Singapore Airlines 2011 Annual Report Download - page 136
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SINGAPORE AIRLINES
134
NOTES TO THE FINANCIAL STATEMENTS
31 March 2011
5 Staff Costs (in $ million) (continued)
Share-based compensation expense (continued)
Share-based incentive plans (continued)
Fair value of share awards granted (continued)
The following table lists the key inputs to the model used for the July 2010 and July 2009 awards:
July 2010 Award July 2009 Award
RSP PSP RSP PSP
Expected dividend yield (%) Management’s forecast in line with dividend policy
Expected volatility (%) 27.58 – 31.92 30.06 27.32 – 33.60 29.50
Risk-free interest rate (%) 0.47 – 0.62 0.54 0.50 – 1.00 0.61
Expected term (years) 1.9 – 3.9 3.0 1.9 – 3.9 2.9
Share price at date of grant ($) 14.70 14.70 13.34 13.34
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 $12.93 to $13.77 (2010: $11.99 to $12.62) and the estimated fair
value at date of grant for each share granted under the PSP is $12.64 (2010: $14.29).
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 senior management 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.