Singapore Airlines 2006 Annual Report Download - page 104

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102
Singapore Airlines Annual Report 05/06
13 Share Capital (in $ million) (continued)
Share option plans (continued)
Fair values of SIA, SATS and SIAEC ESOP
The fair value of services received in return for share options granted is measured by reference to the fair value of share options
granted each year under the SIA, SATS and SIAEC ESOP. The estimate of the fair value of the services received is measured based
on a binomial option pricing model, taking into account the terms and conditions upon which the options were granted. The
following table lists the inputs to the model used for the July 2005 and July 2004 grants:
SIA ESOP July 2005 Grant July 2004 Grant
Expected dividend yield (%) Management’s forecast in line with dividend policy
Expected volatility (%) 31.58 – 33.33 34.46 – 35.71
Risk-free interest rate (%) 2.29 – 2.44 2.63 – 3.08
Expected life of options (years) 5.5 – 7.0 5.5 – 7.0
Exercise price ($) 11.28 10.70
Share price at date of grant ($) 11.20 11.20
SATS ESOP July 2005 Grant July 2004 Grant
Expected dividend yield (%) Management’s forecast in line with dividend policy
Expected volatility (%) 26.0 25.6
Risk-free interest rate (%) 2.29 – 2.44 2.63 – 3.08
Expected life of options (years) 5.5 – 7.0 5.5 – 7.0
Exercise price ($) 2.27 2.09*
Share price at date of grant ($) 2.30 2.38
* At the extraordinary general meeting of SATS held on 20 July 2004, SATS’ shareholders approved an amendment to the Plan allowing for adjustment to the
exercise prices of existing options by the Committee administering the Plan, in the event of the declaration of a special dividend. At the same meeting, SATS’
shareholders approved the declaration of a special dividend. The said Committee then approved a $0.30 reduction of the exercise prices of the outstanding share
options. The exercise prices refl ected here are the exercise prices after such adjustment.
SIAEC ESOP July 2005 Grant July 2004 Grant
Expected dividend yield (%) Management’s forecast in line with dividend policy
Expected volatility (%) 25.9 27.92
Risk-free interest rate (%) 2.29 – 2.44 2.63 – 3.08
Expected life of options (years) 5.5 – 7.0 5.5 – 7.0
Exercise price ($) 2.45 1.89 #
Share price at date of grant ($) 2.41 1.89
# At the extraordinary general meeting of SIAEC held on 26 July 2004, the SIAEC’s shareholders approved an amendment to the Plan allowing for adjustment to
the exercise prices of existing options by the Committee administering the Plan, in the event of the declaration of a special dividend. At the same meeting,
SIAEC’s shareholders approved the declaration of a special dividend. The said Committee then approved a $0.20 reduction of the exercise prices of the
outstanding share options. The exercise prices refl ected here are the exercise prices after such adjustment.
The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur.
The expected volatility refl ects the assumption that the historical volatility is indicative of future trends, which may also not
necessarily be the actual outcome. No other features of options were incorporated into the measurement of fair value.
NOTES TO THE FINANCIAL STATEMENTS
31 March 2006