The Board considered various issues arising from preliminary drafts of the final standard.

The staff proposed including a definition of "employees and others providing similar services". The staff recommended that employees be defined broadly, so that it includes not only individuals who are employees for legal or tax purposes, but also individuals who work for the entity under its direction in the same manner as individuals who are regarded as employees for legal or tax purposes.

The Board agreed with the staff proposals together with a clarification that all directors, including non-executive directors, are included in this category. It was noted that this could be done by including a reference to "key management personnel" as defined in IAS 24. It was also agreed to include examples of various inclusions and exclusions.

The staff proposed including a definition of the phrase 'market condition'. In addition the staff has also proposed including two illustrative examples in the implementation guidance to illustrate the application of the requirements of the IFRS to a grant of equity instruments with a market condition and to clarify what happens in situations in which a grant includes both a market condition and a non-market performance condition.

The Board agreed with the staff proposals.

The staff noted that in certain cases the Board had agreed that the entity should measure the equity instruments at their intrinsic value, and remeasure intrinsic value until exercise date.

The staff recommends that the IFRS specify that the requirements for market conditions, modifications and cancellations do not apply under the exercise date/intrinsic value method. The staff also recommended that if an entity settles a grant of equity instruments to which the exercise date/intrinsic value method has been applied:

(a) if the settlement occurs during the vesting period, the entity should account for the settlement as an acceleration of vesting, and hence should recognise immediately the amount that would otherwise have been recognised for services received over the remainder of the vesting period.

(b) any payment made on settlement should be accounted for as the repurchase of equity instruments, ie as a deduction from equity, except to the extent that the payment exceeds the intrinsic value of the equity instruments, measured at the repurchase date. Any such excess should be recognised as an expense.

The Board agreed with the staff proposals.

The Board had previously agreed that the IFRS should include a requirement to disclose information about the number or percentage of equity instruments expected to vest, as estimated at the beginning and end of the period, along with a brief explanation of the reasons for any significant change in estimate during the period. The staff recommended that this disclosure requirement be deleted.

The Board agreed with the staff proposal.

The staff recommended including a requirement in the transitional provisions that the entity should apply with the paragraphs of the IFRS that require disclosure of information on the nature and extent of share-based payment arrangements that existed during the period.

The Board agreed with the staff proposal.

Some questions have arisen as to whether there should be some disclosures concerning liabilities arising from share-based payment transactions.

The staff recommended that, if the Board wishes to include some disclosure requirements concerning liabilities, this should be limited to the opening and closing balance of any such liabilities, and details of movements during the period.

The Board agreed that the closing balance and the intrinsic value at balance sheet date should be disclosed.

The staff recommended adding some guidance to clarify that, if the goods or services are received on more than one date, the entity should measure the fair value of the equity instruments granted on each date when goods or services are received, and apply that fair value when measuring the goods or services received on that date. However, an approximation could be used in some cases. For example, if an entity received services continuously during a three-month period, and its share price did not change significantly during that period, the entity could use the average share price during the three-month period when estimating the fair value of the equity instruments granted.

The Board agreed with the staff proposal.

The Board noted the FASB decisions in respect of the tax effects of equity-settled transactions. These being:

• If the tax deduction arises in a later period than when the expense is recognised, a deferred tax asset should be recognised, based on the cumulative expense. The current share price should not be taken into account, for recognition or impairment purposes.
• If the tax deduction ultimately received is less than the cumulative expense, the writeoff of the unrecovered portion of the deferred tax asset should be recognised in the income statement.
• If the tax deduction ultimately received is greater than the cumulative expense, the excess tax benefits received should be recognised directly in equity.

• Under the IASB method, the deferred tax asset is recognised based on an estimate of the future tax deduction. If changes in the share price affect that future tax deduction, the deferred tax asset will be remeasured in each period. In contrast, the FASB method takes no account of the current share price. This means that the amount of the deferred tax asset under the FASB method is likely to differ from the amount under the IASB method.
• Because the IASB method recognises a deferred tax asset based on the expected future tax deduction, and this includes both the expected tax benefits allocated to the income statement and the expected tax benefits allocated to equity, there may be tax benefits recognised in equity at an earlier date than under the FASB method.

A further difference is that under the IASB method, the allocation between the income statement and equity applies irrespective of why the tax deduction differs from the cumulative expense. Under the FASB method, the allocation of tax benefits between the income statement and equity applies only if the tax deduction differs from the cumulative expense because of the application of a later measurement date for tax purposes. In other situations, in which a difference arises for reasons that have nothing to do with an equity transaction or event, all of the tax benefits received would be recognised in the income statement.