Yes. The G100 supports this proposal. However, we anticipate that the adoption of other IASB standards will be given a high priority.
   

The G100 believes that the duplication of requirements with AASB 1028 'Employee Benefits' should be avoided and suggests that this could be achieved by stating in the revised standard and the gazetted notice that on application the new standard supersedes the relevant requirements of AASB 1028. In view of the interim and transitional nature of the process, and the eventual adoption of the relevant IASB standards, we do not consider that reissue of AASB 1028 is warranted.

Whether or not the duplication in the requirements leads to additional burdens and costs we believe that the operating principle should be to avoid such duplication. Achieving the 2005 target will impose significant costs and burdens on companies in a relatively short period. These should not be amplified by requiring application of two different sets of requirements even if on an interim basis.
  

Yes. The G100 believes that the measurement requirements should be consistently applied whether for recognition or disclosure.
  

Yes. The G100 is a strong supporter of the process of international harmonisation and convergence.
  

Paragraphs 1-3 of the draft IFRS set out the proposed scope of the IFRS. There are no proposed exemptions, apart from for transactions within the scope of another IFRS. Is the proposed scope appropriate? If not, which transactions should be excluded and why?

The G100 agrees with the scope of the proposed standard.
 

The G100 supports the requirements. However, it is presumed that an asset is recognised (prepayment) when equity instruments are issued in advance of the services being received.
 

Is this measurement principle appropriate? If not, why not, or in which circumstances is it not appropriate?

The G100 supports the measurement principle. However, we suggest that the fair value of the equity instruments issued should be given primacy. However, we are concerned that the determination of the fair value of the equity instruments issued takes no account of the factors such as the size of the parcel of shares or other characteristics such as whether it confers control of another entity.
 

Do you agree that this is the appropriate date at which to measure the fair value of the goods or services received? If not, at which date should the fair value of the goods or services received be measured? Why?

The G100 believes that the fair value of the transaction should be measured on the date the two parties agree the value of the exchange and control passes from one entity to the other, that is the date of acquisition.
  

Do you agree that this is the appropriate date at which to measure the fair value of the equity instruments granted? If not, at which date should the fair value of the equity instruments granted be measured? Why?

The G100 agrees that the fair value of the equity instruments granted should be measured at the grant date. Where grants are made to different employees at different but relatively close dates it is suggested that, on grounds of practicability and to minimise the extent of valuations needed, entities be permitted to measure fair value on the offer date.
  

Do you agree that the fair value of the goods or services received is usually more readily determinable than the fair value of the equity instruments granted? In what circumstances is this is not so?

The G100 agrees with the existence of a rebuttable presumption but considers that the exchange should be measured on the basis which is more readily determinable and reliable.
 

Do you agree that the fair value of the equity instruments granted is more readily determinable than the fair value of the employee services received? Are there are circumstances in which this is not so?

The G100 believes that this would depend on the way in which an employee's total remuneration is determined. For example, remuneration may be expressed as an aggregate amount and the value of share-based compensation determined as a residual which will not necessarily correspond to the fair value of the services rendered or the fair value of the equity instruments granted.

We believe that there is a presumption that the fair value of the equity instruments is more readily determinable but that this is not a general rule. The approach adopted should be consistent with that applying in other circumstances such as those dealt with in paragraphs 9 and 10.
  

Do you agree that it is reasonable to presume that the services rendered by the counterparty as consideration for the equity instruments are received during the vesting period? If not, when are the services received, in your view?

No. The G100 believes that the services may have been rendered in a previous period or that the consideration may relate to both past and future services.
  

Do you agree that if the fair value of the equity instruments granted is used as a surrogate measure of the fair value of the services received, it is necessary to determine the amount to attribute to each unit of service received? If not, what alternative approach do you propose? If an entity is required to determine the amount to attribute to each unit of service received, do you agree that this should be calculated by dividing the fair value of the equity instruments granted by the number of units of services expected to be received during the vesting period? If not, what alternative method do you propose?

The G100 believes that the standard should specify the objective of the process of determining the periodic expense in terms of a principle and that the method of allocation be determined by the entity as one that best reflects the pattern of consumption of the services acquired. Such an approach would be consistent with that applied when determining depreciation of plant and equipment.

In some cases the units of service method may be appropriate while in others a straight-line allocation may be appropriate. In other cases an entity may determine that the periodic cost of equity instruments granted should be recognised as an expense. For example, where an entity has a large number of employees in a plan and there are low levels of staff attrition, the units of service method is likely to add a further level of judgement in applying the requirements, increase the burden of record-keeping required and is unlikely to generate a materially different outcome than the application of a straight-line method of allocation.
 

Do you agree with this proposed requirement? If not, in what circumstances should an adjustment be made to total equity and why?

The G100 believes that the transaction should be measured at the date of acquisition and should not be remeasured subsequently.

We consider that where options are granted and are not exercised it would appear that the cost to the entity of the services received has been overstated and that reported earnings has been understated.
  

Do you agree that an option pricing model should be applied to estimate the fair value of options granted? If not, by what other means should the fair value of the options be estimated? Are there circumstances in which it would be inappropriate or impracticable to take into account any of the factors listed above in applying an option pricing model?

The G100 agrees that where market prices are not available an option pricing model should be applied to determine the fair value of options granted taking account of performance hurdles etc.
 

Do you agree that replacing an option's contracted life with its expected life when applying an option pricing model is an appropriate means of adjusting the option's fair value for the effects of non-transferability? If not, do you have an alternative suggestion? Is the proposed requirement for taking into account the inability to exercise an option during the vesting period appropriate?

The G100 agrees with the proposed requirements.
  

Do you agree that vesting conditions should be taken into account when estimating the fair value of options or shares granted? If not, why not? Do you have any suggestions for how vesting conditions should be taken into account when estimating the fair value of shares or options granted?

Vesting conditions are an integral part of certain option and share schemes and as such should be taken into account in the measurement process. The manner in which this is done should not be specified but left to reflect the circumstances and environment in each case. We suggest that further guidance in determining the vesting period would facilitate practical application, particularly where there are multiple vesting periods.
 

Is this proposed requirement appropriate? If not, why not? Do you have an alternative proposal for dealing with options with reload features?

The G100 agrees with these proposals.
  

Are there other common features of employee share options for which the IFRS should specify requirements?

The proposals appear to identify the most common features. However, the standard should state the principle that the features/terms of options granted are taking into account in determining their fair value (see question 13).
 

Do you agree with this approach? Are there specific aspects of valuing options for which such guidance should be given?

The G100 agrees with the approach not to mandate a measurement methodology. We believe that the major issue at this stage is to achieve recognition of options and that entities be able to experiment and identify appropriate reliable measurement approaches consistent with the valuation principles in respect of their schemes.

Entities should be encouraged to develop methodologies consistent with the principles and to disclose the method(s) adopted. If the outcome of this approach is significant and unacceptable variability in approaches the more specific guidance, on the basis of implementation experience, could then be provided.
  

Do you agree that the incremental value granted should be taken into account when measuring the services received, resulting in the recognition of additional amounts in the remainder of the vesting period? If not, how do you suggest repricing should be dealt with? Of the two methods illustrated in Example 3, which is more appropriate? Why?

The G100 agrees that repricing of options should be measured on the basis of changes in incremental value and applied prospectively over the remainder of the vesting period. We believe that the averaging approach illustrated in Example 3 provides a better reflection of the value of the services consumed by the entity over the remaining period of the option scheme subsequent to a repricing which included an extension of an existing scheme rather than create a new scheme.
 

Are the proposed requirements appropriate? If not, please provide details of your suggested alternative approach.

The G100 does not support this proposal. To continue to account for a scheme which no longer exists appears to be artificial. However, where a scheme is cancelled it is likely that some compensation would be made in respect of the variation/breach of contract with the employees and that cost should be charged to the periods in which the services are consumed.
  

Are the proposed requirements appropriate? If not, please provide details of your suggested alternative approach.

The G100 supports these proposals which are consistent with that adopted in respect of measuring foreign currency liabilities.
  

Are the proposed requirements appropriate? If not, please provide details of your suggested alternative approach.

The G100 supports these proposals.
  

a. the nature and extent of share-based payment arrangements that existed during the period,

b. how the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period was determined, and

c. the effect of expenses arising from share-based payment transactions on the entity's profit or loss.

Are these disclosure requirements appropriate? If not, which disclosure requirements do you suggest should be added, deleted or amended (and how)?

The G100 supports the disclosure principles as outlined in paragraphs 45 and 47 but has serious concerns about the extent and detail of the disclosures. The objective of the disclosures should be to provide users information to understand how amounts are determined and not replicate the measurement process.
  

Are the proposed requirements appropriate? If not, please provide details of your suggestions for the IFRS's transitional provisions.

The G100 supports the transitional arrangements.
 

The draft IFRS proposes a consequential amendment to IAS 12 (revised 2000) Income Taxes to add an example to that standard illustrating how to account for the tax effects of share-based payment transactions. As shown in that example, it is proposed that all tax effects of share-based payment transactions should be recognised in the income statement.

Are the proposed requirements appropriate?

Yes