EQUITY-BASED PLANS AND AWARDS


Securities Law Compliance (U.S.)


Tax Rules for Equity Awards(and Deferred Compensation)


Accounting for Equity Awards

  • General Summaries:
  • New Developments:
    • 2016.03.30   Maximum Statutory Withholding Allowed; Other Simplifications Allowed.  FASB has issued Accounting Standards Update (ASU) 2016-09, "Improvements to Employee Share-Based Payment Accounting," which amends ASC Topic 718, Compensation – Stock Compensation.  See FASB Press Release / Deloitte AlertPwC Alert / Frederic W. Cook Alert.
    • 2013.Oct.29  Delay of All Expense? Possible through CIC or IPO Contingency. Twitter's Form S-1 (Amendment No. 1, filed on Oct. 15, 2013) discloses the absence of any past financial expense for certain restricted stock units, aka RSUs, because their vesting was considered uncertain for GAAP purposes - due to being contingent on both future service and the completion of an IPO or change in corporate control.  Twitter's S-1 explains on pages 81-82 that the closing of the IPO will result in future RSU financial expense, due to satisfaction of the IPO condition.  This handling of the expense for stock-based awards is common, and may also apply to cash-based awards.  In each case, the lynchpin for deferred expense is the uncertainty of future vesting.  Thoughtful drafting and communication with financial experts are needed to assure this design brings the desired financial consequences without triggering adverse effects (with one key consideration being Code §409A).

See:proxy statement disclosure for samples of tax and accounting impact of awards.

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