Page 164 - Annual Report 2014

19 Operating Expenses (continued) Overview

19.2.2 Share-based Payments (continued) Strategy

StarHub Performance Share Plans

Under the StarHub PSP and the StarHub PSP 2014 (collectively the “StarHub Performance Share Plans”), conditional awards
of shares are granted. Awards represent the right of a participant to receive fully paid shares, their equivalent cash value or
combinations thereof, free of charge, upon the participant achieving prescribed performance targets set based on medium-
term corporate objectives. Awards are released once the ERCC is satisfied that the prescribed performance targets have been
achieved. There are no vesting periods beyond the performance achievement periods.

During the financial year ended 31 December 2014, the conditional grants of 645,100 (2013: 479,000) shares under the Performance
StarHub Performance Share Plans were made to the key employees of the Group. These represent the number of shares to
be delivered when performance targets at “on-target” level are achieved, or as the case may be, when the time-based service
conditions are completed.

The movements of the number of shares under the StarHub Performance Share Plans, the fair values of the grant at
measurement date and the assumptions of the fair value model for the grants of the Company are as follows:

Number of

Balance Number of performance Number of Balance
outstanding at performance outstanding at
shares granted shares performance Governance
1.1.2014 31.12.2014
2014 ’000 ’000 vested shares forfeited ’000
Date of grant
’000 ’000

31 March 2011 858 – (858) –– Financials
25 May 2012 872 –– – 872
31 May 2013 432 –– – 432
10 March 2014 645 – – 645
Total – 645 (858) – 1,949
2,162

Number of

Balance Number of performance Number of Balance
outstanding at performance outstanding at
shares granted shares performance
1.1.2013 31.12.2013
2013 ’000 ’000 vested shares forfeited ’000
Date of grant
’000 ’000

17 May 2010 673 – (673) ––
31 March 2011 858 –– – 858
25 May 2012 912 –– (40) 872
31 May 2013 479 – (47) 432
Total – 479 (673) (87) 2,162
2,443

The fair value of the shares is estimated using a Monte-Carlo simulation methodology at the measurement dates, which are
grant dates of the share awards.

The assumptions under the model used for the grant in 2014 and 2013 are as follows: Year of grant

Fair value 2014 2013
Share price
Expected volatility of the Company’s shares $2.65 $2.69
Expected volatility of MSCI Asia-Pacific Telecommunications Component Stock $4.07 $4.01
Expected dividend yield 16.91% 16.30%
Risk-free interest rates 9.50% 10.68%
4.44% 4.80%
0.50% 0.49%

StarHub Ltd | Annual Report 2014 161