Which of the following statements in relation to modifications to the terms and conditions on which equity instruments were granted as part of an employee share scheme is correct?
A) a reduction in the exercise price of options will reduce the fair value of the share options
B) a reduction in a performance hurdle relating to profitability targets will reduce the fair value of the options
C) a shortening of the vesting period will increase the fair value of the share options.
D) an increase in the number of equity instruments granted is not an example of a modification

Question

Quizplus · Accepted Answer

A shortening of the vesting period increases the fair value of share options because it allows employees to exercise their options sooner, potentially benefiting from any increase in the share price earlier than originally planned. This makes the options more valuable to the employees.

Which of the Following Statements in Relation to Modifications to the Terms