Singapore Airlines 2010 Annual Report Download - page 112

SINGAPORE AIRLINES
110
2 Summary of Significant Accounting Policies (continued)
(ac) Employee benefits (continued)
(i) Equity compensation plans (continued)
The Group has also implemented the Singapore Airlines Limited Restricted Share Plan and Performance Share
Plan and the SIA Engineering Company Limited Restricted Share Plan and Performance Share Plan for awarding
of fully paid ordinary shares to senior executives and key senior management, when and after pre-determined
performance or service conditions are accomplished.
Details of the plans are disclosed in Note 5 to the financial statements.
The cost of these equity-settled transactions with employees is measured by reference to the fair value of the options
or awards at the date on which the share options or awards are granted. In valuing the share options, no account
is taken of any performance conditions, other than conditions linked to the price of the shares of the Company.
This cost is recognised in the profit and loss account as share-based compensation expense, with a corresponding
increase in the share-based compensation reserve, over the vesting period in which the service conditions are
fulfilled, ending on the date on which the relevant employees become fully entitled to the award (“the vesting
date”). Non-market vesting conditions are included in the estimation of the number of shares under options
that are expected to become exercisable on the vesting date. At the end of each reporting period, the Group
revises its estimates of the number of shares under options that are expected to become exercisable on the
vesting date and recognises the impact of the revision of the estimates in the profit and loss account, with a
corresponding adjustment to the share-based compensation reserve over the remaining vesting period.
No expense is recognised for options or awards that do not ultimately vest, except for options or awards where
vesting is conditional upon a market condition, which are treated as vested irrespective of whether or not the
market condition is satisfied, provided that all other performance and/or service conditions are satisfied.
The share-based compensation reserve is transferred to general reserve upon cancellation or expiry of the vested
options or awards. When the options are exercised or awards are released, the share-based compensation
reserve is transferred to share capital if new shares are issued.
(ii) Defined contribution plans
As required by law, the companies in Singapore make contributions to the Central Provident Fund scheme in
Singapore, a defined contribution scheme. Certain of the Group’s subsidiary companies and overseas stations
outside Singapore make contributions to their respective countries’ pension schemes. Such contributions are
recognised as an expense in the period in which the related service is performed.
(iii) Defined benefit plans
The Group contributes to several defined benefit pension and other post-employment benefit plans for employees
stationed in certain overseas countries. The cost of providing benefits includes the Group’s contribution for the
year plus any unfunded liabilities under the plans, which is determined separately for each plan. Contributions
to the plans over the expected average remaining working lives of the employees participating in the plans are
expensed on accrual basis.
notes to the financial statements
31 march 2010