Annual Report - AWB Limited

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITED30. Share-Based PaymentsEmployee Share PlanDuring the year, an offer was made under the Employee Share Plan which was established in 2002, under which all permanent employees of thegroup are entitled to be issued with ordinary shares. Each employee who participated received shares to the value of $1,000 (based on the shareprice $2.92 at the issue date (4 January 2008)) for nil consideration. A total of 579,348 shares were provided under the plan to 1,694 employees.Performance Rights PlanA Performance Rights Plan exists, whereby selected senior employees (including key management personnel) of the group are given theopportunity to acquire rights over unissued ordinary shares in AWB Limited by participating in the plan.The terms and valuation of performance rights granted are consistent with those granted to key management personnel and disclosed withinthe remuneration report.Recognised share based payments expenseThe expense recognised for employee services received during the year is shown in the table below:ConsolidatedAWB Limited2008 2007 2008 2007$’000 $’000 $’000 $’000Expense arising from equity-settled share based payment transactions 1,646 923 1,646 923Expense arising from cash-settled share based payment transactions 443 123 443 123Total expense arising from share based transactions 2,089 1,046 2,089 1,046Summary of performance rights grantedThe following table illustrates the number (No.) and weighted average exercise price (WAEP) of, and movements in, performance rights issuedduring the year:2008 2008 2007 2007No. WAEP No. WAEPEquity settledOutstanding at the beginning of the period 1,915,982 nil 1,718,587 nilGranted during the year 2,209,261 nil 1,342,329 nilForfeited during the year (677,086) nil (1,026,880) nilExercised during the year - nil - nilExpired during the year (86,683) nil (118,054) nilOutstanding at the end of the year 3,361,474 nil 1,915,982 nilCash settledOutstanding at the beginning of the period 258,875 nil - nilGranted during the year 369,649 nil 258,875 nilOutstanding at the end of the year 628,524 nil 258,875 nilAs the exercise price is $1 for the exercise of large parcels of performance rights, combined with certain tranches which have a nil exercise price,the effective weighted average exercise price is nil.Weighted average remaining contractual lifeThe weighted average remaining contractual life for equity settled performance rights outstanding as at 30 September 2008 is 2.39 years(2007: 2.64 years). The weighted average remaining contractual life for cash settled performance rights outstanding as at 30 September 2008is 2.59 years (2007: 3 years).Range of exercise priceThe range of exercise prices for performance rights outstanding at the end of the year was $nil to $1 (2007: $nil to $1).Weighted average fair valueThe weighted average fair value of cash settled performance rights granted during the year was $2.03 (2007: $1.42). The weighted averagefair value of equity settled performance rights granted during the year was $1.77 (2007: $1.90).Recognised cash settled share based payment liabilityThe carrying amount of the liability relating to the cash settled share based payment at 30 September 2008 is $565,956 (2007: $122,966).No cash settled awards vested during the period ended 30 September 2008 (2007: nil).Option pricing modelThe equity and cash settled rights have been valued using market data as at the grant date. A Monte-Carlo simulation-based valuation modelwas developed to simulate the date of vesting, the percentage vesting, the share price and its associated TSR. Once the simulated date ofvesting and share prices were determined, the fair value obtained at each vesting date was discounted back to the grant date. Refer to theremuneration report for a listing of inputs to the valuation model.www.awb.com.au 99