Example of number of rights to be vest

What is expected to vest?

The equity settles instrument (options) and cash settled instrument are offered subject to some condition. Normally these right to be vested (exercised) at the end of certain period, it may be three, four and five year.

As instruments is being offered subject to some condition therefore some people may not be willing to continue for vesting period and therefore management at the end of each year calculate/ estimate the number of rights to be exercised.

Why expected right is estimated

Expected right is calculated for the purpose of calculating the liability. The expected right is one of three element used in the formula for calculating the liability under share based payment.

How expected Right is calculated

There is no rule for calculating how much rights are expected to be vest. This is totally management decision to estimate the expected rights.

Example of number of rights to be vest

Beta and Co offered 100 million shares to its director with vesting period of three years. The management has expected that following rights shall be vested.

Year	Number of rights expected vest
1	80 million
2	82 Million
3	79 Million

Above example clearly shows that management expectation regarding vesting is changing each year.