This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

IFRS 2 — Definition of performance condition: performance target achieved after the service period

Date recorded:

The Exposure Draft ED/2012/1 Annual Improvements to IFRSs 2010 – 2012 cycle published in May 2012 included a proposal to clarify the definition of ‘vesting conditions’ in Appendix A of IFRS 2 Share-based Payment by separately defining a ‘performance condition’ and a ‘service condition’.

The project manager informed the Board that the US Emerging Issues Task Force (EITF) reached a consensus that a performance target that is achieved after the requisite service period is a performance condition.

The IASB discussed at their meeting in February 2013 the definitions of ‘vesting conditions’ and ‘performance conditions’ in light of the proposed amendments within the Annual Improvements to IFRSs 2010-2012 cycle. It was decided that the duration of a performance condition needed to be wholly within the period of the related service requirement and that performance conditions outside of this period would be considered as non-vesting conditions.

The project manager asked the Board whether they think that any further work is required prior to finalising the proposed amendments to IFRS 2 in light of the diverging views of the IASB and the EITF.

One Board member said that it cannot be ignored that the EITF has a different view on the same principle and that there should be an exchange with the EITF.

Another Board member wondered if the different views are due to the fact that the US-GAAP guidance on share-based payments and IFRS 2 are different in this aspect and asked the implementation director how far both Standards are converged.

The implementation director confirmed that the Standards are converged on principles but not on details. However, this aspect would be considered as a principle and not a detail.

The vice-chairman issued concerns about the abandonment of conversion when proceeding.

One Board member said that the IASB should not change their answer as the EITF has made its decision although the IASB had already decided otherwise.

It was discussed whether the IASB should try to take influence on the decision and whether the proposed amendment should be deferred until the EITF has reached its final decision.

Although several Board members had expressed a strong wish to finalise the project regardless of the EITF’s discussion, the vice-chairman convinced them to postpone this issue until the next Board Meeting in order to have time to consider long-term implications any decisions could have and also ask the IFRS IC to discuss this issue in their November meeting.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.