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Singapore Airlines Annual Report 2007-08
119
14 Share Capital (in $ million) (continued)
Share-based incentive plans (continued)
Fair values of RSP and PSP (continued)
SIA RSP and PSP (continued)
Based on the Monte Carlo simulation model, the estimated fair value at date of grant for each share granted under the
RSP ranges from $17.24 to $18.04 (2006-07: $11.55 to $12.45) and the estimated fair value at date of grant for each share
granted under the PSP is $15.53 (2006-07: $7.02).
When estimating the fair value of the compensation cost, market-based performance conditions shall be taken into
account. Therefore, for performance share grants with market-based performance conditions, the compensation cost shall
be charged to the profit and loss account on a basis that fairly reflects the manner in which the benefits will accrue to the
employee under the plan over the remaining service period from date of grant to which the performance period relates,
irrespective of whether this performance condition is satisfied.
For performance share grants with non-market conditions, the Group revises its estimates of the number of share grants
expected to vest and corresponding adjustments are made to the profit and loss account and share-based compensation
reserve.
Under the PSP, eligible key executives are required to hold a portion of the shares released to them under a share
ownership guideline which requires them to maintain a beneficial ownership stake in the Company, thus further aligning
their interests with shareholders.
The number of contingent shares granted but not released as at 31 March 2008, were 788,310 (2007: 258,330) and
302,653 (2007: 140,900) for RSP and PSP respectively. Based on the achievement factor, the actual release of the awards
could range from zero to a maximum of 945,972 (2007: 309,996) and 453,980 (2007: 211,350) fully-paid ordinary
shares of the Company, for RSP and PSP respectively.
SATS RSP and SATS PSP
July 2007 Award October 2006 Award
RSP PSP RSP PSP
SATS
Expected dividend yield (%) Management’s forecast in line with dividend policy
Expected volatility (%) 21.70 – 25.60 21.70 19.54 – 24.24 22.78
Risk-free interest rate (%) 2.45 – 2.59 2.47 2.97 – 3.06 2.97
Expected term (years) 1.9 – 3.9 2.9 1.5 – 3.5 2.5
Cost of equity (%) N.A. 8.20 N.A. 7.80
Share price at date of grant ($) 3.04 3.04 2.19 2.19
The details of the shares awarded under SATS RSP and SATS PSP during the year since commencement of the plans are as
follows:
Number of Restricted shares
Balance at
1.4.2007/later Balance at
Date of grant date of grant Adjustment # Cancelled 31.3.2008
SATS RSP
2.10.2006 182,030 2,666 (7,770) 176,926
27.7.2007 345,750 - - 345,750
527,780 2,666 (7,770) 522,676
NOTES TO THE FINANCIAL STATEMENTS
31 March 2008