notes to the financial statements - Singapore Technologies ...

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200 SIMPLY SMARTERNOTES TO THE FINANCIAL STATEMENTS31 December 2011(Currency - Singapore dollars unless otherwise stated)39. Share-based payment arrangements (continued)PSP2010Year of grant2011Number of performance sharesAt grant date 1,503,000Lapsed (9,374)Outstanding as at 31.12.2011 1,493,626During the year, performance shares amounting to 587,594 ordinary shares were awarded in respect of grant made in 2008 under PSP2000.The fair value of the performance shares is determined on conditional grant date using the Monte Carlo simulation model.The significant inputs to the model used for the conditional grants in 2009 to 2011 are as follows:Year of grant2011 2010 2009Market conditionsVolatility of MSCI Index (%) – – 33.10Volatility of Defensive Index (%) 20.33 16.56 –Volatility of the Company’s shares (%) 19.21 20.18 18.88Correlation of volatility of Defensive Index/MSCI Index vs. the Company (%) 55.80 50.10 67.50Risk-free rate (%) 0.49 0.71 1.03Share price ($) 3.15 3.26 2.26Cost of equity (%) 7.90 8.90 7.86Dividend yield (-- Management’s forecast in line with dividend policy --)Singapore Technologies Engineering Restricted Stock Plan (“RSP2000”) and Singapore Technologies Engineering Restricted Share Plan2010 (“RSP2010”)Restricted shares are granted on an annual basis with key performance indicator targets set for a performance period, currently prescribed to be a 2-yearperformance period. The restricted shares will only be released to the recipient at the end of the performance qualifying period if the targets are met. Thefinal number of restricted shares awarded will depend on the level of achievement of those targets and range between 0% and 150% of the conditionalaward of the restricted shares and will be delivered to recipients over a 3-year vesting period; half at the end of the performance qualifying period andthe balance will vest equally over the subsequent 2 years.Subject to the shareholders’ approval at the Annual General Meeting to be held on 19 April 2012, the awards granted under the Restricted Share Plan2010 to all Non-Executive Directors (“NEDs”) for FY2011 are outright shares with no performance and vesting conditions and will form up to 30% ofNEDs’ total compensation. The share award has a Moratorium on selling as NEDs are required to hold shares (including ST Engineering shares obtainedby other means) up to one time Annual Base Retainer ($ cap). Any extra shares can be disposed of and NEDs can dispose of all shares at least after ayear has elapsed from the time they left the Board.
SINGAPORE TECHNOLOGIES ENGINEERING LTD Annual Report 2011201NOTES TO THE FINANCIAL STATEMENTS31 December 2011(Currency - Singapore dollars unless otherwise stated)39. Share-based payment arrangements (continued)RSP2000Date of grantNumber ofrestrictedshares as atgrant dateNumber ofrestrictedshares lapsedNumber ofrestrictedshares releasedBalanceoutstandingas at31.12.201126 July 2007 897,000 248,147 648,853 –12 November 2007 300,000 – 180,000 120,00024 March 2008 7,603,183 3,246,874 3,367,025 989,28424 March 2008 217,000 107,379 109,621 –18 March 2009 8,286,892 2,667,829 2,933,374 2,685,68918 March 2009 210,500 78,958 91,038 40,50422 March 2010 8,547,400 954,071 – 7,593,32922 March 2010 170,800 3,300 167,500 –Total 26,232,775 7,306,558 7,497,411 11,428,806RSP2010Date of grantNumber ofrestrictedshares as atgrant dateNumber ofrestrictedshares lapsedNumber ofrestrictedshares releasedBalanceoutstandingas at31.12.201125 February 2011 50,000 – – 50,00016 March 2011 7,380,041 399,287 – 6,980,75427 June 2011 349,900 – 174,950 174,950Total 7,779,941 399,287 174,950 7,205,704During the year, restricted shares amounting to 4,446,347 and 174,950 ordinary shares were awarded under RSP2000 and RSP2010 respectively.The fair value of the restricted shares is determined at conditional grant date using the Monte Carlo simulation model.The significant inputs to the model used for the conditional grant in 2010 and 2011 are as follows:Year of grant2011 2010Volatility of the Company’s shares (%) 19.21 20.18Risk-free rate (%) 0.35 – 0.82 0.57 – 1.12Share price ($) 3.15 3.26Dividend yield(--Management’s forecast in line with dividend policy--)For 2011, the actual number of shares granted to each NED will be based on the volume-weighted average price of an ordinary share of the Company onthe SGX over the 14 trading days immediately after Annual General Meeting.
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