ANNUAL REPORT 2011 - Connacher Oil and Gas

AR 2011
PG 76
The estimated fair value of each award granted under the Share Award Incentive Plan was $1.36 (2010 : $1.29), which is equal to the share price
at the date of the grant. The outstanding awards of 312,500 and 380,598 as at December 31, 2011 and 2010, respectively, were fully vested and
settled in January 2012 and 2011, respectively.
18.3 Share Unit Plan
In 2011, the shareholders approved a Share Unit Plan for the company. The Share Unit Plan allows for the granting of Restricted Share Units
(“RSUs”) and Performance Share Units (“PSUs”) to officers and employees of the company. An RSU represents the right of the holder to receive
one fully–paid common share for each unit granted. A PSU represents the right of the holder to receive between 0 and 2 fully–paid common shares
for each unit granted on the vesting date, depending on the performance factor applied thereto. The Board of Directors may alternatively elect to
pay cash upon vesting of such share units, in lieu of delivering common shares. The units granted in 2011 are expected to be settled by delivery of
common shares and accordingly, are considered equity–settled awards for accounting purposes. The maximum number of common shares that may
be reserved from time to time for issuance under the Share Unit Plan is five million common shares. RSUs or PSUs granted under the Plan generally
vest annually over a three year period.
The following table summarizes the changes in Share Unit Plan:
For the year ended December 31 2011 2010
Outstanding, beginning of year – –
Granted 645,616 –
Vested and Settled – –
Forfeited (56,172) –
Outstanding, end of year 589,444 –
Vested, end of year – –
The estimated fair value of each RSUs granted under the Share Unit Plan was $1.05, which is equal to the share price at the date of the grant. A
forfeiture rate of 6% was used in calculating the share–based compensation in 2011. The outstanding RSUs vest 50% on July 1, 2012 and 50% on
July 1, 2013. No PSUs were granted in 2011 under the Share Unit Plan.
18.4 Share–based compensation
For the year ended December 31
2011 2010
(Canadian dollar in thousands)
Stock Option Plan $ 2,980 $ 6,095
Share Award Incentive Plan 453 534
Share Unit Plan 258 –
Total share–based compensation 3,691 6,629
Less: Share–based compensation capitalized (238) (1,610)
Share–based compensation expensed $ 3,453 $ 5,019
18.5 Contributed surplus
For the year ended December 31
2011 2010
(Canadian dollar in thousands)
Balance, beginning of year $ 36,107 $ 31,040
Share–based compensation 3,691 6,629
Transfer to share capital – stock options exercised (423) (1,082)
Transfer to share capital – share awards settled (534) (480)
Balance, end of year $ 38,841 $ 36,107