The Straight-line expensing method is popular for European countries and reporting in line with International Finance Reporting Standards (IFRS) with this expensing method.
Please note that the report highlighted in this article has a period type - month and it is simple deflation of 1%. Before you can export the report, you will need to add Fair Value and Share Price valuations.
Once the report has been requested, our team will meet with you to get the details and then deliver the draft report. Click ‘Download’ to download the SBP report in an Excel spreadsheet.
Once you have downloaded and opened the report, you will see 8 worksheets:
Worksheets 5 - 9 store the data and details of the grants and worksheets 3 - 4 use those worksheets to calculate the relevant values.
Description
This is where you can find details of the report as well as the parameters that you have selected for the report i.e amortization method, deflation type and percentage etc.
Warning
This states all of the information that is missing and that is needed in order to successfully submit the report. These warnings could include:
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Missing Fair Value
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Missing Share Price estimate
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Missing vesting description for option grants
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Missing terms and conditions for each option grants
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Missing terms and conditions for the option plans
Next to each individual warning description, there will be the corresponding link that will direct you to Carta and allow you to make the necessary adjustments. You are still able to review the report with these warnings but the relevant parties will require the additional information.
Expected Future Values
This worksheet details the expected future value of each grant specific to each tranche. To calculate this, we calculate the expense per award based on the number of days in the period and match the vesting schedule of the award.
For a straight-line expensing method, the vested quantity is split periodically and equally between the vesting start date and the vesting end date.
The following fields can be found in the worksheet:
- Grant ID - The grants’ unique identifier, if a grant has multiple transactions, each transaction will share the same ID.
- Plan Name - Every grant recorded belongs to a plan and is subject to its terms and conditions (EMI, Unapproved, etc.).
- Grantholder Name - The name of the optionholder.
- Grant Date - The date of grant.
- Vesting Start - The date of when the vesting schedule commences.
- Total Granted - The total amount of options granted to the optionholder.
- Deflation - The expected number of people leaving your company (set by the administrator when ordering the report).
Thereafter, we see the expected future values that are calculated by the predetermined period and expensing method. The right side and the bottom of the page also shows the totals of these.
Disclosures
This worksheet is a summary of the Price Estimates tab. It will provide the Option rollforward of the activity of options within the period.
Price Estimates
In this worksheet, data is mostly taken from worksheet ‘data - grants per period’. This is because the worksheet lists the transaction details of each grant per period. The Price Estimate worksheet then sums that up for each period to calculate the grants periodic price estimate.
These are the fields found in the worksheet:
- Period - This is dependent on the period interval set in the parameter of the report and the date of the transaction e.g if the period was ‘Monthly’ and an issuance occurred on 10/08/2020, the period would relate to that month and be denoted by 202008.
- Outstanding Start of Period - The outstanding options at the start of the period (Total Granted - (Exercised + Cancelled + Expired)).
- Outstanding - WAEP - The weighted average exercise price (WAEP) of the outstanding options at the start of the period.
- Issued in Period - All options granted in the company in a certain period.
- Issued WAEP - The weighted average exercise price of the issued options of that period.
- Issued WAFV - The weighted average fair value (WAFV) of the issued options of that period.
- Exercised in Period - All options exercised in the company in the period.
- Exercised WAEP - The weighted average exercise price of the exercised options of that period.
- Exercised WASP - The weighted average share price (WASP) of the exercised options of that period.
- Cancelled in Period - The amount of options cancelled in a certain period.
- Cancelled WAEP - The weighted average exercise price of the cancelled options of that period.
- Expired in Period - The amount of options expired in a certain period.
- Expired WAEP - The weighted average exercise price of the expired options of that period.
- Outstanding End of Period - The outstanding options at the end of the period (Total Granted - (Exercised + Cancelled + Expired)).
- Outstanding WAEP - The weighted average exercise price of the outstanding options at the end of that period.
- Exercisable - The number of vested, non-cancelled, non-exercised options.
- Exercisable WAEP - The weighted average exercise price of the exercisable options of that period.
- Exercise Prices - The price that the grantholder would pay to exercise 1 vested option. If there are multiple grants recorded in this row, there will be multiple exercise prices.
- Minimum/Maximum Exercise Price - The maximum/minimum exercise price of each grant detailed in that period. If only one grant is detailed, these values will be the same.
- Contractual life - The weighted average remaining contractual life. This is calculated by: (the sum of the remaining contractual life * the options granted for all grants)/the sum of the options granted for all grants.
Grant Details
This worksheet highlights details of the grants and corresponding valuations to be in line with IFRS.
This is the same information that can be found in Carta's user-interface.
- Grant ID - The grants unique identifier, if a grant has multiple transactions, each transaction will share the same ID.
- Plan Name - Every grant recorded belongs to a plan and is subject to its settings (EMI, Unapproved, etc.)
- Grantholder Name - The name of the optionholder.
- Grant Date - The date of grant.
- Expiry Date - The date that the options expire.
- Deflation - The expected number of people leaving your company (set by the administrator when ordering the report).
- Exercise Price - The price that the grantholder would pay to exercise 1 vested option.
- Fair Value - The grant’s corresponding Fair Value generated by Carta.
- Fair Value Currency - The currency of the Fair Value.
- Share Price Estimate - The grant’s corresponding Share Price that is recorded on Carta.
- Share Price Estimate Currency - The currency of the Share Price.
- Fair Value Description - A description of the Black-Scholes Fair Value Estimate and its parameters.
- Spot Price - Valuation of the applicable share class for the award at the time of grant.
- Interest Rate - The interest rate entered in the valuations settings or the in-report calculated rate.
- Volatility - The volatility entered in the valuation settings or the in-report calculated percentage based on comparable companies.
- Vesting Description - A description of the vesting schedule. If the grant has an automatic or immediate vesting schedule then Carta will populate this, if the schedule is custom or conditional then the administrator will have to populate the description via Carta. To do this, click the option grants corresponding Actions Button > Modify vesting > Add the description > Save.
- Plan Terms and Conditions - The terms and conditions of the corresponding plan which can be populated on Carta.
- Grant Terms and Conditions - The terms and conditions of the corresponding option grant which can be populated on Carta.
- D1, D2, Calculated Fair Value - These columns relate to the Black Scholes formula and will update based on the inputs within the sheet.
Data - Grants Per Period
This worksheet highlights the transaction history of each grant detailed in each period.
- Grant ID - The grants unique identifier, if a grant has multiple transactions, each transaction will share the same ID.
- Total Granted - The total amount of options granted to the optionholder.
- Period - This is dependent on the period interval set in the parameter of the report and the date of the transaction e.g if the period was ‘Monthly’ and an issuance occurred on 10/08/2020, the period would relate to that month and be denoted by 202008.
- Outstanding Start of Period - The outstanding option quantity at the start of the period (Total Granted - (Exercised + Cancelled + Expired)).
- Issued in Period - How many options were granted to an optionholder in a certain period.
- Exercised in Period - How many options were exercised by the grantholder in a certain period.
- Cancelled in Period - How many of the grantholders options were cancelled in a certain period.
- Expired in Period - How many of the grantholders options expired in a certain period.
- Outstanding End of Period - The outstanding option quantity at the end of the period (Total
- Granted - (Exercised + Cancelled + Expired)).
- Exercisable - How many options have vested and are therefore exercisable at the time of the period.
- Exercise Price - The price that the grantholder would pay to exercise 1 vested option.
- Share Price Estimate - The estimated share price, this is only detailed in a period where the grantholder has exercised their options.
- Fair Value - The fair value of options upon issuance.
- Contractual Life - The time from the period ends until the contract expires.
Data - tranches
This worksheet shows each vesting tranche represented by period and the grant ID.
- Tranche ID - The tranches unique identifier.
- Grant ID - The grants unique identifier, if a grant has multiple transactions, each transaction will share the same ID.
- Period - This is dependent on the period interval set in the parameter of the report and the date of the transaction e.g if the period was ‘Monthly’ and an issuance occurred on 10/08/2020, the period would relate to that month and be denoted by 202008.
- Date - The date the specified quantity of options vest.
- Quantity - How many options vest in the tranche.
- Future Value - The future value of the specified vested options.
- Grant Date or Vesting start date - The starting point for expense.
- Service period begin - Equals the value in the previous column for Graded amortization, or equals the service period end date of the award’s previous tranche for Straight-line amortization.
- Service period end - Equals the vest date of that particular tranche.
- Total fair value - Quantity of the tranche multiplied by the award’s calculated fair value from the ‘Grant Details’ Tab.
- Completed days - Number of days from the Service period begin date to the report period end date, or the total service days if tranche is vested.
- Total service days - Number of days from the Service period begin to the service period end.
- Percentage - Completed days divided by the Total service days.
- Pre-deflation expense to-date. The expense prior to deflation being accounted for. It is simply the percentage column multiplied by the total fair value column.
- Remaining service period - Time in years until the tranche vests. Equals 0.00 for tranches that are already vested.
- Expected to vest - This is where the deflation rate is accounted for. The dynamic formula takes into account how close the award is to vesting or if it has already vested it does not apply any deflation to the expense that the percentage would be 100%. Formula is (1-’Deflation rate’)^Remaining service period.
- Post-deflation Expense to-date - Expense after deflation is taken into account. It is the Expected to vest percentage multiplied by the Pre-deflation expense to-date.
- Prior period expense - Should match the actual amount booked for each tranche in the previous period’s report.
- Current period expense - Should always equal the total post-deflation expense to-date minus the prior period expense.
Data - transactions
This worksheet provides details about each grant transaction.
- Grant ID - The grants unique identifier, if a grant has multiple transactions, each transaction will share the same ID.
- Plan Name - The name of the plan that the grant was issued from.
- Grantholder Name - The name of recipient of the equity award.
- Type - Either an issuance, exercise, cancellation or expiration.
- Period - This is dependent on the period interval set in the parameter of the report and the date of the transaction e.g if the period was ‘Monthly’ and an issuance occurred on 10/08/2020, the period would relate to that month and be denoted by 202008.
- Date - The date of the transaction.
- Quantity - How many options were affected by the transaction.
- Weighted Average Exercise Price - The cost of exercising the quantity (quantity * exercise price).
- Weighted Average Share Price Estimate - Quantity * corresponding Share Price.
- Weighted Average Fair Value - Quantity * corresponding Fair Value.
The data above is used to generate the Expected Future Values sheet and the Price Estimate sheet.