Singapore Airlines 2010 Annual Report Download - page 134
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SINGAPORE AIRLINES
132
notes to the financial statements
31 march 2010
5 Staff Costs (in $ million) (continued)
Share-based compensation expense (continued)
Share-based incentive plans (continued)
Fair values of share awards granted
The fair value of services received in return for shares awarded is measured by reference to the fair value of shares
granted each year under the RSP and PSP. The estimate of the fair value of the services received is measured based on a
Monte Carlo simulation model, which involves projection of future outcomes using statistical distributions of key random
variables including share price and volatility of returns.
The following table lists the key inputs to the model used for the July 2009 and July 2008 awards:
July 2009 Award July 2008 Award
RSP PSP RSP PSP
Expected dividend yield (%) Management’s forecast in line with dividend policy
Expected volatility (%) 27.32 – 33.60 29.50 20.20 – 22.15 21.08
Risk-free interest rate (%) 0.50 – 1.00 0.61 1.30 – 2.35 1.76
Expected term (years) 1.9 – 3.9 2.9 2.0 – 4.0 3.0
Share price at date of grant ($) 13.34 13.34 14.60 14.60
For non-market conditions, achievement factors are determined based on inputs from the Board Compensation &
Industrial Relations Committee for the purpose of accrual for the RSP until the achievement of the targets can be
accurately ascertained.
Based on the Monte Carlo simulation model, the estimated fair value at date of grant for each share granted under the
RSP ranges from $11.99 to $12.62 (2008-09: $11.21 to $12.72) and the estimated fair value at date of grant for each
share granted under the PSP is $14.29 (2008-09: $9.62).
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.