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  • This topic has 3 replies, 2 voices, and was last updated 8 years ago by P2-D2.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • February 2, 2017 at 1:08 pm #370759
    ahmed9729
    Member
    • Topics: 66
    • Replies: 60
    • ☆☆

    At the end of the vesting period, shares are exercised at intrinsic value or exercise price?
    Because, in one example in text, its showing intrinsic value..but i think it should be exercise price

    And in which settlement (equity and cash), do we use the option pricing model?

    February 4, 2017 at 7:55 am #370991
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    Hi,

    The shares will be exercised at the exercise price and we use the option pricing model to value the equity settled share based payment.

    Thanks

    February 4, 2017 at 8:52 pm #371073
    ahmed9729
    Member
    • Topics: 66
    • Replies: 60
    • ☆☆

    Okay, so the option pricing is used only if we don’t have a proper fair value for the shares?
    Its like the 2nd alternative correct?

    February 5, 2017 at 8:10 pm #371237
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    Hi,

    It’s easy to get the fair value of cash settled as it is just the difference between the current share price and exercise price.

    You sound like you’re getting confused a bit though. We’re using the option pricing model to value the option on the shares, not the shares themselves.

    Thanks

  • Author
    Posts
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