Share Based Payment
Ques -
PQ Ltd. grants 100 stock options to each of its 1,000 employees on 1-4-2013, conditional upon the employee remaining in the company for 2 years. The fair value of the option is ` 18 on the grant date and the exercise price is ` 55 per share. The other information is given as under:
(i) The no. of employees expected to satisfy service condition are 930 in the 1st year and 850 in the 2nd year.
(ii) 40 employees left the company in the 1st year of service and 880 employees have actually completed 2 year vesting period.
(iii) The profit of the enterprise before amortization of the compensation cost on account of ESOPs is as follows:
(A) ` 18,50,000
(B) ` 22,00,000
(iv) The fair value of share for these years was ` 80 and ` 88 respectively.
(v) The company has 6 lakhs shares of ` 10 each outstanding at the end of both years.
Compute basic and diluted EPS for both the years (ignore the tax impacts).
Answer
In attached pictures.
Profit before amortization of ESOP cost.
18,50,000 22,00,000
Less: ESOP cost amortised
(7,65,000) (8,19,000)
Net profit for shareholders
10,85,000 13,81,000
No. of shares outstanding 6,00,000 6,00,000
Basic EPS. 1.81 2.30
Potential equity. 19,200 33,000
Total no. of equity shares 6,19,200 6,33,000
Diluted EPS. 1.75 2.18
Ques -
PQ Ltd. grants 100 stock options to each of its 1,000 employees on 1-4-2013, conditional upon the employee remaining in the company for 2 years. The fair value of the option is ` 18 on the grant date and the exercise price is ` 55 per share. The other information is given as under:
(i) The no. of employees expected to satisfy service condition are 930 in the 1st year and 850 in the 2nd year.
(ii) 40 employees left the company in the 1st year of service and 880 employees have actually completed 2 year vesting period.
(iii) The profit of the enterprise before amortization of the compensation cost on account of ESOPs is as follows:
(A) ` 18,50,000
(B) ` 22,00,000
(iv) The fair value of share for these years was ` 80 and ` 88 respectively.
(v) The company has 6 lakhs shares of ` 10 each outstanding at the end of both years.
Compute basic and diluted EPS for both the years (ignore the tax impacts).
Answer
In attached pictures.
Profit before amortization of ESOP cost.
18,50,000 22,00,000
Less: ESOP cost amortised
(7,65,000) (8,19,000)
Net profit for shareholders
10,85,000 13,81,000
No. of shares outstanding 6,00,000 6,00,000
Basic EPS. 1.81 2.30
Potential equity. 19,200 33,000
Total no. of equity shares 6,19,200 6,33,000
Diluted EPS. 1.75 2.18
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