Creative 2009 Annual Report Download - page 47

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47
CREATIVE฀TECHNOLOGY฀LTD฀AND฀ITS฀SUBSIDIARIES
(a) Treasury shares
The Company acquired 7,756,000 (2008: 7,000,000) shares in the Company through purchases on the SGX-ST during the
financial year. The total amount paid to acquire the shares was US$22,719,000 (2008: US$32,196,000) and this was presented
as a component within shareholders’ equity.
The Company re-issued 2,000 (2008: 19,000) treasury shares during the financial year pursuant to the Creative Technology
(1999) Share Option Scheme (“1999 Scheme”) at the exercise price of US$2.92 (2008: US$4.50) each, for a total cash
consideration of US$10,000 (2008: US$83,000).
(b) Share options
The Creative Technology (1999) Share Option Scheme (“1999 Scheme”) was approved by shareholders at an Extraordinary
General Meeting on 30 December 1998 which allows options to be granted to full-time employees as well as consultants and
non-executive directors. The total number of shares that may be granted under the 1999 Scheme is 7.5 million, provided
that such amount shall be automatically increased on the first day (1 July) of each of the five financial years ended 30
June 2001, 2002, 2003, 2004 and 2005 by four percent of the issued share capital of the Company as at the last day of the
immediate preceding financial year. The Option Committee has the discretion to decide the vesting schedule in the letter of
offer. If it is not specifically stated in the letter of offer, 1/4 of the total amount of the grant vests on the first anniversary
of the grant date and 1/48 of the total amount of the grant vests on the last day of each calendar month thereafter.
The exercise price of the options is determined at the average of the closing prices of the Company’s shares as quoted on
the SGX-ST or the National Association of Securities Dealers Automated Quotations (“NASDAQ”) for five market days
preceding the date of the grant.
Options expire after the tenth anniversary of the date of grant, except in the case of options granted to participants other than
employees, options expire not later than the fifth anniversary of the date of grant. Effective 12 November 2007, amendments
were made to the 1999 Scheme to allow the use of treasury shares to satisfy share based exercises. The options under the
1999 Scheme do not entitle the holders of the options, by virtue of such holdings, to any right to participate in any share
issue of any other company.
The 1999 Scheme has expired on 29 December 2008. The existing options granted will continue to vest according to the
terms and conditions of the 1999 Scheme and the respective grants.
During the financial year ended 30 June 2009, the Company granted 277,000 (2008: 2,931,000) share options under the 1999
Scheme at an exercise price per share of US$2.64 (2008: US$4.70). The options would be exercisable from 24 December
2009 and expire on 24 December 2018. The total fair value of options granted was US$177,000 (2008: US$2,403,000)
using the Black Scholes option-pricing model and the weighted average fair value per share value was US$0.64 (2008:
US$0.82).
The fair value of each share option granted is determined at the date of grant using the Black Scholes option-pricing model.
This model requires the input of highly subjective assumptions, including the option’s expected life, risk-free interest rates,
dividend yield and the price volatility of the underlying share. The expected life of the options represents the period of time
the options are expected to be outstanding and is based on historical trends. The expected share price volatility assumption
is determined using the historical volatility of the Company’s shares. The following table presents the weighted average
assumptions used in the Black Scholes option-pricing model for the share option grants.
฀฀ 2009฀ 2008
฀
฀ Exercise฀price฀ US$2.64฀ US$4.70
฀ Expected฀volatility฀ 40%฀ 35%
฀ Risk-free฀interest฀rates฀ 0.90%฀to฀1.48%฀ 1.82%฀to฀2.33%
฀ Dividend฀yield฀ 2.6%฀ 3.0%
฀ Expected฀life฀of฀options฀(in฀years)฀฀฀ 0.93฀years฀after฀vest฀date฀ 0.93฀years฀after฀vest฀date
AR09 pg1-64_Final.indd 47 10/2/2009 10:38:10 AM