The valuation is performed using complex models, with the two common models being a Binomial model and the Black Scholes model. These models take into account a variety of inputs and assumptions, such as:
- The duration of the option;
- The share price and volatility of returns;
- The dividend yield;
- The likelihood that options will not be exercised; and
- The risk-free rate.
Share based payments can be a considerable expense and thus the use of an expert will reduce the risk of non-compliance with IFRS 2 as well as ensuring that all factors have been adequately considered to ensure that an accurate determination has been completed and disclosed.