Problem
Modification to Stock Compensation Award after Fully Vested:
Prime went public in 2005 and experienced a continued increase in stock prices through 2007. With the sustained growth of the business and rising stock price, Prime developed a practice of granting annual stock option awards to its executives at the beginning of each year.
On January 1, 2008, Prime granted 1,000 employee share options that vest after a four-year service period, with an exercise price of $30 per share. Using the Black-Scholes pricing model, it was determined that the grant-date-fair-value-based measure of each option was $15. On the grant date, Prime's stock was trading at $30 per share.
On January 1, 2010, Prime decided to change the terms of the incentives for the third and fourth years of service of the 2008 annual grant by modifying the exercise price to $20 per share. Using the Black-Scholes pricing model, management determined that the fair-value-based measure of the awards as of January 1, 2010 was $9 before the terms of the award were modified and $12 immediately after modification. The modification did not affect any of the other terms or conditions of the awards. (No forfeitures are assumed.)
How would the accounting for the awards change if the modification to the terms of the award was made on January 1, 2014, after the awards have become fully vested?