At Incentrium we always ask ourselves how we can further enhance the services and usability of our Software using exciting new advancements. We identified OpenAI’s ChatGPT and in particular the technology behind it to have great potential in offering to improve and expand our offer in the context of management, valuation and reporting of share-based compensation programs.
As always, the requirements of the users as well as the contractual and regulatory challenges (IFRS 2 share-based payment, ASC 505-50 and 718) must be mastered or reconciled.
We are currently working on an AI-based solution which enhances our management module in terms of classifying share-based compensation plans into equity and cash-settled plans.
This seems trivial in many cases where there is either a clear delivery of equity instruments such as shares or the payment of a certain amount of money as part of the settlement of share-based payments. The classification becomes even more difficult if there are options or the share-based payment extends over different group entities (so-called group schemes). While we are still working to fin-tune the model, in first test the Artificial Intelligence already delivers highly accurate results.
A further expansion of our AI application will be the classification of contract conditions into vesting conditions (service conditions, performance conditions, market condition) and non-vesting conditions. The contractual freedom of design in combination with the sometimes complex regulations of the respective accounting standards like IFRS 2, ASC 505-50 and 718 required corresponding (human) expertise in the classification. Our AI-based platform is intended to support the user in deriving the correct classification in a first step and, in the future, to carry out the corresponding classification directly on the basis of the contract text.
What ChatGPT says
Because we believe in the future of machine-learning-based solutions like ChatGPT, we asked ChatGPT about its possible uses in Incentrium. Here is a small excerpt:
“Incentrium.com offers a comprehensive equity management software that enables companies to manage their equity compensation plans efficiently. The platform includes a range of features, such as management plans, equity grant tracking, fair market value calculations and comprehensive reporting capabilities.
With the integration of ChatGPT, Incentrium can provide users with a conversational interface that can help them classify equity vs. cash settlement and classify conditions according to IFRS and US GAAP making our platform even more accessible. ChatGPT’s natural language processing capabilities enable it to understand user queries and provide them with accurate and relevant information.
For instance, a user may want to know whether an equity compensation plan should be classified as equity-settled or cash-settled. They could ask ChatGPT a question like, “How do I determine whether an equity compensation plan should be classified as equity or cash-settled?” ChatGPT can use its language processing capabilities to understand the question and provide a clear and concise answer based on the relevant accounting standards and guidelines.
Similarly, ChatGPT can assist users in classifying conditions according to IFRS and US GAAP. For example, a user may want to know whether performance-based equity awards meet the criteria for liability or equity classification under the applicable accounting standards. ChatGPT can provide users with guidance on how to evaluate the conditions and assist them in determining the appropriate classification.
In summary, the integration of ChatGPT into Incentrium can help users classify their equity compensation plans correctly and ensure compliance with relevant accounting standards. By leveraging natural language processing, ChatGPT can provide users with accurate and personalized advice, streamline certain processes, and help ensure regulatory compliance.”
We look forward to making AI technology usable for our customers in Incentrium and offering them real added value from this cutting edge technology.