380 | Share-based payments – IFRS 2 handbook
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6.2 Basic principles of accounting for equity-settled share-based payment transactions with employees................. 83
Example 6.2.1 – Equity-settled share-based payment transaction with a service condition
............................................. 86
Example 6.2.2 – Equity-settled share-based payment transaction with a non-market performance condition
................. 88
Example 6.2.3 – Equity-settled share-based payment transaction with a market condition
............................................. 89
Example 6.2.4 – Not meeting a non-vesting condition that the counterparty can choose to meet
................................... 91
6.3 Determination of grant date ......................................................................................................................................... 94
Example 6.3.1 – Grant date and communication of a plan to the employees
................................................................... 94
Example 6.3.2 – Grant date and determination of exercise price dependent on formula
................................................. 95
Example 6.3.3 – Annual acceptance and monthly reductions
.......................................................................................... 96
Example 6.3.4 – Category 1 discretion clause
................................................................................................................. 98
Example 6.3.5 – Category 2 discretion clause
................................................................................................................. 99
6.4 Determination of the vesting period .......................................................................................................................... 100
Example 6.4.1 – Service commencement date before grant date
................................................................................. 100
Example 6.4.2 – Graded vesting
.................................................................................................................................... 102
Example 6.4.3 – Straight-line attribution and different reference periods
....................................................................... 103
Example 6.4.4 – Straight-line attribution with challenging performance target
.............................................................. 103
Example 6.4.5 – Market condition not met when expected
........................................................................................... 103
Example 6.4.6 – Market condition met earlier than expected
........................................................................................ 104
Example 6.4.7 – Non-market performance condition not met when expected
.............................................................. 105
Example 6.4.8 – Non-market performance condition met earlier than expected
........................................................... 106
Example 6.4.9 – Non-market performance condition with variable vesting period
......................................................... 107
6.5 Determination of type of equity instruments granted ............................................................................................. 108
Example 6.5.1 – Share purchase plan at fixed price for longer period
............................................................................ 109
Example 6.5.2 – Impact of classification as true ESPP or as option plan
........................................................................ 109
Example 6.5.3 – Share purchase funded through loan: Net settlement
..........................................................................110
Example 6.5.4 – Share purchase funded through loan: Gross settlement
.......................................................................110
Example 6.5.5 – Share purchase funded through loan with retrospective partial waiver: Full-recourse loan
................... 111
Example 6.5.6 – Share purchase funded through loan with retrospective partial waiver: Non-recourse loan ..................112
Example 6.5.7 – Share purchase partially funded through loan
....................................................................................... 113
Example 6.5.8 – Share purchase funded through loan: Fixed interest, no dividends
....................................................... 114
Example 6.5.9 – Share purchase funded through loan: Fixed interest and dividends
......................................................115
6.6 Measurement principles ..............................................................................................................................................118
Example 6.6.1 – EPS target treated as a non-vesting condition
......................................................................................119
Example 6.6.2 – Post-vesting transfer restriction
.......................................................................................................... 120
Example 6.6.3 – Forfeitable dividends
........................................................................................................................... 122
6.7 Variable number of equity instruments or variable exercise price .......................................................................... 125
Example 6.7.1 – Measurement of a grant of a variable number of equity instruments to the value of a fixed amount
.... 125
Example 6.7.2 – Non-market performance condition with variable number of equity instruments
................................. 126
Example 6.7.3 – Non-market performance condition with variable exercise price
.......................................................... 127
Example 6.7.4 – Market condition with variable number of equity instruments: Grant to one employee
........................ 128
Example 6.7.5 – Market condition with variable number of equity instruments: Grant to more than one employee
....... 129
6.8 Multiple vesting conditions........................................................................................................................................ 130
Example 6.8.1 – Equity-settled share-based payment transaction with ‘and’ conditions
............................................... 130
Example 6.8.2 – Equity-settled share-based payment transaction with ‘or’ conditions
.................................................. 133
Example 6.8.3 – Good leaver clause for retirees
............................................................................................................ 136
Example 6.8.4 – Good leaver clause and a non-vesting condition
.................................................................................. 137
Example 6.8.5 – Good leaver: Cancellation of award for leaver who qualifies as a good leaver
...................................... 138
Example 6.8.6 – Bad leaver allowed to keep their award
............................................................................................... 139
6.9 Forfeiture or cancellation ............................................................................................................................................ 140
Example 6.9.1 – Termination of employment due to sale of division
.............................................................................. 140
Example 6.9.2 – Pro rata accelerated vesting in case of termination by employer
......................................................... 141