This excerpt taken from the CHINA 20-F filed Jun 30, 2009.
(o) Stock Compensation Expenses
During 2008 and in prior years, certain employees of the Company have been granted CDC Corporation share options under CDC Corporations share incentive plans.
Equity-based compensation expense recognized under Share Based Payment (SFAS 123(R)) in the consolidated statements of operations for the year ended December 31, 2006, 2007 and 2008 was $6,877, $8,388 and $7,782 , respectively. The estimated fair value of the Companys equity-based awards, less expected forfeitures, is amortized over the awards vesting period on a straight-line basis.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands U.S. dollars, except share and per share data)
Under SFAS 123(R), the fair value of share-based awards is calculated through the use of option-pricing models, even though such models were developed to estimate the fair value of freely tradable, fully transferable options without vesting restrictions, which differ significantly from the Companys option grants. These models also require subjective assumptions, including future share price volatility and expected lives of each option grant.