Q: HPS - Can you expand on their specific SBC, 1st look one might think $16,671,000 million in SBC in one quarter WTH... 1 year ago that expense was $4,478,000.
Noted share price as of March 31 $145 so it seems they issued over 100,000 shares as compensation and that is it?
But reading more into it thanks to some twitter(X) ppl I follow (you are tagged in it so you can see exactly what i mean) and its as if they are updating their DSU (deferred share units Directors and Senior executives can defer compensation as stock + they do issue some as awards) and then RSU PSU (recently the new LTIP was instituted for Senior Executives).
Please shed some light on this is that a correct interpretation because they state on page 11 of 1st Quarters Interim financial statements that they issued 1335 DSU shares at $115.80 and a total of 10,388 PSU/RSU shares were issued @ $117.26 this quarter = $1.37 Million at those prices and 11,723 shares.
*BUT noting an expense of $10,836,500 for DSU recorded in general and admin expenses + $5,834,000 expense for PSU/RSU expense recorded = the stated SBC expense of $16.67 Million.
How do they calculate that expense?!
I understand they need to update this quarterly as share price moves as its money owed to Directors and Senior executive but next quarter the stock is lower then is this expense updated and then potentially less?!
Noted share price as of March 31 $145 so it seems they issued over 100,000 shares as compensation and that is it?
But reading more into it thanks to some twitter(X) ppl I follow (you are tagged in it so you can see exactly what i mean) and its as if they are updating their DSU (deferred share units Directors and Senior executives can defer compensation as stock + they do issue some as awards) and then RSU PSU (recently the new LTIP was instituted for Senior Executives).
Please shed some light on this is that a correct interpretation because they state on page 11 of 1st Quarters Interim financial statements that they issued 1335 DSU shares at $115.80 and a total of 10,388 PSU/RSU shares were issued @ $117.26 this quarter = $1.37 Million at those prices and 11,723 shares.
*BUT noting an expense of $10,836,500 for DSU recorded in general and admin expenses + $5,834,000 expense for PSU/RSU expense recorded = the stated SBC expense of $16.67 Million.
How do they calculate that expense?!
I understand they need to update this quarterly as share price moves as its money owed to Directors and Senior executive but next quarter the stock is lower then is this expense updated and then potentially less?!
5i Research Answer:
The expense of $10.8M recorded in the income statement under G&A and the balance sheet under accounts payable are based on the fair value of the DSUs at the time they are granted, and this expense is recognized over the vesting period of the DSUs. The fair value is determined by a complex pricing model called the Black-Scholes model, taking into account volatility, price, risk-free rates. But, both the liability and the expense line items for DSUs can move up or down quarter-to-quarter based on the inputs mentioned above (price, volatility, risk-free rates).
The same principles apply for the LTIP portion for the $5.8M expense.