NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the period ended 28 July 2018 H4 SHARE-BASED PAYMENTS (CONTINUED) (a) Long Term Incentive Plan (continued) Set out below is a summary of performance rights granted under the plan: 2018 Balance Expired and Balance 29 July 2017 Granted Exercised lapsed 28 July 2018 Total 10,645,383 14,238,436 (459,675) (10,731,492) 13,692,652 Weighted average exercise price $0.00 $0.00 $0.00 $0.00 $0.00 2017 Balance Expired and Balance 30 July 2016 Granted Exercised lapsed 29 July 2017 Total 6,997,530 4,714,871 (28,355) (1,038,663) 10,645,383 Weighted average exercise price $0.00 $0.00 $0.00 $0.00 $0.00 The weighted average remaining contractual life of share rights outstanding at the end of the period was 1.6 years (2017: 1.5 years). Fair value of performance rights granted The assessed fair value at grant date of rigts granted during the peod is oted below. Faialue varies depedgon the peod to vesting date. The fair values at grant dates were independently determined using a Monte Carlo simulation pricing model that takes into account the exercise price, the term of the rights, the impact of dilution, the fair value of shares in the Company at grant date and expected volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the right. The fair values and model inputs for performance rights granted during the period included: 2018 LTIP 2018 LTIP 2018 LTIP Rights Rights Rights (TSR) (EPS) (ROFE) (a)Fair value of performance rights granted $0.22 $0.50 $0.50 (b)Grant date 21-Dec-17 21-Dec-17 21-Dec-17 (c)Expiry date 31-Oct-20 31-Oct-20 31-Oct-20 (d)Share price at grant date $0.61 $0.61 $0.61 (e)Expected price volatility of the Group’s shares 41% 41% 41% (f)Expected dividend yield 8.2% 8.2% 8.2% (g)Risk-free interest rate 2.07% 2.07% 2.07% The expected price volatility is based on the historic volatility (based on the remaining life of the performance rights), adjusted for any expected changes to future volatility due to publicly available information. Where rights are issued to employees of subsidiaries within the Group, the subsidiaries compensate the Company for the amount recognised as expense in relation to these rights. (b) Expenses arising from share-based payment transactions Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense were as follows: 2018 2017 $'000 $'000 Rights issued under the LTIP 982 1,782 Share-based payment transaction expenses represent the amount recognised in the period in relation to share-based remuneration plans. Where expectations of the number of rights expected to vest changes, the life to date expense is adjusted, which can result in a negative expense for the period due to the reversal of amounts recognised in prior periods. Accounting policy Share-based compensation benefits are provided to employees through the Myer Long Term Incentive Plan (LTIP). The fair value of rights granted under the plan is recognised as an employee benefit expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the rights granted, which includes any market performance conditions but excludes the impact of any services and non-market performance vesting conditions and the impact of any non-vesting conditions. Non-market vesting conditions are included in assumptions about the number of rights that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of rights that are expected to vest based on the non-market vesting conditions. It recognises the impact of revisions to original estimates, if any, in profit or loss, with a corresponding adjustment to equity. The LTIP is administered by the Myer Equity Plan Trust (refer to note G1). When rights are vested, the trust transfers the appropriate number of shares to the employee. The proceeds received net of any directly attributable transaction costs are credited directly to equity. 82 Myer Annual Report 2018