prepare any necessary entries in e s financial statements as at dec 31 for the years 613342

Increase in number of equity instruments or modification of vesting conditions?

An entity grants a performance-related award which provides for different numbers of options to vest after 3 years, depending on different performance targets as follows.

During the vesting period, the entity concludes that the criteria are too demanding and modifies them as follows.

This raises the issue of whether the entity has changed:

(a) the performance conditions for the vesting of 200 or 300 options; or

(b) the number of equity instruments awarded for achieving 5%-10% or over 10% growth.

In our view, the reality is that the change is to the performance conditions for the vesting of 200 or 300 options, and should therefore be dealt with as in 7.3.1.C , rather than 7.3.1.B , above. Suppose, however, that the conditions had been modified as follows.

In that case, there has clearly been an increase in the number of equity instruments subject to an award for an increase of over 15% growth, which would have to be accounted for as such (i.e. under 7.3.1.B , rather than 7.3.1.C , above). In such a case, it might seem more appropriate to deal with the changes to the lower bands as changes to the number of shares awarded rather than changes to the performance conditions.