(a) Share purchase plan
Compensation expense for the Company’s share purchase plan was $485,000 (2009 – $448,000) and is included in operating expenses.
(b) Executive stock option plan
At year end, the number of Class A shares reserved for issuance pursuant to the executive stock option plan was 3,425,937. The number of Class A shares underlying outstanding options under the executive stock option plan was 2,650,000. 775,937 options remained available to grant. The exercise price per share is determined by the Board of Directors at the time the option is granted but cannot be less than either the closing price of the shares on the last trading date preceding the date of the grant or the average closing price of the preceding twenty trading days. The expiry date of the options is established by the Board of Directors. Options either vest on the date they are granted or vest over time in the following manner: twenty-five percent vest on the date of granting and twenty-five percent vest on each of the three succeeding anniversary dates.
The following summarizes the Company’s outstanding stock options which expire at varying dates from 2011 to 2015 and have a weighted average remaining contractual life of 2.62 years (2009 – 3.26 years).
The compensation expense related to stock options for 2010 was $335,000 (2009 – $212,000) and is recorded in operating expenses.
The fair value was estimated using the Black-Scholes Option Pricing Model with the following assumptions:
(c) Stock appreciation rights plan
A total of 1,745,000 stock appreciation rights (“SARS” or “rights”) have been granted since 2006 at a weighted-average reference price of $5.75. The SARS’ expiry dates range from March 2011 to February 2015. As at December 31, 2010, 270,000 rights had expired and 454,250 rights had been exercised. The rights vest at a rate of 50% at the end of year three, 25% at the end of year four and 25% at the end of year five and are exercisable as they vest. At the date of exercise, cash payments are made to the holders based on the difference between the market value of the Company’s Class A shares and the reference price. All rights granted under this plan expire on the 60th day following the 5th anniversary of the grant date. For the year ended December 31, 2010, the compensation expense related to the rights was $66,000.
During 2010, $604,000 was paid due to the exercise of SARS (2009 – $32,000). The total remaining obligation for SARS compensation is $1,005,000 (2009 – $1,544,000), of which $869,000 was current.