Share Based Payment ASB DP - ACT Response

The ASB's Discussion Paper has raised many issues of interest to a treasurer. The Paper focuses primarily on employee share plans, particularly those based on share options. Since these options are a financial derivative, treasurers will be familiar with many of the concepts introduced by the ASB.

The method of accounting for share options inevitably impinges on the schemes actually used and, perhaps in consequence, has become a highly contentious area on which a diverse range of views is held, often with considerable fervour! The ACT has accordingly had difficulty in formulating an 'ACT view' that will command general support, however, the topic is of vital interest to treasurers and the purpose of this paper is to advance the discussion. The paper seeks to identify the main points and, where appropriate, seeks to draw reasonable conclusions from the arguments.

There are two key issues being addressed by the ASB:

1. How should share-based payments be recognised in the accounts (the most important being share option costs)?

2. How should share options be valued?