RE:RE:RE:RE:RE:Bad news/ Good newslscfa wrote: I'm not sure about that. Anyone know how to value these damn phantom shares?
| $US | Fair value liability | Expensed to SG&A | No of Shs o/s | Vested | Ending Sh pr |
| Jun30/20 | 4,699,000 | 4,308,000 | 1,042,000 | 601,000 | 9.60 |
| Mar31/20 | 4,593,000 | (697,000) | 1,328,000 | 0 | 4.76 |
| Dec31/19 | 5,290,000 | | 1,350,000 | 0 | 6.20 |
| | | | | | |
| $US | Fair value liability | Expensed to SG&A | No of Shs o/s | Vested | Ending Sh pr |
| Jun30/21 (e) | | | 571,000 | 700,000 | |
| Mar31/21 | 7,808,000 | 2,465,000 | 951,000 | 0 | 10.12 |
| Dec31/20 | 5,344,000 | | 985,000 | 0 | 7.76 |
| | | | | | |
donmayne wrote: If the share price closes at a low at the end of Q2, will that reverse all the phantom share charges for the prior three quarters? That would amount to .075 per share boost to quarterly income.
That phantom share plan was a bad plan poorly executed. It has cost the company by the wild volatility that it generates in the earnings. It was so short sighted not to have abandoned that plan and replaced it with a better plan that provides an equivalent incentive.
In any event, I expect a reversal of phantom share expenses will boost Q2s income.
If we look at the fair value liability component it is divided into current contract liabilities and long term contract liabilities. The shares that vest within 12 months would be included in current liabilities and those that vest outside of this time are included in long term liabilities. To determine the intrinsic value of vested shares it is simply the fair market value at the end of the reporting period minus the grant date price multiplied by the number of phantom shares given. If your shares vest over a 4 year period then you are allowed to amortize 1/4 or 25% of these phantom shares expense per year.
If we look at the chart, the amount that gets expensed to sga are shares that are amortized over their life even if the shares have not fully vested or paid out. In some cases where the employment of a person terminates before the shares vest, the following reporting period would show a gain to reflect the expense from the previous reporting period.
To determine what will happen in q2 we would need to know how many phantom shares will be granted and what the market price of the shares will be on June 30 , 2021. If they do not issue more shares, then sga expense should go down provided that the share price does not jump too much.
The amount that will end up in sga in q2 would be:
(market price - grand date price)* 701,000 + number of outstanding options that have not vested * (market price -grand date price) * the amount that should be appropriately amortized for that year.