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Under IFRS 2 there is an example for cash settled share based payment which involves share appreciation rights (SARs) given to employees.
Share appreciation rights: Cash equals to the increase in share price is paid.
Intrinsic Value: Market value minus Strike price. (not sure if this applies to SARs)The example shows when the employees exercise the SARs, cash equal to the intrinsic value is paid to the employees. I’m confused here. Why cash equals to the amount of intrinsic value is paid? What’s the relationship between increase in share price and intrinsic value?
Oscar, here’s a link that will explain it. It’s too much for me to write it out for you but basically it’s the difference between the strike price and the market price. And the strike price is not the same as the share price at the date of granting the SARs
Sorry!
https://www.trader-soft.com/option-trading/option-basics/option-premium.html
I put into Google “intrinsic value and strike price” and a number of threads appeared. If the one I have given you doesn’t answer your question, try the other threads
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