Notes to the Financial Statements for the year ended 30 June 2007 Note 39
Share Based Payment Plans
The number of full time equivalents employed at 30 June are:
Consolidated
Parent
2007
2006
2007
2006
5,002
5,118
21
22
(a) Employee option ownership scheme The parent entity issues from time to time options over ordinary shares to senior employees of the Group. These options are issued at the sole discretion of the Directors as part of employees’ remuneration packages. The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, share options issued during the year:
Outstanding at the beginning of the year Issued during the year Lapsed during the year
2007 No. (‘000)
2007 WAEP
2006 No. (‘000)
2006 WAEP
12,090
1.75
11,360
1.51
8,763
2.06
5,465
2.02
(695)
2.01
(825)
1.73
Exercised during the year
(1,670)
1.54
(3,910)
1.44
Outstanding at the end of the year
18,488
1.91
12,090
1.75
The range of exercise prices for options outstanding at the end of the year was $1.23 - $2.25. The weighted average remaining contractual life for the share options outstanding as at 30 June 2007 is 4.18 years (2006: 4.59 years). The expense recognised in the income statement in relation to these options is disclosed in note 3. (b) Employee share plan (ESP) Shareholders approved the implementation of an ESP at a general meeting in November 1989 and October 1998. Within the ESP, two schemes exist. The general terms and conditions of these schemes comprise: (i) General Employee Scheme under which permanent employees may acquire shares in the parent company with a market value ranging from $3,000 to $17,500 per year per employee; and (ii) Incentive Scheme under which selected employees will be eligible to acquire shares in the parent company on such terms as the Directors decide are appropriate in the circumstances of the employee. During the financial year no ordinary shares (2006: nil) in the parent company were transferred to eligible employees for nil consideration under the Incentive Scheme. Shares are issued to eligible employees by way of an interest free loan and are subject to holding restrictions, which prevent the employee dealing in the shares until the restriction period has expired. All shares issued under the plan rank equally with other shares of their class and participants enjoy all rights attaching to that class of shares. Any loan is repayable from dividends and the proceeds of sale of shares issued under the plan but is otherwise non-recourse to the employee, the shares being held by the Trustee as security for repayment of loan. This plan is accounted for and valued as an option plan, with the contractual life of each option equivalent to the estimated loan life. (c) Option pricing model The fair value of the share options is estimated as at the date of grant using a Trinomial valuation model and taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model used for the period:
Dividend Yield (%) Expected Volatility (%)
2007
2006
-
-
28.00
28.00
Risk-free interest rate (%)
6.05
5.31
Expected life of options (years)
3.00
3.00
Option exercise price ($)
2.12
2.28
Weighted average share price at measurement date ($)
2.16
2.26
80