Singapore Airlines 2008 Annual Report Download - page 115

Singapore Airlines Annual Report 2007-08
113
14 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 2007 and July 2006 grants:
July 2007 Grant July 2006 Grant
SIA ESOP
Expected dividend yield (%) Management’s forecast in line with dividend policy
Expected volatility (%) 23.47 – 28.80 29.99 – 30.16
Risk-free interest rate (%) 2.64 – 2.81 3.37 – 3.45
Expected life of options (years) 5.5 – 7.0 5.5 – 7.0
Exercise price ($) 18.22* 12.10*
Share price at date of grant ($) 18.70 12.60
SATS ESOP
Expected dividend yield (%) Management’s forecast in line with dividend policy
Expected volatility (%) 27.9 27.7
Risk-free interest rate (%) 2.65 3.37 – 3.45
Expected life of options (years) 6.0 5.5 – 7.0
Exercise price ($) 3.01^ 2.05^
Share price at date of grant ($) 3.10 2.13
SIAEC ESOP
Expected dividend yield (%) Management’s forecast in line with dividend policy
Expected volatility (%) 23.13 – 24.83 25.06 – 25.36
Risk-free interest rate (%) 2.60 – 2.76 3.37 – 3.45
Expected life of options (years) 5.5 – 7.0 5.5 – 7.0
Exercise price ($) 4.67 3.44#
Share price at date of grant ($) 4.64 3.96
* Following approval by the Company’s shareholders of the declaration of a special dividend of $0.50 on 31 July 2007, the Board
Compensation & Industrial Relations Committee approved a reduction of $0.50 in the exercise prices of the share options outstanding on
2 August 2007. The exercise prices reflected here are the exercise prices after such adjustment.
^ Following approval by SATS’ shareholders of the declaration of a special dividend of $0.05 on 26 July 2007, the Remuneration and
Human Resource Committee administering the SATS ESOP approved a reduction of $0.05 in the exercise prices of the share options
outstanding on 30 July 2007. The exercise prices reflected here are the exercise prices after such adjustment.
# At the extraordinary general meeting of SIAEC held on 26 July 2004, SIAEC’s shareholders approved an amendment to the SIAEC’s ESOP
to allow for adjustment to the exercise prices of the existing options by the Compensation and Human Resource Committee administering
the ESOP, in the event of the declaration of a special dividend. Following approval by SIAEC’s shareholders of the declaration of
a special dividend of $0.20 on 26 July 2004, the said Committee approved a reduction of $0.20 in the exercise prices of the share
options outstanding on 28 July 2004. The said Committee approved another $0.20 reduction in the exercise prices of the share options
outstanding on 25 July 2006 following approval by SIAEC’s shareholders of the declaration of a special dividend of $0.20 on 21 July
2006. The exercise prices reflected here are the exercise prices after such adjustments.
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 reflects 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 2008