Note 31 - Share-based payments

The Company has entered into two Employee share schemes with selected employees.

On the 13 January 2013, the Company entered into a Share option agreement as follows: The Board of Directors of Siem Offshore Inc. has authorized the award of 14,000,000 share options to eight key employees of the Company. The exercise price is NOK 8.45 per share. The exercise price of the granted options is equal to the market price of the shares on the date of the grant.

The Options can be exercised as follows:

2014

20% of the total number beginning on January 18th 2014.

2015

40% of the total number beginning on January 18th 2015, less any options previously issued.

2016

60% of the total number beginning on January 18th 2016, less any options previously issued.

2017

80% of the total number beginning on January 18th 2017, less any options previously issued.

2018

100% of the total number beginning on June 18th 2018, less any options previously issued.

The exercise period shall in no event be later than the date falling 10 years after the award date.The group has no legal or constructive obligation to repurchase or settle the options in cash. No options were exercised during 2015 or 2016.

The weighted average fair value of options granted during the period determined using the Black-Scholes valuation model was NOK 3.72 per option.

The significant inputs into the model were weighted average share price of NOK 8.45 at the grant date, exercise price of NOK 8.45, volatility of 23%, dividend yield of 0%, an expected option life of 10 years and an annual risk-free interest rate of 2.32% (4.13%).

The volatility measured at the standard deviation of continuously compounded share returns is based on statistical analysis of daily share prices over the last three years.

See Note 19 for the total expense recognised in the income statement for share options granted to certain employees.

Value of employee services as per December 31, 2016 are recognized under Retained earnings at USD 3,125.

On the 2 April 2014, the Company entered into a Share option agreement with selected employees. The Board of Directors of Siem Offshore Inc. has authorized the award of 3,000,000 share options to ten key employees of the Company. The exercise price is NOK 9.07 per share. The exercise price of the granted options is equal to the market price of the shares on the date of the grant.

The Options can be exercised as follows:

2017

60% of the total number beginning on April 2nd 2017, less any options previously issued.

2018

80% of the total number beginning on April 2nd 2018, less any options previously issued.

2019

100% of the total number beginning on April 2nd 2019, less any options previously issued.

The exercise period shall in no event be later than the date falling 10 years after the award date. The group has no legal or constructive obligation to repurchase or settle the options in cash. The weighted average fair value of options granted during the period determined using the Black-Scholes valuation model was NOK 3.65 per option.

The significant inputs into the model were weighted average share price of NOK 9.07 at the grant date, exercise price of NOK 9.07, volatility of 25.92%, dividend yield of 0%, an expected option life of 10 years and an annual risk-free interest rate of 2.90%. The volatility measured at the standard deviation of continuously compounded share returns is based on statistical analysis of daily share prices over the last five years.

During 2015 three members of the option program left the Company. They have been taken out of the progam and previously expensesd option costs are reversed. See Note 19 for the total expense recognised in the income statement for share options granted to certain employees.Value of employee services as per December 31, 2016 are recognized under Retained earnings at USD 0.391.

Excercise price per share option, NOK (*weighted average)

Options outstanding

At 1 January 2014

8,45*

14,000,000

Granted

9.07

3,000,000

Forfeited

-

Excersised

-

Expired

-

At 31 December 2014

8,56*

17,000,000

At 1 January 2015

8,56*

17,000,000

Granted

-

Forfeited

-7,200,000

Excersised

-

Expired

-

At 31 December 2015

8,56*

9,800,000

At 1 January 2016

8,56*

9,800,000

Granted

-

Forfeited

-

Excersised

-

Expired

-

At 31 December 2016

8,56*

9,800,000

Board Of Directors

Financial Statements

Notes