ANNUAL REPORT 2008/09 - Sonova

Options/Warrants – Executive Equity Award Plan
The exercise price of the options/warrants is generally equal to the market price of the Sonova share at the
SIX Swiss Exchange at grant date. The fair value of the options/warrants granted is estimated at grant
date and recorded as an expense over the corresponding vesting period. Assumptions are made regarding
the forfeiture rate which is adjusted during the vesting period to ensure that in the end only a charge
for vested amounts occurred. While the options may be exercised between the end of the vesting period
and the expiration date of the options the tradable warrants may be sold between the end of the vesting
period and the expiration date of the warrants. If options are exercised, shares are issued from the conditional
share capital. In the case of warrants, shares are issued from the conditional share capital in relation
25:1.
Warrant Appreciation Rights (WARs)/Share Appreciation Rights (SARs) – Executive Equity Award Plan
The exercise price of the WARs/SARs is generally equal to the market price of the Sonova share at the SIX
Swiss Exchange at grant date. Upon exercise of a WAR/SAR, a participant shall be paid, in cash, an
amount equal to the products of the number of shares for which the participant exercised WARs/SARs, multiplied
by the excess, if any, of the per-share market price at the date of exercise over the per-share exercise
price (determined at the date of grant of WARs/SARs). The initial fair value of the WARs/SARs is in line
with the valuation of the warrants/options of the respective period and recorded as an expense over the
vesting period. Until the liability is settled, it is revalued at each reporting date recognizing changes in fair
value in the income statement. The WARs/SARs may be sold between the end of the vesting period and
the expiration date of the WARs/SARs.
The carrying amount of the liability relating to the WARs at March 31, 2009 is CHF 0.4 million (previous
year CHF 0.4 million) and the remaining life is 4.5 years. The carrying amount of the liability relating
to the SARs at March 31, 2009 is CHF 0.2 million (previous year CHF 0.3 million) and the remaining life is
three years.
Assumptions for valuation at grant date
104 CONSOLIDATED FINANCIAL STATEMENTS
Executive Equity
Award Plan 2009 Type 1
Executive Equity
Award Plan 2009 Type 2
Executive Equity
Award Plan 2008
Valuation date 01.02.2009 01.02.2009 01.02.2008
Expiration date 28.02.2014 28.02.2017/20201) 28.02.2013
Share price on grant date CHF 56.00 CHF 56.00 CHF 96.00
Exercise price CHF 56.00 CHF 56.00 CHF 96.00
Volatility 32.2 % 32.2 % 26.6 %
Expected dividend yield 1.82 % 1.82 % 0.73 %
Weighted risk free interest rate
Weighted average fair value
1.4 % 2.1 % 2.5 %
of options/warrants issued CHF 11.08 CHF 15.02 CHF 25.00
1) The options are split into 4 equal tranches with the following expiration dates: 28.02.2017, 28.02.2018, 28.02.2019, 29.02.2020.
The fair value of options/warrants at grant date was determined by using an “Enhanced American Pricing
Model”. The expected volatility is based on the historical volatility.