Share - Based Payment Flashcards
Two Types of Settlement
Equity Settled
Cash Settled
Equity Settled
What are the 2 methods?
How to compute compensation in each methods?
Share Options
Methods
1. FV method
- Compensation = FV of options @ date of grant
2. Intrinsic Value method
- Compensation = MP less Option Price
- Used only if FV method is not applicable
Cash Settled
How to measure liability?
Share Appreciation Rights
Liability = MP less Price
Vesting
Immediately vs Not Immediately
Requirements for employees for above
How to recognize compensation expense for above?
Immediately
- employee not required to do something
- Compensation expense = Recognized fully at grant date
Not Immediately
- employee need to complete a specified service period
- Compensation Expense = Recognized over the vesting period
What if the condition is based on Share Price?
IGNORE (employees can’t do anything about it)