New World Development Company Limited
148
Financial Section
14 Staff Costs
(continued)
(b) Share options
(continued)
Notes: (continued)
(ii)
On dates of grant, the share options are divided into 5 tranches and exercisable within a period of 3 years to 5 years
commencing on the expiry of one month after the dates on which the options were accepted.
The fair value of options granted during the year was determined using the Binomial pricing model amounting to HK$4.4 million
(2015: HK$21.8 million). The significant inputs to the model was share price of HK$4.504 (2015: HK$4.42 to HK$5.36) at the grant
dates, exercise prices of HK$4.504 (2015: HK$4.42 to HK$5.42), volatility of the share of 38.32% (2015: 37.94% to 40.52%),
expected life of options of 5 years (2015: 5 years), expected dividend yield of 0.63% (2015: 0.57% to 1.68%), risk-free interest
rate of 1.28% (2015: 1.17% to 1.40%) and suboptimal exercise factor of 1.91 times (2015: 1.90 to 1.91 times) of the exercise
prices (which accounts for the early exercise behaviour of the option holders). The volatility measured at the standard deviation
of expected share price returns is based on statistical analysis of daily share prices of NWCL over the past 5 years.
For the year ended 30 June 2016, the weighted average share price at the time of exercise was HK$7.074 per share (2015:
HK$4.931 per share) and HK$6.291 per share (2015: HK$5.166) under NWCL 2002 Share Option Scheme and NWCL 2011 Share
Option Scheme respectively.
All the share options were cancelled on 1 April 2016 following the acceptances by the option holders of the cash offer made by
The Hongkong and Shanghai Banking Corporation Limited on behalf of Easywin Enterprises Corporation Limited (“the Offeror”),
a wholly owned subsidiary of the Company, to cancel all outstanding share options held by the option holders in accordance
with the terms set out in the joint announcement of the Company, NWCL and the Offeror dated 6 January 2016.
(iii)
The share option scheme of NWSH, which was adopted on 21 November 2011, is valid and effective for a period of ten years
from the date of adoption. The Board may, at their discretion, grant options to any eligible participant as defined under the
share option scheme to subscribe for the shares of NWSH. The total number of shares which may be issued upon exercise of all
options to be granted under the share option scheme must not in aggregate exceed 10% of the share capital of NWSH in issue
as at 21 November 2011, i.e. 3,388,900,598 shares.
On 9 March 2015, 55,470,000 share options were granted to directors and certain eligible participants at the exercise price of
HK$14.160 per share, which represents the average closing price of NWSH’s shares in the daily quotations sheets of the Hong
Kong Stock Exchange for the five trading days immediately preceding 9 March 2015. Such share options will expire on 8 March
2020.
Pursuant to the scheme, the number of unexercised share options and the exercise price may be subject to adjustment in case
of alteration in the capital structure of NWSH. NWSH declared the final dividend for the year ended 30 June 2015 and interim
dividend for the six months ended 31 December 2015 in scrip form (with cash option) during the year which gave rise to
adjustments to the number of outstanding share options and the exercise price in accordance with the scheme. With effect
from 16 May 2016, the exercise price per share for the share options granted was adjusted to HK$14.137.
The share options will be vested according to the scheme and the terms of grant provided that for the vesting to occur the
grantee has to remain as an eligible participant on such vesting date.
(iv)
The Binomial pricing model requires input of subjective assumptions such as the expected stock price volatility. Change in the
subjective input may materially affect the fair value estimates.
