The Group employees (including the Management Board Members) receive remuneration in the form of treasury shares. As a result, they provide services in return for shares or rights to shares (‘equity-settled transactions’).
The cost of equity-settled transactions with the employees is measured by reference to fair value as at the date of vesting the rights. The fair value is determined by an independent expert as at the date of vesting the rights on the basis of the binominal model discussed further herein in supplementary information and explanatory notes. The valuation of equity-settled transactions takes into account market conditions of acquiring the rights (related to the price of the parent company shares).
The costs of equity-settled transactions are recognised together with the corresponding increase in equity in the period when the conditions concerning the effectiveness/results and the provision of work are met, ending on the date when the particular employees become fully entitled to the given benefits (‘vesting date’). The cumulated cost recognised due to equity-settled transactions as at each balance-sheet date until the vesting date reflects the progress of the period of acquiring (vesting) the rights and the number of awards the rights to which – in the opinion of Group Management Board as of that day, based on the best possible estimates of the number of equity instruments – are finally acquired.
No costs are recognised for not finally qualified awards, except for those awards for which the qualification depends on market conditions and which are treated as qualified regardless of the fact of meeting the market conditions, provided, however, that all other non-market conditions are met.
In the event of modifications of the conditions governing the granting of equity-settled awards, in order to comply with the minimum requirements, the costs are recognised as if the conditions had not been modified. Furthermore, the costs related to each increase in the transaction value as a result of the modification are recognised at the date of the change.
In the event of cancelling the equity-settled award, it is treated as if it was qualified on the cancellation date and all the award related costs not yet recognised are immediately recognised. However, in the event of replacing the cancelled award with a new one, specified as a substitution award on the date of its granting, the cancelled award and the new one are treated as if they constituted a modification of the original award, i.e. in accordance with the provisions of the paragraph above.
No costs are stated for not finally qualified awards, except for those awards for which the qualification depends on market conditions or conditions other than the vesting conditions, which are treated as acquired regardless of the fact of meeting the market conditions or conditions other than the acquiring (vesting) conditions, provided, however, that all other conditions with regard to the efficiency/results and/or the provision of work or services have been complied with.
The effect of the issued share options is considered when determining the diluted earnings per share.
