NZ King Salmon has equity based incentives for its CEO. The incentive for each year is based on the current year’s EBITDA and the CEO can be awarded shares that are worth up to 30% of their base salary. The shares vest three years after the year they are earned. The financial threshold is set at achieving 100% of the prior year EBITDA, with a maximum target set at 130%. Achievement of the maximum financial target results in a payment of 100% of the incentive.
ï‚·CEO base salary $501,925
ï‚·2019 Annual report EBITDA $23,063
ï‚·2018 Annul report EBITDA $28,482
Record any journal entries required for the above information for the 2019 financial year. You must justify and explain your answer and include workings. NZ King Salmon also offers an equity incentive plan to its employees. The plan commenced at the start of the 2018 financial year, with the shares vesting in four years’ time if the employee remains with NZ King Salmon.
ï‚·At the end of the 2018 financial years there were 480 eligible employees, with 30 more expected to leave before the shares vest.
ï‚· At the end of the 2019 financial year there were 460 eligible employees, with 20 more expected to leave before the shares vest.
ï‚·Each employee was granted 5,000 shares and shares have a fair value of $2.10 at the time they were granted.
Record any journal entries required for the above information for the 2019 financial year. You must justify and explain your answer and include working
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