 |  |  |  | 2017 - 2021 |
1,739,050 |  |  | 13.145 |  |  |  | 2017 - 2024 |
4,375 |  |  | 13.145 |  |  |  | 2018 - 2024 |
564,975 |  |  | 13.505 |  |  |  | 2016 - 2023 |
14,125 |  |  | 13.505 |  |  |  | 2017 - 2023 |
Number of ADRs under option |  | Exercise price per ADR ($) |  |  | Exercise dates |
24,550 |  |  | 49.230 |  |  |  | 2014 - 2021 |
16,530 |  |  | 56.560 |  |  |  | 2013 - 2020 |
39,184 |  |  | 67.490 |  |  |  | 2015 - 2022 |
166,655 |  |  | 102.670 |  |  |  | 2017 - 2024 |
141,935 |  |  | 110.760 |  |  |  | 2016 - 2023 |
WPP Share Option Plan 2015 (WSOP) As at 31 December 2019, unexercised options over ordinary shares of 13,413,425 and unexercised options over ADRs of 1,396,745 have been granted under the WPP Worldwide Share Ownership Programme as follows:
Number of ordinary shares under option |  | Exercise price per share (£) |  |  | Exercise dates |
18,250 |  |  | 8.372 |  |  |  | 2021 - 2025 |
3,406,900 |  |  | 8.372 |  |  |  | 2021 - 2028 |
15,500 |  |  | 9.600 |  |  |  | 2022 - 2026 |
2,863,975 |  |  | 9.600 |  |  |  | 2022 - 2029 |
19,250 |  |  | 13.085 |  |  |  | 2020 - 2024 |
2,785,100 |  |  | 13.085 |  |  |  | 2020 - 2027 |
55,500 |  |  | 15.150 |  |  |  | 2018 - 2022 |
1,952,200 |  |  | 15.150 |  |  |  | 2018 - 2025 |
5,375 |  |  | 15.150 |  |  |  | 2019 - 2025 |
12,375 |  |  | 17.055 |  |  |  | 2019 - 2023 |
2,279,000 |  |  | 17.055 |  |  |  | 2019 - 2026 |
Number of ADRs under option |  | Exercise price per ADR ($) |  |  | Exercise dates |
347,660 |  |  | 53.140 |  |  |  | 2021 - 2028 |
347,105 |  |  | 62.590 |  |  |  | 2022 - 2029 |
276,790 |  |  | 88.260 |  |  |  | 2020 - 2027 |
236,265 |  |  | 105.490 |  |  |  | 2020 - 2026 |
188,925 |  |  | 115.940 |  |  |  | 2018 - 2025 |
The aggregate status of the WPP Share Option Plans during 2019 was as follows: Movements on options granted (represented in ordinary shares)
|  | 1 January 2019 |  |  | Granted |  |  | Exercised |  |  | Lapsed |  |  | Outstanding 31 December 2019 |  |  | Exercisable 31 December 2019 |
WPP |  |  | 6,741 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 6,741 |  |  |  | 6,741 |
WWOP |  |  | 5,520,774 |  |  |  | – |  |  |  | (71,475 | ) |  |  | (747,375 | ) |  |  | 4,701,924 |  |  |  | 4,701,924 |
WSOP |  |  | 18,691,100 |  |  |  | 4,615,000 |  |  |  | (4,150 | ) |  |  | (2,904,800 | ) |  |  | 20,397,150 |  |  |  | 5,249,075 |
|  |  | 24,218,615 |  |  |  | 4,615,000 |  |  |  | (75,625 | ) |  |  | (3,652,175 | ) |  |  | 25,105,815 |  |  |  | 9,957,740 |
Weighted-average exercise price for options over
|  | 1 January 2019 |  |  | Granted |  |  | Exercised |  |  | Lapsed |  |  | Outstanding 31 December 2019 |  |  | Exercisable 31 December 2019 |
Ordinary shares (£) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
WPP |  |  | 9.355 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 9.355 |  |  |  | 9.355 |
WWOP |  |  | 12.290 |  |  |  | – |  |  |  | 6.888 |  |  |  | 12.027 |  |  |  | 12.421 |  |  |  | 12.421 |
WSOP |  |  | 12.753 |  |  |  | 9.600 |  |  |  | 8.372 |  |  |  | 12.405 |  |  |  | 12.121 |  |  |  | 16.164 |
ADRs ($) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
WWOP |  |  | 95.453 |  |  |  | – |  |  |  | 47.388 |  |  |  | 91.622 |  |  |  | 96.744 |  |  |  | 96.744 |
WSOP |  |  | 84.893 |  |  |  | 62.590 |  |  |  | 53.140 |  |  |  | 82.290 |  |  |  | 79.798 |  |  |  | 115.940 |
Options over ordinary shares Outstanding
Range of exercise prices £ |  | Weighted average exercise price £ |  |  | Weighted average contractual life Months |
6.268 – 17.055 |  |  | 12.171 |  |  |  | 90 |
Options over ADRs Outstanding
Range of exercise prices $ |  | Weighted average exercise price $ |  |  | Weighted average contractual life Months |
49.230 – 115.940 |  |  | 83.488 |  |  |  | 89 |
As at 31 December 2019 there was £7.3 million (2018: £8.5 million) of total unrecognised compensation costs related to share options. That cost is expected to be recognised over a weighted average period of 19 months (2018: 20 months). Share options are satisfied out of newly issued shares. The weighted average fair value of options granted in the year calculated using the Black-Scholes model was as follows:
|  | 2019 |  |  | 2018 |  |  | 2017 |
Fair value of UK options (shares) |  |  | 117.0p |  |  |  | 107.0p |  |  |  | 112.0p |
Fair value of US options (ADRs) |  |  | $8.49 |  |  |  | $8.09 |  |  |  | $9.40 |
Weighted average assumptions: |  |  |  |  |  |  |  |  |  |  |  |
UK Risk-free interest rate |  |  | 0.57% |  |  |  | 0.78% |  |  |  | 0.57% |
US Risk-free interest rate |  |  | 1.61% |  |  |  | 2.74% |  |  |  | 2.05% |
Expected life (months) |  |  | 48 |  |  |  | 48 |  |  |  | 48 |
Expected volatility |  |  | 24% |  |  |  | 24% |  |  |  | 17% |
Dividend yield |  |  | 3.8% |  |  |  | 3.5% |  |  |  | 2.9% |
Options are issued at an exercise price equal to market value on the date of grant. The average share price of the Group for the year ended 31 December 2019 was £9.39 (2018: £11.56, 2017: £15.86) and the average ADR price for the same period was $59.93 (2018: $77.31, 2017: $101.86). Expected volatility is sourced from external market data and represents the historic volatility in the Group’s share price over a period equivalent to the expected option life. Expected life is based on a review of historic exercise behaviour in the context of the contractual terms of the options, as described in more detail below. Terms of share option plans In 2015, the Group introduced the Share Option Plan 2015 to replace both the “all-employee” Worldwide Share Ownership Plan and the discretionary Executive Stock Option Plan. Two kinds of options over ordinary shares can be granted, both with a market value exercise price. Firstly, options can be granted to employees who have worked at a company owned by WPP plc for at least two years which are not subject to performance conditions. Secondly, options may be granted on a discretionary basis subject to the satisfaction of performance conditions. The Worldwide Share Ownership Programme was open for participation to employees with at least two years’ employment in the Group. It was not available to those participating in other share-based incentive programmes or to Executive Directors. The vesting period for each grant is three years and there are no performance conditions other than continued employment with the Group. The Executive Stock Option Plan has historically been open for participation to WPP Group Leaders, Partners and High Potential Group. It is not currently offered to Parent Company Executive Directors. The vesting period is three years and performance conditions include achievement of various TSR (Total Shareholder Return) and EPS (Earnings Per Share) objectives, as well as continued employment. The terms of these stock options are such that if, after nine years and eight months, the performance conditions have not been met, then the stock option will vest automatically. The Group grants stock options with a life of 10 years, including the vesting period.

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