Note 5

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5. SHARE-BASED PAYMENTS

The Group grants equity-settled instruments comprising share options and restricted shares to directors, certain officers and employees. During financial 2009, the following share plans were in place: The GF Management Incentive Scheme, the Gold Fields Limited 2005 Share Plan, the Gold Fields Limited 2005 Non-executive Share Plan and the GF Non-executive Director Share Plan. Details of the salient features of these plans are included in the directors’ report.

The following information is available for each plan:

30 June 2008     30 June 2009  
Average             Average  
instrument   Number of     Number of   instrument  
price (cps)   instruments   (a) The GF Management Incentive Scheme instruments   price (cps)  
76.66   5,584,973   Outstanding at 1 July 2008 4,212,219   78.38  
        Movement during the year:        
-   -   Granted during the year -   -  
71.82   (990,175)   Exercised and released (1,367,882)   69.69  
72.33   (382,579)   Forfeited (539,916)   105.39  
-   -   Cancelled -   -  
78.38   4,212,219   Outstanding at 30 June 2009 2,304,421   77.20  
        Included in the above are 2,266,799 (2008: 3,307,624)        
        vested options.        

Average             Average  
instrument   Number of     Number of   instrument  
price (cps)   instruments   (b) GF Non-executive Director Share Plan instruments   price (cps)  
83.47   174,400   Outstanding at 1 July 2008 146,700   83.81  
        Movement during the year:        
-   -   Granted during the year -   -  
81.71   (27,700)   Exercised and released (25,000)   43.70  
-   -   Forfeited (40,000)   99.21  
-   -   Cancelled -   -  
83.81   146,700   Outstanding at 30 June 2009 81,700   88.54  
        All options above in F2009 and F2008 have vested.        

No further allocations are being made under schemes a and b above, in view of the new plans below. However, some share option expiry dates were extended to enable participants who were disadvantaged due to closed periods to be placed in an equitable position. The incremental fair value of the modifi cation is R8.1 million and was recorded in earnings (2008: R4.4 million).

30 June 2008     30 June 2009  
        Contractual             Contractual  
    Weighted   life         Weighted   life  
Number   average   extended     Number   average   extended  
of options   price (Rand)   by (years)     of options   price (Rand)   by (years)  
            The following directors were affected by the modification:            
            Executive directors            
97,999   78.81   0.79   NJ Holland 172,499   76.59   0.38  
294,932   74.35   0.78   ID Cockerill –   –   –  
22,833   114.18   0.67   TP Goodlace 3,167   154.65   0.01  
                         
            Non-executive directors            
6,700   68.59   0.59   K Ansah 6,700   68.59   0.39  
20,000   99.21   1.47   JM McMahon –   -   –  
25,000   84.79   1.18   RL Pennant-Rea 25,000   84.79   0.39  
20,000   99.21   1.47   PJ Ryan –   –   –  
20,000   99.21   1.47   CI von Christierson 20,000   99.21   0.39  
55,000   68.41   1.16   AJ Wright 55,000   68.41   0.39

Performance       Performance     Performance          
    Share   vesting     vesting   Share      
Average   appreciation   restricted     restricted   appreciation   Average  
instrument   rights   shares   (c) Gold Fields Limited 2005 Share Plan and shares   rights   instrument  
price (cps)   (SARS)   (PVRS)         Gold Fields Limited 2005 Non-executive Share Plan (PVRS)   (SARS)   price (cps)  
124.75   1,765,540   1,906,452   Outstanding at 1 July 2008 5,477,487   3,837,937   112.73  
            Movement during the year:            
105.97   2,569,481   4,267,761   Granted during the year 2,668,771   1,311,271   108.90  
–   –   (21,933)   Exercised and released (106,954)   –   –  
118.77   (497,084)   (674,793)   Forfeited (880,240)   (539,582)   121.07  
–   –   –   Conditions for vesting not met (226,900)   –   –  
–   –   –   Cancelled –   –   –  
112.7   3,837,937   5,477,487   Outstanding at 30 June 2009 6,932,164   4,609,626   111.50  
            Included in the above are 558,863 (2008: nil) vested            
            restricted shares.            

30 June 2008     30 June 2009  
    (c) Gold Fields Limited 2005 Share Plan and Gold Fields Limited 2005 Non-executive Share Plan    
         
    The fair value of equity instruments granted during the year were valued using the Black    
    Scholes and Monte Carlo Simulation models.    
    Black Scholes Model    
    This model is used to value the Share Appreciation Rights (SARS) as described in the    
    directors’ report. The inputs to the model for options granted during the year were    
    as follows:    
R105.98   – weighted average exercise price R108.90  
41.7%   – exponentially weighted moving average volatility (based on a statistical analysis    
        of the share price on a weighted moving average basis for the expected term    
        of the option) 51.7%  
3.0-4.2   – expected term (years) 3.0 - 4.2  
1.5%   – long-term expected dividend yield 1.8%  
10.8%   – weighted average risk free interest rate 6.9%  
R41.72   – weighted average fair value R45.90  
         
    Monte-Carlo Simulation    
    This model is used to value the Performance Vesting Restricted Shares (PVRS) as    
    described in the Directors' Report. The inputs to the model for options granted    
    during the year were as follows:    
42.4%   – weighted average historical volatility (based on a statistical 67.8%  
        analysis of the share price on a weighted moving average basis for the expected    
        term of the option)    
3.0   – expected term (years) 3.0  
1.5%   – historical dividend yield 2.3%  
2.8%   – weighted average three year risk free interest rate (based 0.6%  
        on US interest rates)    
R146.30   – weighted average fair value R209.40  
         
    Subsequent to the implementation of the Gold Fields Limited 2005 Share Plans, during    
    financial year 2008, it became evident that the Philadelphia XAU Index (XAU Index) was not    
    representative of Gold Fields' peer competitors, as some of the companies in the XAU Index    
    are not pure gold mining companies. Furthermore, since the selection of the XAU Index as a    
    benchmark, a number of relatively small gold producers have been included in the XAU Index    
    and again these cannot be regarded as representative of Gold Fields' peer competitors.    
         
    Accordingly instead of using the XAU Index, Gold Fields' performance will be measured against    
    only five gold mining companies who can be regarded as peer competitors.    
         
    The incremental fair value and the inputs used in calculating the effect of the modification are    
    listed below:    
41.2%   – weighted average expected volatility (based on a statistical n/a  
        analysis of the share price on a weighted moving average    
        basis for the expected term of the option)    
3.0   – expected term (years) n/a  
0.8%   – expected dividend yield n/a  
2.5%   – weighted average three year risk free interest rate (based n/a  
        on US interest rates)    
R62.53   – weighted average incremental fair value of modification n/a  

The following table summarises information relating to the options outstanding at 30 June 2009:

30 June 2008     30 June 2009  
Weighted average             Weighted average  
Contractual       Number of   Range of exercise prices for outstanding equity Number of       Contractual  
life (years)   Price   instruments   instruments (South African rands) instruments   Price   life (years)  
2.43   –   5,477,488   n/a* 6,932,164   –   1.98  
0.16   21.72   93,000   10.00 - 34.99 –   –   –  
0.43   46.05   252,200   35.00 - 59.99 93,200   46.23   1.00  
3.23   72.39   2,975,255   60.00 - 84.99 1,826,009   72.25   2.27  
5.20   102.99   2,955,032   85.00 - 109.99 3,690,976   105.73   4.84  
3.88   123.43   1,753,702   110.00 - 134.99 1,335,164   123.79   3.11  
1.77   150.80   167,666   135.00 - 159.99 50,398   146.02   1.65  
        13,674,343   Total outstanding at 30 June 2009 13,927,911          
            * Restricted shares (PVRS) are awarded for no consideration.            
        111.74   Weighted average share price during the year 89.20          

 

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