Share-based payment, the abbreviation of "share-based payment", refers to a transaction in which an enterprise grants equity instruments or assumes liabilities determined based on equity instruments in order to obtain services from employees and other parties.

Share-based payment, the abbreviation of "share-based payment", refers to a transaction in which an enterprise grants equity instruments or assumes liabilities determined based on equity instruments in order to obtain services from employees and other parties.

The four main links of share-based payment:

Grant date: the date when the share-based payment agreement is approved by the shareholders' meeting;

vesting date: the date when vesting conditions are met and employees or others have rights to obtain equity instruments or cash from the enterprise;

Exercise date;

sale date.

The main types of share-based payment instruments:

Equity-settled share-based payment: refers to transactions in which enterprises settle with shares or other equity instruments as consideration in order to obtain services, such as restricted stocks and stock options;

Cash-settled share-based payment : Refers to a transaction in which an enterprise assumes an obligation to deliver cash or other assets calculated on the basis of shares or other equity instruments in order to obtain services, simulating stocks and cash stock appreciation rights.

Restricted stock: refers to employees or other parties obtaining a certain number of shares of the company from the company in accordance with specified terms or conditions, such as private placement or transfer by shareholders. Usually the shares are granted first and then repurchased if vesting conditions are not met.

Stock options: refers to the right granted by an enterprise to employees or other parties to purchase a certain number of shares of the enterprise at a predetermined price and conditions within a certain period in the future. It is essentially a targeted issuance of warrants.

Cash Stock Appreciation Rights: A compensation instrument in the form of appreciation rights that is tied to the value of the stock.

simulated stock: similar to the principle of restricted stock.

Principles for the recognition and measurement of equity-settled share-based payments:

Principles for the recognition and measurement of cash-settled share-based payments:

Modification of vesting conditions in favor of employees (modified accounting treatment):

Increases the fairness of the grant of equity instruments Value: The increase in services obtained will be recognized according to the increase in the fair value of equity instruments;

increases the number of equity instruments granted: the increase in services obtained will be recognized accordingly according to the fair value of the increased equity instruments;

modifies the vesting conditions, such as shortening the waiting period. Period: When dealing with vesting conditions, consider the modified vesting conditions.

Modifications to the vesting conditions that are not conducive to employees:

Reduce the fair value of the equity instruments granted: continue to recognize the amount of services obtained based on the fair value of the equity instruments on the grant date;

Modify the vesting conditions, such as extending the waiting period : The modified vesting conditions will not be considered when processing vesting conditions;

reduces the number of equity instruments granted: treat the reduction as the cancellation of granted equity instruments.

If the granted equity instruments are canceled or settled during the waiting period (except those canceled due to failure to meet the vesting conditions), they shall be treated as accelerated vesting, and the amount that should have been recognized within the remaining waiting period shall be immediately recognized.

Any amount paid to employees upon cancellation or settlement shall be treated as a repurchase of equity. The portion of the repurchase amount that is higher than the fair value of the equity instrument on the repurchase date shall be included in the current expenses.

If a new equity instrument is granted to replace the original equity instrument, it will be treated in the same way as the modification of the terms and conditions of the original equity instrument. If it is not recognized as a replacement equity instrument, it will be treated as a newly granted share payment.

To determine the fair value of shares, for shares granted to employees, their fair value should be measured based on the market price of the company's shares, and adjusted by taking into account the terms and conditions on which the shares are granted (excluding vesting conditions other than market conditions). If shares of a business are not publicly traded, they should be measured at their estimated market price, adjusted to take into account the terms and conditions under which the shares were granted.

Determination of the fair value of stock options. Stock options granted to employees are usually subject to some terms and conditions that are different from trading options, so in many cases it is difficult to obtain their market price. If no trading options exist with similar terms and conditions, the fair value of the options granted should be estimated through an option pricing model.

Share repurchase for employee option incentives (belonging to equity-settled share-based payment):

Share repurchase:

Borrow: treasury shares

Loan: Bank deposit

At the same time, it is registered for reference;

On each balance sheet date during the waiting period:

Debit: Management expenses, etc.

Credit: Capital reserves - other capital reserves

Measured based on the fair value on the date of grant;

Employee exercise:

Debit: Bank deposits

Capital reserves - other capital reserves

Loan ：Treasury shares

Capital reserve - capital premium

Accounting treatment for equity incentive plans granted to restricted stocks:

1. If the restricted stocks issued to employees have completed registration and other capital increase procedures in accordance with relevant regulations, they will receive payment from employees. When the subscription amount is:

Debit: bank deposit (subscription payment paid by employees)

Credit: share capital

Capital reserve - share capital premium

At the same time, liabilities are recognized for the repurchase obligation (treated as repurchase of treasury shares)

Debit: treasury shares (the amount determined based on the number of issued restricted stocks and the corresponding repurchase price)

Credit: other payables - restricted stock repurchase obligations (including the portion that needs to be repurchased immediately if conditions are not met)

2. Accounting treatment related to share-based payment during the waiting period: Listed companies should comprehensively consider the lock-up period and unlocking period of restricted stocks and other relevant provisions, determine the waiting period in accordance with the relevant provisions of "Accounting Standards for Business Enterprises No. 11 - Share-based Payment", and conduct relevant Accounting treatment related to share-based payment.

3. When the restricted stock unlocking conditions are not met and the stock needs to be repurchased:

Borrow: Other payables - restricted stock repurchase obligations (according to the amount payable)

Credit: Bank deposits

At the same time:

Borrow: Equity ( The amount of share capital corresponding to the number of canceled restricted shares)

Capital reserve - capital premium (according to the difference)

Credit: treasury shares (the book value of treasury shares corresponding to the number of canceled restricted shares)

4. When the restricted stock unlocking conditions are met without the need to repurchase the stock:

Debit: Other payables - restricted stock repurchase obligations (according to the book value of the liability corresponding to the unlocked stock)

Credit: treasury stock (corresponding to the unlocked stock) Book value of treasury shares)

Capital reserve - equity premium (difference, or debit)

cash dividends will be issued during the waiting period . The cash dividends can be revoked. Once the unlocking conditions are not met, the restricted shares will be repurchased. Holders will not be able to receive (or be required to return) cash dividends receivable (or received) during the waiting period. During the waiting period, when accounting for cash dividends that should be distributed to restricted stock holders, a listed company should make a reasonable estimate of the satisfaction of future unlocking conditions. This estimate should be consistent with each balance sheet during the waiting period when accounting for share-based payments. The estimate of the number of exercisable equity instruments should be consistent from day to day.

1. For holders of restricted stock that are expected to be unlockable in the future, cash dividends that a listed company should distribute to holders of restricted stock should be accounted for as profit distribution:

Borrow: Profit distribution - cash dividends or profits payable

Loan : Dividends payable - Restricted stock dividends

Debit: Other payables - Restricted stock repurchase obligations (according to the amount of cash dividends distributed)

Credit: Treasury shares

When actually paid:

Debit: Dividends payable - Restricted stock dividends

Credit: bank deposits

2. For holders of restricted stocks that are not expected to be unlocked in the future, the cash dividends that a listed company should distribute to restricted stock holders should offset related liabilities:

Credit: other payables ——Restricted stock repurchase obligation

Credit: Dividends payable—Restricted stock dividends

When actually paid:

Debit: Dividends payable—Restricted stock dividends

Credit: Bank deposits

Cash dividends are issued during the waiting period, cash dividends Irrevocable, that is, regardless of whether the unlocking conditions are met, the holders of restricted stock are still entitled to (or may not be required to return) the cash dividends they receivable (or received) during the waiting period. During the waiting period, when accounting for cash dividends that should be distributed to restricted stock holders, a listed company should make a reasonable estimate of the fulfillment of future unlocking conditions. This estimate should be consistent with the accounting treatment for share-based payments in each balance sheet during the waiting period. The estimate of the number of exercisable equity instruments should be consistent from day to day.

1. For holders of restricted stock that are expected to be unlockable in the future, cash dividends that a listed company should distribute to holders of restricted stock should be accounted for as profit distribution:

Borrow: Profit distribution - cash dividends or profits payable

Loan : Dividends payable - Restricted stock dividends

When actually paid:

Debit: Dividends payable - Restricted stock dividends

Credit: Bank deposits

2. For holders of restricted stocks that are not expected to be unlockable in the future, listed companies should allocate restricted Cash dividends to stock holders should be included in current costs and expenses:

Borrow: Management expenses

Credit: Dividends payable - Restricted stock rights payable

When actually paid:

Borrow: Dividends payable - Restricted stock dividends payable

Credit: Bank deposit

Group share-based payment:

If a settlement enterprise settles with its own equity instruments, it is treated as equity-settled share-based payment; if it is settled with the equity instruments of other enterprises within the same enterprise group, it is treated as cash-settled share-based payment. When settling the enterprise, if the company accepts services from shareholders,

Debit: long-term equity investment

Credit: Capital reserve - other capital reserves (equity settlement)

(or) Employee compensation payable (cash settlement)

Enterprises that accept services have no settlement obligation Or although there is a settlement obligation, but the equity instruments granted to the employees of the enterprise are its own equity instruments, it will be accounted for as equity-settled share-based payment; there are settlement obligations and the equity instruments granted to the employees of the enterprise are equity instruments of other enterprises in the group, and the equity instruments will be treated as cash-settled share-based payment. Carry out accounting treatment,

Debit: administrative expenses/production costs, etc.

Credit: capital reserve - other capital reserve

(or) employee compensation payable