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117
Other Notes
NOTE 32
SHARE-BASED PAYMENTS
32
Accounting policies
– Share-based payments
Share-based compensation benefits are provided to employees of Washington H. Soul Pattinson and Company
Limited (the Parent company) and New Hope Corporation Limited via various employee incentive schemes.
A summary of each scheme is provided below.
The fair value of options and rights granted under each of these schemes is recognised as an employee benefits
expense with a corresponding increase in the share-based payment reserve within equity.
The fair value is measured at grant date and the total amount to be expensed is recognised over the period during
which the employee becomes unconditionally entitled to the options rights. The fair value of options and rights
granted is adjusted to reflect any market performance conditions and the impact of any non-vesting conditions.
Non-market vesting conditions are included in assumptions about the number of options and rights that are
expected to become exercisable. At each reporting date, the entity revises its estimate of the number of options
and rights that are expected to become exercisable. The employee benefits expense each period takes into
account the most recent estimate. The impact of the revision to the original estimate, is recognised in profit or
loss with a corresponding adjustment to equity.
Washington H. Soul Pattinson and Company Limited – Long term incentive plan
During the year, Washington H. Soul Pattinson and Company Limited, (Parent company) introduced a Long
Term Incentive Plan (LTI plan) for its executive team and management team whereby rights to shares are
granted for nil consideration. Rights are granted in accordance with the plan at the sole discretion of the
Washington H. Soul Pattinson and Company Limited Board. Rights vest and automatically convert to ordinary
shares in Washington H. Soul Pattinson and Company Limited following the satisfaction of the relevant
performance and service conditions. Performance and service conditions applicable to each issue of rights are
determined by the Board at the time of the grant. Rights granted under the plan carry no dividend or voting
rights until they have vested and have been converted into shares in the Parent company. Detailed vesting
conditions are set out in the Remuneration report. Refer to pages 28 to 45.
The fair value of services received in return for performance rights granted is based on the fair value of the
performance rights granted. The fair value of rights was independently determined by valuation specialists
Lonergan Edwards & Associates Limited and was based on the market price of Washington H. Soul Pattinson
and Company Limited’s shares at the grant date, with an adjustment made to take into account the vesting
period, expected dividends during that period that will not be received by the participants and the probability
that the market performance conditions will be met.