Employee Stock Option Plan Presenter: Khushwant

Transcript:Employee Stock Option Plan Presenter: Khushwant:
Employee Stock Option Plan Presenter: Khushwant Pahwa, FIAI, FIA Founder and Consulting Actuary KPAC (Actuaries and Consultants) Guide: Shri K K Wadhwa, FIAI Consulting Actuary Kwadhwa.in@gmail.com Agenda Look at the Reference Material Black-Scholes Model Live Example – Listed Company Practical Challenges – Non Listed Companies Market Research Questions Black-Scholes Formula Reference material provided contains necessary reading material for ESOPs: Ind AS 102: Share Based Payments GN on Share Based Payments Ind AS 101: First time Adoption SEBI Guidelines: SEBI (Employee Stock Option Scheme And Employee Stock Purchase Scheme) Guidelines, 1999 SEBI (Share Based Employee Benefits) Regulations, 2014 CT8 Chapter 12 (The Binomial Model) CT8 Chapter 13 (The Black-Scholes option pricing formula) Mayur Ankolekar’s presentation on ESOPs Let is take a quick overview of each of above Ind AS 102: Share Based Payments (1/4) 35 page Standard covering Share Based Payments. Specifies Recognition, Measurement and Disclosure with regards to share based transactions. Standard is divided into 3 main parts: Main Standard, containing Scope, Recognition, Measurement and Disclosure Requirements. Appendix A, giving major definitions Appendix B, which provides guidance on application of the standard Appendices are an integral part of the Standard. Overview of above parts given in the following slides. Ind AS 102: Share Based Payments (2/4) Main Standard (16 pages) Objectives & Scope (2 pages) Disclosures (3 pages) Recognition (11 pages) Financial reporting of all SBPT, whether or not the entity can identify specifically some or all of the goods or services received Equity-Settled SBPT SBPT with choice of settlement Writer Holder Cash-Settled SBPT Description of SBPT - Para 44, with 45 Description of method / assumption used to estimate fair value of option - Para 46, with 47 to 49 Expense to be recognized in P/L statement - Para 50, with 51 to 52 For each SBPT: Recognition & Measurement Treatment of vesting condition (Marketing & Non-Marketing) Modification of terms & condition Settlement by group entities Ind AS 102: Share Based Payments (3/4) Appendix A (5 pages) Cash-settled SBPT Employees and others providing similar services Equity instrument Equity instrument granted Equity-settled SBPT Fair Value Grant Date Intrinsic Value Market condition Measurement Date Performance condition Reload feature Reload option Service condition Share-based payment arrangement Share-based payment transaction Share option Vest Vesting condition Vesting period Appendix A defines following items: Ind AS 102: Share Based Payments (4/4) Appendix B (14 pages) Estimating fair value of equity instruments Share options Shares Expected