Annual Report 2010/11 - Sonova

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The fair value of options/warrants/WARs/SARs at grant date was determined by using an “Enhanced American Pricing
Model.” The expected volatility is based on historical volatility. The assumptions for valuation used for the programs 2010
and 2011 are as follows:
Assumptions for valuation
at grant date
Executive Equity
Award Plan 2011
Advanced Bionics
Welcome Plan 2010
Executive Equity
Award Plan 2010
Valuation date 01.02.2011 30.12.2009 01.02.2010
Expiration date 29.02.2016 30.12.2013 28.02.2015
Share price on grant date CHF 118.40 CHF 125.50 CHF 131.00
Exercise price CHF 118.40 CHF 125.80 CHF 131.00
Volatility 32.3% 32.3% 32.2%
Expected dividend yield 1.01% 0.92% 0.89%
Weighted risk-free interest rate
Weighted average fair value
1.1% 1.2% 1.3%
of options/warrants issued CHF 24.03 CHF 25.53 CHF 27.57
Options/warrants – Executive Equity Award Plan
The exercise price of the options/warrants is generally equal to the market price of the Sonova share at the SIX Swiss
Exchange at grant date. The fair value of the options/warrants granted is estimated at grant date and recorded as an expense
over the corresponding vesting period. Assumptions are made regarding the forfeiture rate which is adjusted during the
vesting period to ensure that in the end only a charge for vested amounts occurred. While the options may be exercised
between the end of the vesting period and the expiration date of the options, the tradable warrants may be sold by the
plan participants between the end of the vesting period and the expiration date of the warrants. The tradable warrants will
be exercised at the end of the expiration date and shares are issued from the conditional share capital. One share will
be issued for 25 warrants. If options are exercised, one share per option is issued from the con ditional share capital.
Changes in outstanding options/warrants 2010/11 2009/10
Number of
options/
warrants 2)
Weighted
average
exercise price
(CHF)
Number of
options/
warrants 2)
Weighted
average
exercise price
(CHF)
Outstanding options/warrants at April 1 2,142,314 89.88 2,437,299 73.29
Granted 556,530 118.40 417,640 131.00
Exercised/sold 1) (559,508) 83.26 (686,915) 56.65
Forfeited (414,152) 90.74 (25,710) 72.33
Outstanding options/warrants at March 31 1,725,184 101.03 2,142,314 89.88
Exercisable at March 31 638,267 94.58 694,642 85.98
1) Out of the movement for the financial year 2010/11, 423,648 (previous year 578,661) relates to options exercised and 135,860 (previous year 108,254) to
warrants sold. Total consideration from exercise of options amounted to CHF 36.5 million (previous year CHF 30.4 million). The weighted average share price of
the options exercised during the year 2010/11 was CHF 103.71 (previous year CHF 123.17).
2) For better comparison, the number of warrants has been adjusted according to exercise ratio 25:1.