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## 30. Employee Benefits (continued) 

## Employee Option Incentive Scheme for Rebel Sport Limited 

Rebel Sport Limited (“Rebel”) is the only entity within the Harvey Norman Holdings Limited consolidated group that offers an Employee Option Incentive Scheme. Hence the disclosure below only relates to Rebel. 

Rebel operates an Employee Option Incentive Scheme which was approved by shareholders on 12 October 1993. Under the terms of this Scheme, the directors may offer options over unissued ordinary shares in Rebel to certain senior management employees of Rebel. 

Pursuant to this Scheme, on 4 April 2003, Rebel granted unlisted options over 500,000 unissued ordinary shares to one employee of the consolidated entity, at an exercise price of $2.22 per option. The options were issued free of charge to this employee. This employee, Karen Bozic, later became an executive director of Rebel on 22 May 2003. Using the Black-Scholes Option Pricing Formula, the options issued were valued at $0.49 per option, or $247,000 in total. 

In the prior period, Rebel granted unlisted options over 40,000 unissued ordinary shares to one employee of Rebel, at an exercise price of $0.92 per option. 

Subsequent to balance date, Rebel granted unlisted options over 450,000 ordinary shares to three senior executives of Rebel, at an exercise price of $2.46 per option. These options were issued free of charge to these employees. 

Under the Employee Option Incentive Scheme, each of the outstanding options will lapse after five years from the date of issue and are exercisable as follows: 

 In the first year after the issue, no options will be exercisable. 

 In the second year after the issue, 20% of the options will become exercisable. 

 In each successive year, 20% of the options will become exercisable. 

 The right to exercise the options is cumulative. 

 All of the unexercised options become exercisable thirty days before the fifth anniversary of the issue of the options. 

If a relevant employee leaves the employment of Rebel within one year of commencing employment, all of the options held by that relevant employee will lapse. For employees with greater than one year’s service, any unexercised options will lapse thirty days after an employee ceases employment with Rebel. During the year ended 30 June 2003, 81,000 (2002: 323,000) options issued to six (2002: twelve) employees whose employment terminated, were cancelled. 

## Options Issued to Directors of Rebel Sport Limited 

For details on options issued to the directors of Rebel, refer to Note 26. Contributed Equity (Rebel Sport Limited section). 

Options issued to employees or directors are not transferable without approval by the Board of Rebel and are not quoted on the ASX. Upon exercise, each outstanding option entitles the holder to subscribe for one fully paid ordinary share in Rebel. 

The following table summarises information about options exercised by employees and directors of Rebel under the Employee Option Incentive Scheme during the year 30 June 2003: 

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Subsequent to balance date, 50,000 options have been exercised by employees, resulting in the issue of 50,000 ordinary shares. 

