kAThMANdu  annual report 2012 59 the tSr performance is calculated for the following performance periods: the fair value of the tSr rights have been valued under a Monte Carlo simulation approach predicting Kathmandu holdings  limited’s tSr relative to the comparable group of companies at the respective vesting dates for each tranche. the fair value of  tSr rights, along with the assumptions used to simulate the future share prices using a random-walk process are shown below: 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 $54,101 (2011: $41,948) which represents this amortisation. the proportion of rights subject to the epS growth hurdle is dependent on the compound average annual growth in Kathmandu  holdings limited’s epS relative to the year ending 31 July 2010. the applicable performance periods are: the percentage of the epS growth related rights scales according to the compound average annual epS growth achieved as  follows: the fair value of the rights have been assessed as the Kathmandu holdings limited share price as at the grant date less the  present value of the dividends forecast to be paid prior to each vesting date. 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 $78,923 (2011: $61,194) which represents this amortisation. epS Growth % Vesting < 10% 0% >=10%, < 11% 50% >=11%, < 12% 60% >=12%, < 13% 70% >=13%, < 14% 80% >=14%, < 15% 90% >=15% 100% tranche 2012 performance period 2011 performance period Tranche 1 FY13 EPS relative to FY11 EPS FY12 EPS relative to FY10 EPS Tranche 2 FY14 EPS relative to FY11 EPS FY13 EPS relative to FY10 EPS Tranche 3 FY15 EPS relative to FY11 EPS FY14 EPS relative to FY10 EPS 2012 2011 Fair value of TSR rights $165,331 $173,422 Current price at issue date $2.48 $1.62 Risk free interest rate 3.54% 4.79% Expected life (years) 2-4 2-4 Expected share volatility 36% 38% tranche 2012 2011 Tranche 1 24 months to 1 December 2013 24 months to 1 December 2012 Tranche 2 24 months to 1 December 2014 24 months to 1 December 2013 Tranche 3 24 months to 1 December 2015 24 months to 1 December 2014