Lenovo 2009 Annual Report Download - page 136

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2008/09 Annual Report Lenovo Group Limited
134
NOTES TO THE FINANCIAL STATEMENTS (Continued)
30 Share capital (continued)
(a) Long-term incentive program (continued)
The fair value of the SARs awarded under the long-term incentive program for the year ended March 31, 2009 was
calculated by applying a Black-Scholes pricing model. The model inputs were the fair value (i.e. market value) of the
Company’s shares at the grant date, taking into account the expected volatility of 59.43 percent (2008: 38.42 percent),
expected dividends during the vesting periods of 1.90 percent (2008: 1.85 percent), contractual life of 4.75 years (2008:
4.75 years), and a risk-free interest rate of 1.54 percent (2008: 4.44 percent).
The remaining vesting periods of the awards under the long-term incentive program as at March 31, 2009 ranged from
0.08 to 3.92 years (2008: 0.08 to 3.92 years).
(b) Share options
Under the Company’s employee share option scheme adopted on January 18, 1994 (“Old Option Scheme”), the
Company granted options to employees (including directors) of the Company or its subsidiaries to subscribe for ordinary
shares in the Company, subject to a maximum of 10 percent of the issued share capital of the Company from time to
time. Options granted are exercisable at any time during a period of ten years from the date upon which the option is
accepted. The subscription price of the option shares is the higher of the nominal value of the ordinary shares and an
amount which is 80 percent of the average of the closing prices of the listed ordinary shares on the five trading days
immediately preceding the date on which the offer is made. The Old Option Scheme was terminated on April 26, 2002.
Despite the fact that no further options may be granted thereunder, all other provisions of the Old Option Scheme will
remain in force to govern the exercise of all the options previously granted.
On March 25, 2002, an ordinary resolution approving the adoption of a new share option scheme (“New Option
Scheme”) was passed by shareholders at an extraordinary general meeting of the Company.
Under the New Option Scheme, the Company may grant options to qualified participants as defined in the New Option
Scheme to subscribe for ordinary shares in the Company, subject to a maximum of 10 percent of the issued share capital
of the Company as at the date of adoption of the New Option Scheme. Options granted are exercisable at any time
during a period of ten years from the date upon which the option is accepted. The subscription price of the option shares
is the highest of the closing price of the listed ordinary shares on the date of grant; the average of the closing prices of
the listed ordinary shares for the five trading days immediately preceding the date of grant; and the nominal value of the
ordinary shares.
2009 2008
Number of Number of
outstanding outstanding
share options share options
At the beginning of the year 282,959,051 373,395,601
Exercised during the year (ii) (24,948,000) (90,436,550)
At the end of the year (iii) 258,011,051 282,959,051
(i) No share options were granted, lapsed or cancelled by the Company during the years ended March 31, 2008 and
2009.