In relation to modifications to the terms and conditions on which equity instruments were granted as part of an employee share scheme, which of the following statements 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) An increase in the number of equity instruments granted is not an example of a modification.
D) A shortening of the vesting period will increase the fair value of the share options.

Question

Quizplus · Accepted Answer

A shortening of the vesting period generally increases the fair value of share options because it reduces the time employees must wait to exercise their options, making them more valuable.

In Relation to Modifications to the Terms and Conditions on Which