AGL Energy Limited Annual Report 2012 125 SPRs grant Balance at beginning of the year Deposited (deducted)  during the year  (a) Nationally  granted during the year Vested during the year Forfeited during the year Balance at end of the year 2011 TSR share bank account –  162,840  –  (65,784) (11,121) 85,935  EBIT/Funds Employed share bank account –  59,093  –  (23,872) (4,037) 31,184  Notional grant 20/6/11 –  –  298,265  –  –  298,265  Notional grant 26/2/10 262,655  (262,655) –  –  –  –  Old LTIP grant 27/10/08 240,733  –  –  (2,667) (37,426) 200,640  Old LTIP grant 25/2/08 103,915  –  –  (103,915) –  –  Old LTIP grant 11/1/08 99,521  –  –  (99,521) –  –  706,824  (40,722) 298,265  (295,759) (52,584) 616,024 (a) After testing the SPRs notionally granted on 26 February 2010 against the relevant performance hurdle, the SPRs are deposited into (or deducted from) the relevant share bank account for  each participant. There were nil SPRs vested but not exercisable at 30 June 2011. The fair value of services received in return for SPRs granted are measured by reference to the fair value of SPRs granted. The estimate of  the fair value of services received is measured based on the Black-Scholes and Monte Carlo simulation methods. The contractual life of the  SPRs is used as an input into this model. Expectations of early vesting are incorporated into the Monte Carlo simulation method. Expected  volatility is based on the historical share price volatility over the past two years. SPRs grant 2012  22 Jun 12 2011  20 Jun 11 Weighted average fair value at grant date $14.53 $7.08 Share price at grant date $14.75 $14.24 Expected volatility 20.0% 15.0% SPR life 0.2–4.2 years 0.2–4.2 years Expected dividend yield 5.6% 4.1% Risk free interest rate (based on government bonds) 2.4%–2.9% 4.7% The total expense recognised in the income statement as part of employee benefits expense during the year in relation to SPRs granted to  the Managing Director and executives under the AGL Long-Term Incentive Plan was: 2012  $m 2011  $m Employee benefits expense 5.3  0.5