76 FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS CONTINUED 30 June 2023 Employee share options During the year ended 30 June 2023, 7,930,000 options have been issued to employees by the consolidated entity pursuant to the Company’s Employee Share Option Plan. • Tranches 12 & 13 vests 25% 6 months from issue date and then in 3 amounts at 6 monthly intervals from the date of issue. • Tranches 14 vests 33% immediately then in two equal amounts annually from the date of grant. Vesting conditions for options within all tranches, is based on service period only; i.e. options will only vest if the option holder continues to be a full-time employee with the Company or an Associated Company during the vesting period relating to the option. Conditions for an option to be exercised: • The option must have vested; • Option holder must have provided the Company with an Exercise Notice and have paid the Exercise Price for the option; • The Exercise Notice must be for the exercise of at least the Minimum Number of Options; and • The Exercise Notice must have been provided to the Company and Exercise Price paid before the expiry of 4 years from the date the Option is issued. Options Valuation In order to obtain a fair valuation of these options, the following assumptions have been made: The Black Scholes option valuation methodology has been used with the expectation that the majority of these options would be exercised towards the end of the option term. Inputs into the Black Scholes model includes the share price at grant date, exercise price, volatility, and the risk free rate of a five year Australian Government Bond on grant date. Risk-free rate and grant date For all tranches, the risk-free rate of a five-year Australian Government bond on grant date was used. Please refer to the table below for details. The abovementioned options have various vesting periods and exercising conditions. These options are unlisted as at 30 June 2023. No dividends are expected to be declared or paid by the consolidated entity during the terms of the options. The underlying expected volatility was determined by reference to historical data of the Company’s shares over a period of time. No special features inherent to the options granted were incorporated into measurement of fair value. Note 32. Share-based payments continued
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