In short
A performance condition makes vesting of a share-based award depend on the company's own operations, such as reaching an earnings per share or revenue target, as well as on the employee's service.
Key takeaways
- Compensation cost is recognized only if achieving the condition is probable.
- It isn't reflected in the grant-date fair value, unlike a market condition.
- If the condition isn't met, previously recognized cost is reversed.
Where it's tested
BAR: Stock Compensation — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
How does a company account for share-based awards with a performance condition that is not probable of being achieved?