Richemont is one of the world's leading luxury - Alle jaarverslagen

Notes to the consolidated financial statements continued34. Share-based payment continuedThe following information applies to options outstanding at the end of each year:WeightedExercise Weighted average Number of average remainingPrice exercise price options contractual life31 March 2009 CHF 8.73-10.59 CHF 9.86 6 004 278 1.9 yearsCHF 12.70-14.45 CHF 13.65 10 302 997 4.3 yearsCHF 18.01 CHF 18.01 8 987 014 5.2 yearsCHF 23.18 CHF 23.18 7 228 975 6.2 yearsCHF 32.79 CHF 32.79 5 255 458 7.2 yearsCHF 21.20 CHF 21.20 5 028 702 8.2 years31 March 2008 CHF 20.00-24.25 CHF 22.50 6 563 849 2.9 yearsCHF 29.10-33.10 CHF 31.51 6 981 768 5.3 yearsCHF 41.25 CHF 41.25 4 031 600 6.2 yearsCHF 53.10 CHF 53.10 3 248 500 7.2 yearsCHF 75.10 CHF 75.10 2 353 900 8.2 yearsThe average fair value of options granted during the period determined using a Monte Carlo model was CHF 8.48 (2008: Black Scholes model;value CHF 27.38). The significant inputs into the model were the share price of CHF 21.20 (2008: CHF 73.40) at the grant date, the exerciseprices shown above, a standard deviation of expected share price returns of 41 per cent (2008: 34.0 and 33.0 per cent), an expected option lifeof seven to nine years, a dividend yield of 2.00 per cent (2008: 1.46 per cent) and a risk-free interest rate of 1.3 per cent to 1.7 per cent (2008:3.0 per cent to 3.1 per cent). The volatility measured at the standard deviation of expected share price returns is based on statistical analysis ofdaily share prices over the last six years.The amount recognised in the income statement before social security and taxes for equity-settled share-based payment transactions was€ 31 million (2008: € 31 million).Modification during the year under reviewOn 20 October 2008, the Company split its luxury goods businesses from its other interests resulting in the de-twinning of the then existingRichemont units. The de-twinning process impacted the value and the number of stock options awarded to executives. Richemont unit options,which had vested but were not yet exercised at the date of the restructuring, have been converted into options over Richemont ‘A’ shares,options over BAT shares and options over Reinet shares. The exchange ratio used, determined at market prices at close of business on thedate of the de-twinning, was calculated to preserve the economic benefits of the Richemont option holders. Richemont unit options whichhad not vested at the date of the restructuring were converted in their entirety into options over Richemont ‘A’ shares.The fair value of the outstanding options immediately before and after the modification was recalculated using the binomial model. The significantinputs into the model were the risk-free interest rates set as at the date of the modification, the dividend yield based on historical values ignoringany special dividends (a zero dividend yield and an estimated share price were used for Reinet), an expected option life between zero and sevenyears and an early exercise assumption based on expected rational behaviour, and the seniority of the management and the relative values of theBAT share price (£ 17.14) and the Richemont unit price (CHF 42.90) at the date of modification. The volatility for BAT was based on a historicsix-year average. The historic volatility and estimated price of the new Richemont share was determined by decomposing the Richemont unitprice into the component parts of the luxury goods businesses, and BAT and other assets. The volatility of Reinet was based on nine comparativelisted companies.Expected Expected Risk-freevolatility dividends interest rateRichemont (unit) 31% 2.8% 1.1% – 3.3%Richemont (share) 41% 6.4% 1.1% – 3.3%BAT 20% 4.1% 3.0% – 4.2%Reinet 40% – 2.7% – 3.9%As a consequence of the restructuring, the incremental fair value granted amounts to € 5.8 million. The increase in fair value related to vestedoptions amounts to € 0.4 million and has been fully recognised in the year. The increase in fair value related to unvested options of € 5.4 millionwill be recognised over the period from 20 October 2008 until the vesting dates which remain unchanged after the de-twinning process.104 Richemont Annual Report and Accounts 2009Consolidated financial statements