43. OpenTV Corp - share based payments

43. OpenTV Corp - share based payments

OpenTV Corp, a subsidiary of the Group, recognizes compensation expenses for shares and share options granted to employees and board members as detailed below.

Stock option plan

No options were given in 2008 to employees and board members. In 2007, management and board members received 557 500 options of Open TV Corp with a strike price of USD 2.02. The option granted in 2007 under the current option plan were granted to an exercise price equal to the fair market value of the underlying shares on the date of grant and typically vest 25% after one year from the date of grant and 1/48th over each of the next 36 months. The fair values of the options have been measured using the Black-Scholes option pricing model at grant date. The expense is recognized against the income statement over the vesting period.

In 2008, employees and board members of OpenTV exercised 39 464 (2007: 275 906) options with an average strike price of USD 0.44 (2007: USD 1.10). The table below summarizes movements in options since acquisition date:

The following table summarizes information with respect to the options outstanding as of December 31, 2008:

And as of December 31, 2007:

On June 27, 2007, OpenTV Corp repurchased 1 150 000 stock options for kCHF 189 from James A. Chiddix, the former CEO, in connection with his resignation as CEO.

Employee and board members share allocations

In 2008, OpenTV Corp issued 100 000 restricted Class A ordinary shares each for OpenTV's executive chairman and chief executive officer. The restriction from sale or transfer of these shares shall lapse with respect to one-third of the restricted shares on each March 5, 2009, 2010, 2011. The fair value of the shares is based on the stock market price at the date of grant.

In March 2007, 60 000 restricted shares of OpenTV Corp for no consideration were issued for no consideration to a management member. Such shares were fully vested upon issuance but are restricted from sale or transfer for a specified period of time and as such, the cost was entirely expensed to the income statement at the date of grant.

In December 2007, OpenTV Corp issued 1 211 250 restricted Class A ordinary shares to employees, in lieu of option grants consideration. These shares are restricted from sale or transfer and subject to forfeiture for a period of time that is equivalent to the normal vesting schedule applied to stock options granted under the current option plan. The fair value of the grant has been determined as being the stock market value at the date of grant of USD 1.04 per ordinary share. The expense is recognized over the remaining requisite service period.

In addition as of December 31, 2007, OpenTV Corp's board of directors approved a grant of 1 020 232 restricted Class A ordinary shares including performance and service elements for certain OpenTV's senior management and other key employees. This grant allows for both performance and service elements. Accordingly, once vesting is considered probable, expense is recognized on a straight-line basis over the remaining requisite service period. Final compensation cost is recognized only for awards that ultimately vest. As part of this plan, 1 020 232 Class A ordinary shares were issued in August 2007 as 2007 Management Restricted Shares.The following table summarizes the activity relating to OpenTV's unvested restricted shares during the years ended December 31, 2008 and 2007:

As a result, 771 212 shares vested and were issued, 419 090 shares vested, were issued and immediately cancelled in order to satisfy with holding tax payment on the shares issued in favour of the employees and 260 833 shares forfeited.

Other share based transactions

Minority interest of OpenTV Corp subsidiaries converted their subsidiary shares into OpenTV Corp shares for kCHF2 (2007: kCHF 20).

Opentv share based transactions impacts

The impact of the above transactions on the Group financial statements is as follows: