Share-based Payment

Date recorded:

At a recent meeting the IFRIC was unable to reach consensus on the appropriate accounting for changes in contributions to employee share purchase plans, and the chair requested that the matters under debate be brought before the Board. The Board agreed that their should be no difference in the accounting whether the employee or the employer had cancelled the share-based payment transaction - in either case the requirements of IFRS 2 in respect of cancellations (that is accelerated expensing) apply. The Board noted that this was consistent with FAS 123 (r) and also consistent with a discussion they had in respect of executives voluntarily forfeiting share options during the development of IFRS 2.

The Board noted that this did result in an anomaly - if the employee ceases to save prior to ceasing employment (possibly in anticipation of cessation of employment) and the options are cancelled, accelerated vesting would occur, but if the employee ceases employment first, truing up would be allowed. However, the Board agreed that this was a result of the bright line they had been forced to draw in the development of IFRS 2 to enable truing up.

The Board agreed that vesting conditions comprise service and performance conditions only. The staff will report to the IFRIC the outcome of the Board debate.

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