Singapore Airlines 2011 Annual Report Download - page 117

ANNUAL REPORT 2010/2011 115
NOTES TO THE FINANCIAL STATEMENTS
31 March 2011
2 Summary of Significant Accounting Policies (continued)
(ac) Employee benefits
(i) Equity compensation plans
Employees of the Group receive remuneration in the form of share options and share awards as
consideration for services rendered.
The Group has in place, the Singapore Airlines Limited Employee Share Option Plan and the SIA
Engineering Company Limited Employee Share Option Plan for granting of share options to senior
executives and all other employees. The exercise price approximates the market value of the
shares at the date of grant.
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 and share awards, 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.