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At December 31, 2009, the number of common shares subject to options outstanding and exercisable was as follows:
Price Range
Outstanding
options
Weighted average
exercise price
Weighted average
remaining life
Exercisable
options
Weighted average
exercisable price
18.00 to 19.84 622,760 8.54 9.51 439,833 8.00
112.70 to 124.00 1,347,500 21.99 7.77 650,000 22.96
129.45 to 140.50 530,000 38.93 8.42 157,500 37.95
144.00 to 164.31 72,500 58.12 7.07 27,500 53.30
The maximum number of options that can be granted
under the Plan is 10% of total shares outstanding up to a
maximum of 50,000,000.
Assumptions
The following table lists the inputs into the binomial
model used to calculate the fair value of the share-based
payment options that were granted in 2010 and 2009 under
the 2009 Plan:
2010 2009
Exercise price 17.99 19.84
Share price at date of grant 17.99 19.84
Contractual life (years) 10 10
Dividend yield nil nil
Expected volatility 79.78% 79.12%
Risk-free interest rate 1.27% 1.71%
Expected life of option (years)
Weighted average
3–4 3–4
share price 17.57 16.96
Expected departures 10% 4%
The following table lists the inputs into the binomial model
used to calculate the fair value of the share- based payment
options that were granted in 2009 under the 2007 Plan.
No options were granted under the 2007 Plan in 2010.
Exercise price
2009
18.00
Share price at date of grant 14.24
Contractual life (years) 10
Dividend yield nil
Expected volatility 79.12%
Risk-free interest rate 1.33%
Expected life of option (years) 1
Weighted average share price 16.96
Expected departures 4%
The expected volatility was calculated using the average
historical share volatility of the Company’s peers (over
a period equal to the expected term of the options).
The expected volatility reflects the assumption that the
calculated volatility of the Company’s peers would be
indicative of future trends, which may not be the actual
outcome. The expected life is the time at which options are
expected to vest, however this also may not be indicative
of exercise patterns that may occur. The 2007 Plan options
vest in four equal tranches on the first, second, third
and fourth anniversaries of the grant date, and therefore
continued employment is a non-market condition for
options to vest. The 2009 Plan options vest 50% each
on the third and fourth anniversary of the grant date.
There are performance requirements for vesting of these
options. The risk free rate of return is the yield on zero
coupon three and five-year Dutch government bonds.
AMG’s option expense is recorded in the share-based
payment reserve (refer to note 21). The cumulative
amount recorded in the share-based payment reserve in
shareholders equity was $41,741 as of December 31, 2010
(2009: $36,176).
Cash-settled share-based payments
In May 2009, the Annual General Meeting approved a
remuneration policy that utilizes cash-settled sharebased
payments as a part of compensation. In the year
ended December 31, 2010, the Company issued 269,977
performance share units (“PSUs”) to certain employees
which are cash-settled. 505,574 PSUs were issued in the
year ended December 31, 2009. Fair value is determined
using the binomial method using the following assumptions:
2010 2009
Contractual life (years) 2-3 1-3
Dividend yield (%) nil nil
Expected volatility (%) 36.10–88.41% 79.12%
Risk-free interest rate (%) 0.29–0.85% 0.85 –1.65%
Expected life of option (years) 2–3 1–3
Expected departures (%) 10% 10%
The rollforward of the PSU
liability is noted below:
Balance as at December 31,
2009 3,639
Expense recorded in year
ended December 31, 2010 1,964
Vesting and payments on first
tranche 2009 grant (1,810)
Currency / other (112)
Balance as at December 31,
2010 3,681
As of December 31, 2010, the fair value of the PSUs issued
in 2009 was 18.0–18.81, depending on the vesting term.
The fair value of PSUs issued in 2010 was 17.28–18.01,
depending on the vesting term.
Notes to Consolidated Financial Statements 119