« Back to notes
19. Employment Cost
The group contributes to several defined contribution provident funds. The provident funds are funded on the ‘money accumulative basis’ with the members and company having been fixed in the constitutions of the funds. All the group’s employees, other than those directly employed by West African subsidiary companies, are entitled to be covered by the above-mentioned retirement benefit plans. Retirement benefits for employees employed by West African subsidiary companies are provided by the state social security system to which the company and employees contribute a fixed percentage of payroll costs each month.
The fair value of employee services received as consideration for equity instruments (equity settled) of the company is calculated using the Black-Scholes option pricing model. The key assumptions used in this model for options granted during the year were as follows:
19.1 Volatility is based on the three year historical volatility of the company’s shares on each grant date.
19.2 Weighted average share price for the valuation is calculated taking into account the market price on all grant dates.
19.3 The weighted average exercise price is calculated taking into account the exercise price on each grant date. Please referto page 102 for details provided on share options, including the number and weighted average exercise price of share options outstanding at the beginning and end of each period, options granted, exercised and lapsed during the period.
19.4 The exercise of the options issued in 2009 is subject to a satisfactory performance level being achieved during the 12 month period prior to the exercise date of each tranche of options. The minimum performance level to be achieved is defined as level 3 in the company’s performance management system. Similar performance criteria was attached to the options that were issued in 2008. It is expected that most employees who were awarded share options would achieve a level 3 performance.
The table below summarises the information about the options outstanding, including options that are not yet exercisable:
The table below summarises the information about the Randgold Resources Share Option Scheme options that are
exercisable as at 31 December 2009 and 2008:
Options over 774 163 ordinary shares were issued in relation to Moto options, as part of the acquisition of the joint
venture interest in Moto Goldmines Ltd (‘Moto’) (Refer note 30).
The weighted average exercise price of these options as at 15 October 2009 (the date of completion of the Moto
acquisition) was US$56.39 per option. The fair value of these share options has been calculated as US$20.2 million.
The Black Scholes valuation model was used to determine the fair value of these options.
Restricted shares issued to directors
During the year, an annual reward of 1 200 ordinary shares were awarded to the 8 non-executive directors.
The issue price of these shares was US$43.92.
During the year, the CEO received the following restricted share awards:
- 40 000 restricted shares with an award date of 1 January 2009, two thirds vesting on 1 January 2010 and the remaining third vesting on 1 January 2011. The issue price of these shares was US$43.26.
- 40 000 restricted shares with an award date of 1 January 2009, one third vesting on 1 January 2010, one third vesting on 1 January 2011 and the remaining third vesting on 1 January 2012. The issue price of these shares was US$43.26.
The CFO received 36 000 restricted shares in 2007 at an issue price of US$22.19. The first tranche of the restricted
shares vested on 1 July 2008, with the second and third tranches vesting on 1 July 2009 and 1 July 2010 respectively.
The CFO further received 54 000 restricted shares in 2009 at an issue price of US$56.99. The first tranche of the
restricted shares vests on 2 September 2011, with the second and third tranches vesting on 2 September 2012 and
2 September 2013 respectively. Refer to the long-term incentive: restricted share award table on page 102 of the
remuneration report for further details on these shares.
« Back to notes