Bill is almost 3 weeks into the new job. Among the papers he signed on the first day there is a grant letter: 150 restricted stock units, which are shares of the company delivered to him on 1 October 2029, provided he is still employed on that date. The share price on the grant date, 1 October 2026, was 20 euro.
That is 3,000 euro. It is a little under 2 months of his net salary and 42 per cent of his net assets. His ledger records none of it. The company's books record it every month for the next 3 years.
A share plan usually has 3 instruments, and Bill holds one of them. A stock option is the right to buy shares at a price fixed today, the strike price, and it is worth something only if the share ends up above it. A restricted stock unit is a promise to deliver the share itself at a future date. A performance stock unit is a restricted stock unit whose number depends on a target: reach it and the units vest, miss it and some or all of them do not. Those are the names plans use, not terms defined by IFRS. Bill's letter says restricted stock units, with one condition, which is staying until 1 October 2029.
IFRS 2 is written for the company that receives the work, not for the employee who receives the units. The company has received Bill's services and is paying for them in shares, so it recognises a cost. The amount is measured by reference to the fair value of the equity instruments granted, on the grant date. The cost is recognised as the services are rendered during the vesting period, with a matching increase in equity. For Bill's units, 150 at 20 euro is 3,000 euro, spread over 36 months: 83.33 euro a month, 1,000 euro a year. The other side of the entry is equity and not a liability, because the company will settle in its own shares and not in cash.
The 20 euro is fixed on the grant date and does not move. If the share is at 30 euro in 2029, the company's cost is still 3,000 euro. If it is at 10 euro, the cost is still 3,000 euro. What can change the total is the number of units. A vesting condition other than a market condition, such as staying in the job or reaching a profit target, adjusts how many instruments are expected to vest. If Bill left in month 20, his units would never vest and no cost would remain in the books for them.
A share price target works differently: a market condition goes into the fair value, and the cost is recognised whether or not the target is met. Options are different again. An employee option is not traded, so no market price exists, and the company has to estimate the fair value with a valuation technique. A restricted stock unit starts from something observable, which is the share price.
On Bill's side the arithmetic is shorter. Signing the contract in September created no entry, because nothing was earned or owed yet, and the grant letter belongs to the same family. Bill owns no shares yet, and the right to them depends on a condition that can still take everything away. A ledger of what he owns and owes has nothing to write. Net assets stay at 7,100.00, savings stay at 3,072, and nothing moves on the day the letter is signed.
The ledger will have something to write on 1 October 2029. On that date 150 shares are delivered, and they are worth whatever the market says that day: 3,000 euro at 20 euro a share, 4,500 euro at 30, 1,500 euro at 10. The company's cost is 3,000 euro in every case. Bill's gain is a different number, and it is not known until the day it arrives. The tax on the delivery is a separate question and is left out of this entry.
Until then the figures sit in 2 sets of books, and only one of them is Bill's. The company records 83.33 euro of cost every month and its equity grows by the same amount. Bill's ledger stays still. The grant is real and measurable, 3,000 euro on the day it was made, and it does not belong on a balance sheet that lists what he owns. For Bill it is about 12 months of the surplus he is left with each month, 260, but it arrives only if he stays.
The tip
When shares come with a job, find out 3 things before reading the number: which instrument it is, what has to happen before it vests, and what the company measured it at on the grant date. The figure on the grant letter is the company's cost, spread over the vesting period. It is not an amount you have received, and it stays that way until the condition is met.
Share-based payment, October 2026: 150 restricted stock units granted on 1 October 2026, share price on the grant date 20.00 euro, fair value at grant date 3,000 euro. Service condition only, all units vesting on 1 October 2029, settled in shares. Cost in the company's books 1,000 euro a year, 83.33 euro a month, over 36 months, with a matching increase in equity. Entry in Bill's ledger at grant: none. Net assets 7,100.00, unchanged. Total assets 19,566, unchanged.
Bill is 26. Every episode, we read his personal ledger through accounting eyes. / FY 2026 ledger