Atari 2009 Annual Report Download - page 103

ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
103
Principal assumptions 2008 - 2009
Valuation model Black & Scholes
Price of shares on option grant date
€13.77
Exercise price on option grant date (per share)
€13.12
Expected volatility
85.00%
Risk-free interest rate on grant date
3.70%
Expected dividend rate
0.00%
Fair value of options on grant date €7.96
Volatility relates to the propensity of an asset's value to fluctuate significantly. The more an asset's value experiences
substantial changes over a short period of time, the higher its volatility. According to IFRS 2, the period over which
historical fluctuations in the price of the underlying shares is taken into consideration to determine volatility must equal
the expected life of the options. Based on the Group‟s dividend history, no dividend is anticipated.
The risk-free interest rate corresponds to the interest rate on government bonds (OAT) with a maturity equal to the
estimated life of the options on the various option grant dates.
19.5. GRANTS OF FREE SHARES
In fiscal year 2008-2009 and 2007-2008 the Company used the authorizations given at the Shareholders' Meeting of
November 15, 2006 to grant free shares to certain officers and executives.
In order for rights to free shares to vest, their beneficiaries must be part of the Group on the vesting date and grants are
generally contingent on the achievement of certain performance conditions. After the vesting period, shares are subject
to a two-year lock-up period.
The table below shows a summary of transactions relating to free shares in fiscal year 2008-2009 and 2007-2008:
2008-2009 2007-2008
Number of free shares outstanding at the beginning of the year 639,584 -
Free shares granted during the year
472,685 1,038,948
Shares cancelled
(624,852) (399,364)
Shares vested
- -
Number of free shares outstanding at the end of the year 487,417 639,584
The fair value of free shares granted is based on the trading price of the Company‟s shares at the grant date. The
weighted fair value of shares granted in fiscal year 2008-2009 was €7.96 per share.
The related expense recognized in the years ended March 31, 2009 and 2008 (including the cost of employer social
security contributions) amounted to €0.2 million and €2.3 million respectively.
The fair value recognized is based on the assumption that all performance conditions will be fulfilled.
19.6. OTHER SHARE-BASED PAYMENTS
In the last quarter of fiscal year 2008-2009, the Company set up an additional incentive bonus scheme for two of its
executives, based on the Company‟s market capitalization. The maximum amount payable under this scheme has been
capped at €35 million. In the event that the Company‟s average market capitalization, on a fully-diluted basis, exceeds
€500 million over three successive months before March 31, 2013, each of the two officers would be entitled to an
additional bonus representing 3.75% and 5.0% respectively of the excess between €500 million and €900 million. This
variable compensation may be settled either in cash or in shares at the Company‟s discretion and falls within the scope
of IFRS 2. The related expense recognized in the year ended March 31, 2009 amounted to €2.4 million.
The main assumptions used to measure this compensation were as follows: