Document ID: chunk:federal_register_of_legislation:F2022C00493:reg:3:p2
Version: federal_register_of_legislation:F2022C00493
Segment Type: reg
Provision Reference: reg 3 (pt 2/7)
Character Range: 303521–307704

for the year ended 31 December 20X5.
Share-based Payment
During the period ended 31 December 20X5, the Company had four share-based payment arrangements, which are described below.

Type of arrangement  Senior management share option plan                                              General employee share option plan  Executive share plan                                                            Senior management share appreciation cash plan
Date of grant        1 January 20X4                                                                   1 January 20X5                      1 January 20X5                                                                  1 July 20X5
Number granted       50,000                                                                           75,000                              50,000                                                                          25,000
Contractual life     10 years                                                                         10 years                            N/A                                                                             10 years
Vesting conditions   1.5 years' service and achievement of a share price target, which was achieved.  Three years' service.               Three years' service and achievement of a target growth in earnings per share.  Three years' service and achievement of a target increase in market share.

The estimated fair value of each share option granted in the general employee share option plan is CU23.60. This was calculated by applying a binomial option pricing model. The model inputs were the share price at grant date of CU50, exercise price of CU50, expected volatility of 30 per cent, no expected dividends, contractual life of ten years, and a risk-free interest rate of 5 per cent. To allow for the effects of early exercise, it was assumed that the employees would exercise the options after vesting date when the share price was twice the exercise price. Historical volatility was 40 per cent, which includes the early years of the Company's life; the Company expects the volatility of its share price to reduce as it matures.
The estimated fair value of each share granted in the executive share plan is CU50.00, which is equal to the share price at the date of grant.
Further details of the two share option plans are as follows:

                              20X4               20X5
                              Number of options  Weighted average exercise price  Number of options  Weighted average exercise price
Outstanding at start of year  0                  –                                45,000             CU40
Granted                       50,000             CU40                             75,000             CU50
Forfeited                     (5,000)            CU40                             (8,000)            CU46
Exercised                     0                  –                                (4,000)            CU40
Outstanding at end of year    45,000             CU40                             108,000            CU46
Exercisable at end of year    0                  CU40                             38,000             CU40

The weighted average share price at the date of exercise for share options exercised during the period was CU52. The options outstanding at 31 December 20X5 had an exercise price of CU40 or CU50, and a weighted average remaining contractual life of 8.64 years.

                                                                                           20X4     20X5
                                                                                           CU       CU
Expense arising from share-based payment transactions                                      495,000  1,105,867
Expense arising from share and share option plans                                          495,000  1,007,000
Closing balance of liability for cash share appreciation plan                              –        98,867
Expense arising from increase in fair value of liability for cash share appreciation plan  –        9,200

Summary of conditions for a counterparty to receive an equity instrument granted and