Chapter 13: Share based payments (IFRS 2)

Example 2 - Options expected to be exercised. On 1 January 2014, Edam granted 20,000 share options to each of its ten directors. The conditions attached to the share option scheme are that the directors must remain an employee of Edam for three years. The fair value of each equity settled share based payment at the grant date was $60. At 31 December 2014, it was estimated that four directors would leave before the end of the three years. At 31 December 2015, due to a downturn in the economy, it was estimated that one director would leave before the end of the three years.

Example 1 - Fair value equity settled (services). Brie granted 10,000 equity settled share based payments to each of its 20 directors on 1 January 2015. The options vest on 31 December 2017. It is anticipated that none of the directors will leave over the three year period. The fair value of the option is as follows:

Example 6 - Vesting conditions. Cheshire granted 5,000 share options to each of its five directors on 1 January 2015. The share options will vest on 31 December 2017 if the share price reaches $15. It is not anticipated that any of the directors will leave during the three years. The fair value of each option was $12 at the grant date and the share price at 31 December 2015 was $13. Due to the fall in global stock markets at the start of 2016, it is not anticipated that the share price will rise above its current price for the foreseeable future.

Each entity has a reporting date of 31 December.