Share-Based Payment Memo Template (IFRS 2, ASC 718)

Share-based payment memo: plan terms, classification, grant date, Black-Scholes inputs, vesting true-up, forfeitures, modifications, deferred tax, ASC 718 differences, disclosures

재무, 투자 및 회계표준IFRS 2; IAS 12; ASC 718share based payment memo math업데이트됨 2026. 10. 29.

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사용법: Use it for each share option, RSU or performance share plan and re-open it for modifications and year-end estimates. Fill the plan terms and fair value inputs with their sources first. The main pitfall is truing up expense for market conditions, which are already in the grant-date value.

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Share-Based Payment Memo: [Plan name and grant]

Technical accounting memo for one share-based payment plan or grant: plan terms, classification as equity- or cash-settled, grant date, fair value and inputs, vesting and attribution, forfeitures, modifications and cancellations, income tax and employer taxes, and disclosure. Structure aligned with IFRS 2 Share-based Payment (as amended, last substantive amendment June 2016) and FASB ASC Topic 718 Compensation, Stock Compensation, cited by paragraph or section number only. Obtain the standards for the normative text. Replace every [bracketed] value and every row marked Example. This is a documentation format, not accounting, tax, legal or financial advice: check the current official text and a qualified professional.

Document control

Field	Value
Document ID	[SBP-YYYY-NN] Example: SBP-2027-01
Plan	[Plan name and rules version] Example: Brindlecote 2026 Executive Share Option Plan, rules v1.2
Grant	[Grant ID and date] Example: GR-2027-01, 2027-01-01
Framework	[IFRS 2 / ASC 718 / both] Example: IFRS 2; ASC 718 differences in section 9
Valuation source	[Internal or external valuer, report reference]
Version	[0.1]
Status	[Draft / In review / Final]
Owner	[@technical-accounting]
Approvers/reviewers	[@group-controller], [@head-of-reward], [@tax]
Last updated	YYYY-MM-DD
Classification	[Confidential]

Approvals

Role	Name	Decision	Date
Preparer	[@name]	[Prepared]	YYYY-MM-DD
Head of reward	[@name]	[Confirmed plan facts]	YYYY-MM-DD
Group controller	[@name]	[Approved]	YYYY-MM-DD

Revision history

Version	Date	Author	Change summary
0.1	YYYY-MM-DD	[@name]	Draft at grant
1.0	YYYY-MM-DD	[@name]	Example: 2027 year-end estimate
1.1	YYYY-MM-DD	[@name]	Example: Repricing on 2028-12-31 (section 7)

1. Summary and conclusion

Example: GR-2027-01 grants 300,000 share options to 60 employees with an exercise price of GBP 20.00, equal to the share price on the grant date, vesting after three years of service (cliff) and expiring after ten years. The award is equity-settled. Grant-date fair value is GBP 7.21 per option. Expense recognised over 2027 to 2029 is GBP 1,816,920 for the original award plus GBP 408,240 incremental fair value from the repricing on 2028-12-31, a total of GBP 2,225,160.

2. Plan terms

Term	Value
Instrument	[Options / RSUs / performance shares / SARs / phantom units]
Number granted	Example: 300,000 options
Exercise price	Example: GBP 20.00
Service condition	Example: employment for three years from grant
Performance condition	[Non-market (EPS, revenue) / market (TSR, share price) / none] Example: none
Contractual term	Example: ten years
Settlement	[Shares / cash / choice of holder or entity] Example: new shares
Leaver terms	Example: unvested options lapse on leaving; good leavers keep a time-apportioned number
Net settlement for withholding tax	[Yes / No]

3. Classification and scope

Question	Answer and evidence
Is this a share-based payment in scope (IFRS 2 paras. 2 to 6; ASC 718-10-15)?	Example: Yes, goods or services (employee service) received for equity instruments
Who settles: the entity, its parent or a shareholder?	Example: Parent issues shares to subsidiary employees; subsidiary recognises equity-settled expense with a capital contribution
Equity- or cash-settled (IFRS 2 paras. 10, 30, 34)?	Example: Equity-settled, no past practice of cash settlement
Any choice of settlement?	Example: No
Liability classification triggers under ASC 718-10-25 (puttable shares, indexed to other factors)	Example: None

4. Grant date and fair value

Grant date: Example: 2027-01-01, when the board approved the grant and award letters were accepted (IFRS 2 Appendix A; ASC 718-10-20).

Model: [Black-Scholes-Merton / binomial / Monte Carlo for market conditions] Example: Black-Scholes-Merton, because there are no market conditions and expected early exercise is captured through the expected term.

Input	Value	Source
Share price at grant	Example: GBP 20.00	Closing price, 2026-12-31
Exercise price	Example: GBP 20.00	Plan rules
Expected term	Example: 6 years	Historical exercise behaviour
Expected volatility	Example: 35%	Historical volatility over six years, peer check
Risk-free rate	Example: 3.5% (continuous)	Government bond yield for the expected term
Expected dividend yield	Example: 1.0%	Dividend policy

The model, with d1 = 0.6036 and d2 = -0.2537, gives:

C = S e^{-qT} N(d_1) - K e^{-rT} N(d_2) \approx 7.21

where S is the share price, K the exercise price, T the expected term, q the dividend yield and r the risk-free rate. Market conditions and non-vesting conditions are reflected in this value and never trued up later (IFRS 2 paras. 21 and 21A). Non-market performance and service conditions are not in the value; they adjust the number of awards expected to vest.

5. Vesting and expense attribution

Expense is recognised over the vesting period based on the best estimate of options expected to vest, revised at each reporting date (IFRS 2 paras. 19 and 20). Graded vesting is accounted for as separate tranches under IFRS 2; this grant vests in one tranche.

Example, GBP:

Year end	Options expected or actually vesting	Cumulative expense	Expense in the year
2027-12-31	270,000 (90% retention)	270,000 x 7.21 x 1/3 = 648,900	648,900
2028-12-31	255,000 (85% retention)	255,000 x 7.21 x 2/3 = 1,225,700	576,800
2029-12-31	252,000 (actual)	252,000 x 7.21 = 1,816,920	591,220

Journal each year: debit employee benefit expense, credit equity (share-based payment reserve). On exercise, the cash received and the reserve are transferred within equity under local company law.

6. Forfeitures, leavers and cancellations

Event	IFRS 2	ASC 718
Employee leaves before vesting	Reverse cumulative expense for those awards through the true-up	Same, or account for forfeitures as they occur if that policy is elected (ASC 718-10-35-3)
Market condition not met	No reversal (para. 21)	No reversal
Cancellation by entity or employee during vesting	Accelerate the remaining unrecognised expense (para. 28)	Unrecognised cost recognised at cancellation unless a replacement award is granted

7. Modifications

Example: On 2028-12-31 the share price was GBP 14.00 and the board repriced the options to an exercise price of GBP 14.00, with no other change. Fair values at that date (remaining expected term 4 years, volatility 38%, other inputs unchanged) are GBP 2.84 before and GBP 4.46 after, an increment of GBP 1.62 per option. The increment is recognised over the remaining vesting period, 2029, for options that vest (IFRS 2 para. 27 and Appendix B paras. B42 to B44; ASC 718-20-35-3):

Item	Calculation	GBP
Original grant-date cost in 2029	From section 5	591,220
Incremental fair value in 2029	252,000 x 1.62	408,240
Total 2029 expense		999,460
Total over life of the award	1,816,920 + 408,240	2,225,160

A modification that changes classification from cash-settled to equity-settled follows IFRS 2 paras. B44A to B44C.

8. Income taxes and employer taxes

IFRS (IAS 12 paras. 68A to 68C): measure the deferred tax asset on the estimated future deduction (for options, usually intrinsic value at the reporting date) for the portion of service received. If the estimated deduction exceeds cumulative expense, the excess tax effect goes to equity.

Example: at 2027-12-31 the share price is GBP 22.00, intrinsic value GBP 2.00, tax rate 25%. Deferred tax asset = 2.00 x 270,000 x 1/3 x 25% = GBP 45,000, credited to profit or loss because the estimated deduction (GBP 180,000) is below cumulative expense (GBP 648,900).

US GAAP (ASC 718-740): the deferred tax asset follows cumulative recognised cost (648,900 x 25% = GBP 162,225 on the same facts); excess tax benefits and shortfalls at settlement go to income tax expense.

Employer social security or payroll taxes on exercise or vesting are accounted for separately as a liability, for example under IAS 19 or IAS 37 policies. Net settlement to meet the employee's withholding tax follows IFRS 2 paras. 33E to 33H, or ASC 718-10-25 for US GAAP.

9. US GAAP differences (ASC 718)

Topic	IFRS 2	ASC 718
Graded vesting, service only	Each tranche separately	Policy choice: straight-line over the whole award or tranche by tranche
Forfeitures	Estimate	Policy choice: estimate or account as they occur
Non-employee awards	Measured at fair value of goods or services where reliable	Aligned with employee model since ASU 2018-07
Nonpublic entities	Fair value	Practical expedients (calculated value, intrinsic value for liabilities)
Deferred tax	Based on estimated deduction	Based on cumulative recognised cost
Profits interests	Analyse terms	Scope illustration added by ASU 2024-01; check effective date

10. Disclosure checklist

Disclosure	Reference	Note
Description of each plan, vesting and settlement	IFRS 2 para. 45(a)	[Note X]
Number and weighted average exercise price of options by movement	IFRS 2 para. 45(b)	[Note X]
Fair value measurement and inputs	IFRS 2 paras. 46 and 47	[Note X]
Effect of modifications	IFRS 2 para. 47(c)	[Note X]
Total expense and liabilities	IFRS 2 paras. 50 and 51	[Note X]
ASC 718 disclosures	ASC 718-10-50	[Note X]

11. Glossary and references

Term	Meaning in this memo
Grant date	Date on which the entity and employee share an understanding of the terms, after approvals
Vesting condition	Service or performance condition that decides whether the employee earns the award
Market condition	Performance condition linked to share price or shareholder return
Incremental fair value	Value added by a modification, measured on the modification date
Intrinsic value	Share price less exercise price

Reference	Version or date	URL
IFRS 2 Share-based Payment	Issued 2004, amended June 2016 and by consequential amendments	https://www.ifrs.org/issued-standards/list-of-standards/ifrs-2-share-based-payment/
IAS 12 Income Taxes	As amended	https://www.ifrs.org/issued-standards/list-of-standards/ias-12-income-taxes/
FASB ASC Topic 718	As amended, including ASU 2016-09, 2018-07, 2024-01	https://asc.fasb.org/

Standard and licence note

Structure aligned with IFRS 2 Share-based Payment, IAS 12 and FASB ASC Topic 718. Standards are cited by name and paragraph or section number only; no text from the IFRS Foundation or FASB is reproduced. Official text: IFRS Foundation (licensed access at https://www.ifrs.org/) and FASB (Accounting Standards Codification at https://asc.fasb.org/). The Black-Scholes-Merton formula is a public mathematical model. Check later amendments and effective dates. Brindlecote Software and all figures are fictional. The text is original and is not accounting, tax or financial advice. Template licence: MIT.