Sony 2003 Annual Report Download - page 208
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Consolidated Financial Information 2003
- 122 -
The weighted-average fair value per share at the date of grant for common stock warrants, convertible
bond options and stock acquisition rights granted during the years ended March 31, 2001, 2002 and 2003
was ¥4,111, ¥2,554 and ¥1,707 ($14.23), respectively. The fair value of common stock warrants, convertible
bond options and stock acquisition rights granted on the date of grant, which is amortized to expense over
the vesting period in determining the pro forma impact, is estimated using the Black-Scholes option-pricing
model with the following weighted-average assumptions:
Year ended March 31
Weighted-average
assumptions
2001
2002
2003
Risk-free interest rate 2.68% 2.58% 1.73%
Expected lives 3.26years 3.28years 3.30years
Expected volatility 44.07% 50.81% 44.54%
Expected dividend 0.21% 0.40% 0.49%
(4) SAR plan:
Sony grants stock appreciations rights (“SARs”) in Japan, Europe and the United States of America for
selected employees. Under the terms of these plans, employees on exercise receive cash equal to the
amount that the market price of Sony Corporation’s common stock exceeds the strike price of the SARs.
The SARs generally vest ratably over a period of three years, and are generally exercisable up to six to ten
years from the date of grant. Sony holds treasury stock for the SAR plan in Japan to minimize cash flow
exposure associated with the SARs. In addition, Sony uses various strategies to minimize the
compensation expense associated with the SAR plans in the United States of America and Europe.
In December 2001, Sony granted options under its convertible bond plan to certain employees in
exchange for the employees agreeing to cancel an equal number of outstanding SARs. Under FASB
Interpretation No. 44 “Accounting for Certain Transactions Involving Stock Compensation – an interpretation
of APB Opinion No. 25”, no compensation charge was recorded as the number and terms of the new options
under the convertible bond plan were substantially the same as the SARs that were cancelled.