kAThMANdu  annual report 2012 57 18 CONTRIBuTEd EQuITY - ORdINARY ShARES Group pArent 2012 nZ$’000 2011 nZ$’000 2012 nZ$’000 2011 nZ$’000 Ordinary shares fully paid ($) 197,298 197,049 422,386 422,137 Balance at beginning of year 197,049 197,049 422,137 422,137 Issue of shares under Executive and Senior Management Long Term  Incentive Plan 249 - 249 - Balance at end of year 197,298 197,049 422,386 422,137 numBer oF AutHorISeD SHAreS Group pArent 2012 ’000 2011 ’000 2012 ’000 2011 ’000 Ordinary shares on hand at beginning of the year 200,000 200,000 200,000 200,000 Shares issued under Executive and Senior Management Long Term  Incentive Plan 166 - 166 - Ordinary shares on hand at end of the year 200,166 200,000 200,166 200,000 Ordinary shares as at 31 July 2012 there were 200,165,940 ordinary issued shares in Kathmandu holdings limited and these are classified as  equity. 165,940 shares were issued under the “executive and Senior Management long term Incentive plan 24 november  2010” during the year ending 31 July 2012 (2011: nil). all ordinary shares carry equal rights in respect of voting and the receipt of dividends. ordinary shares do not have a par value. on 16 october 2009 the Board approved an executive Share  option plan to issue options to selected senior executives and  to executive directors. options will vest annually in part or in  full with the holder, in three tranches commencing 1 october  2010. all options not vested expire on 1 october 2013, and  all options vested must be exercised within five years from  date of grant. entitlement to exercise is conditional on the  Company achieving in relation to each tranche a compound  total shareholder return of 15% per annum over the period of  trading that is measured in relation to that tranche. each option  entitles the holder to one ordinary share in the capital of the  Company. the exercise price is determined by the Board but  is generally $2.1333 for new Zealand based employees and  a$1.70 for australian based employees. 19 EMPLOYEE ShARE BASEd REMuNERATION Executive Share Option Plan 16 October 2009: options issued during 2010 were valued under a Monte Carlo  simulation approach factoring in the total shareholder return  condition using the following assumptions: a 50% net profit after tax dividend payout ratio was factored  into the valuation of the options based on management  budgets. the expected volatility was estimated based on the  historical volatility of comparable listed retail businesses. during the financial year the Company issued nil options (2011:  nil) to executive directors and senior executives. the fair value  of options issued during the financial year is $0 (2011: $0). the  the estimated fair value for each tranche of options issued  is amortised over the vesting period from the grant date.  the Company has recognised a compensatory expense in  the income statement of $21,911 (2011: $168,587) which  represents this amortisation. Current price at issue date  $ 2.14 Risk free interest rate  5.40% Expected life (years)  5 Expected share volatility  30%