57 KATHMANDU A NNUAL REPORT  2013 18 CONTRIBUTED EQUITY - ORDINARY SHARES GROUP PARENT 2013 2012 2013 2012 NZ$’000 NZ$’000 NZ$’000 NZ$’000 Ordinary shares fully paid ($) 197,370 197,298 422,458 422,386 Balance at beginning of year 197,298 197,049 422,386 422,137 Issue of shares under Executive and Senior Management Long Term Incentive Plan 72 249 72 249 Balance at end of year 197,370 197,298 422,458 422,386 NUMBER OF AUTHORISED SHARES GROUP PARENT 2013 2012 2013 2012 ’000 ’000 ’000 ’000 Ordinary shares on hand at beginning of the year 200,166 200,000 200,166 200,000 Shares issued under Executive and Senior Management Long Term Incentive Plan 50 166 50 166 Ordinary shares on hand at end of the year 200,216 200,166 200,216 200,166 As at 31 July 2013 there were 200,215,894 ordinary issued shares in Kathmandu Holdings Limited and these are classified as equity.  49,954 shares were issued under the “Executive and Senior Management Long Term Incentive Plan 24 November 2010” during the  year ending 31 July 2013 (2012:165,940). Ordinary shares All ordinary shares carry equal rights in respect of voting and the receipt of dividends. Ordinary shares do not have a par value. of options issued during the financial year is $0 (2012: $0). The  options issued during 2010 were valued under a Monte Carlo  simulation approach factoring in the total shareholder return  condition using the following assumptions: 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. A 50% Net Profit after Tax dividend pay-out 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. 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 $6,515 (2012: $21,911) which represents this  amortisation. During the financial year the Company issued nil options (2012:  nil) to Executive Directors and senior executives. The fair value  19 EMPLOYEE SHARE BASED REMUNERATION Executive Share Option Plan 16 October 2009: Current price at issue date $ 2.14 Risk free interest rate 5.40% Expected life (years) 5 Expected share volatility 30%