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ANNEXURE 3: SHARE - BASED PAYMENTS
FOR THE YEAR ENDED 31 DECEMBER
2008 award 2007 award
Fair value assumptions
Share price on date of grant (Rand) 332.06 126.50
Weighted average exercise price (Rand) 332.06 124.27
Annualised expected volatility (%) 38.95 37.20
Expected share option life (years) 5.50 4.50
Expected dividend yield (%) 6.30 2.66
Risk-free interest rate (%) 9.12 7.66
The risk-free interest rate for the period within the contractual term of the rights is based on South African government bonds.
The historical volatility of the Kumba share price is used in determining the expected volatility.
DEFERRED BONUS PLAN
Number
of rights
Exercise
price range
Rand
Movement in the number of pledged shares
Balance at beginning of year 1,578 232.75 – 342.25
Exercised (1,578)
Balance at 31 December 2011 – –
Balance at beginning of year 1,578 232.75 – 342.25
Balance at 31 December 2010 1,578 232.75 – 342.25
Exercise
price range
Rand
Number
of pledged
shares
Expiry
date
Vesting period of pledged shares
1 to 2 years 232.75 – 342.25 1,578 2011
The shares awarded under the DBP are considered equity-settled. The share-based payment expense is measured using the fair value of the
shares issued under the DBP which was determined using the Black-Scholes option pricing model.
MANAGEMENT SHARE OPTION SCHEME
Number of
share options
Option
price range
(Rand)
Movement in the number of share options granted
Balance at beginning of year 321,148 15.38 – 97.74
Share options exercised (149,218) 15.38 – 97.74
Share options forfeited – 75
Balance at 31 December 2011 171,930 15.38 – 97.74
Balance at beginning of year 798,620 15.38 – 97.74
Share options exercised (462,752) 15.38 – 97.74
Share options forfeited (14,720) 75
Balance at 31 December 2010 321,148 15.38 – 97.74
Number of share options 2011 2010
Vesting period of share options granted
Already vested 171,930 177,168
Within 1 year – 143,980
171,930 321,148
Range of exercise prices (rand)
Weighted
average
option price
Rand
Number of
share options
Expiry
date
37.62 – 67.26 39.78 46,260 2012
68.53 – 97.74 78.58 125,670 2013
171,930
The share options granted under the Management Share Option Scheme are considered equity-settled. The share-based payment expense is
measured using the fair value of the share options issued under the Management Share Option Scheme which was determined using the Black-
Scholes option pricing model.
80 Kumba Iron Ore Limited