Market Based Condition – Equity Settled Share based payment

Hi Stephen,

Say an entity has share price condition attached to its equity settled share based payment (.i.e share price must increase to $2.4/share) but the entity did not achieve the share price target. However, despite the entity not achieving this share price we will still recognise the expense based on the original fair value.

The ACCA articles state that the reason for this is because ‘The market-based condition is taken into account in measuring the fair value of the share option at the grant date..’.

So, this almost sounds as if the market based performance condition like this does not matter at all (since not achieving the target did not matter) which then makes me question why then even set out such redundant performance condition in the first place anyways? I am quite confused with this…

Kind regards,
RR