On March 30, 2016, the FASB issued an ASC 718 update, ASU 2016-09, as a part of its Simplification Initiative. In part 1 of our blog series, ASC 2016-09: Simple But Complex, we explored the changes to accounting for income taxes and the elimination of the APIC pool. Here we will discuss another key provision of the FASB’s new standard, accounting for forfeitures.
In one of our most watched on-demand webinars, Getting IPO Ready: Preparing Your Strategy and Equity Plan, experts discuss what it takes to gear up for your IPO and outline essential success factors across the finance organization. Preparing for an IPO takes resources, expertise, and coordination across departments, and the best time to begin the preparation process is now! Below you will find seven key areas affected by an IPO as presented by Nicole Irvin, Vice President, Morgan Stanley Investment Banking Division. Irvin provides detailed information about who from your organization should be involved, what key things you need to be thinking about, and what can you do now – even if you are well in advance of an IPO – to start to prepare.
A modification is a change in any term of an award that is not included in your original equity compensation plan such as a change in number of shares, exercise price, transferability features, settlement provisions, or vesting conditions. Modifications to awards can result in additional compensation expense for the company. Below are a few examples of common events that trigger modification accounting, as well as those that do not.
In a recent poll, Certent surveyed a cross section of public and private company webinar attendees to find out what participants felt was their biggest challenge associated with year-end close. Over a quarter of all attendees agreed that the time crunch makes navigating year-end close significantly more challenging. In order to beat the year-end squeeze, there are a few activities that you and your team can plan ahead of time.
The 7th Annual Regional New England Conference will be held in the Greater Hartford, CT area on Thursday, July 16th, 2015. As those who have attended a Connecticut/Boston conference in the past know, this well-established event is an excellent opportunity for learning and networking with equity compensation colleagues.
On June 8th, 2015, The Financial Accounting Standards Board (FASB) issued an exposure draft detailing the proposed amendments to the current employee share-based payment accounting standards as part of an initiative to reduce complexity surrounding the current accounting standards. As stated in the exposure draft, the FASB feels that, “The objective of the Simplification Initiative is to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements.” Here are a few of the main provisions and what they could mean to your current ASC 718 processes.
Making changes to your equity plan is not an overnight process. This laborious task involves many internal and external parties and several steps along the way. It will take some time to determine a proposal of changes and evaluate what is best for your company and your employees. It is critical to develop an equity plan that is attractive to top talent, but it is essential to keep in mind any cost prohibitions, communication challenges, and ongoing maintenance. Below are some common changes companies make to their equity plans, as well as various impacts on accounting and information to help you determine how your employees will be affected.
Finalized in April 2007, Internal Revenue Code section 409A regulates the tax treatment of nonqualified deferred compensation, whether paid to executives or any employee. Under Section 409A, a stock option that is granted with an exercise price less than the fair market value of the common stock determined as of the option grant date requires the companies to withhold applicable income and employment taxes at the time of option vesting. This immediate taxation can be avoided by pricing the stock options at fair market value at the time of granting.
On April 29, 2015, the Securities and Exchange Commission (the “Commission”) voted to propose rules requiring public companies to disclose in a clear manner the relationship between executive compensation and the financial performance of the registrant. The proposed disclosure would be required in proxy statements in which executive compensation disclosure pursuant to Item 402 of Regulation S-K is required. The proposal is meant to supplement current disclosure requirements with a factual description of how executive compensation that is actually paid in a particular year relates to financial performance.
Equity compensation is an essential tool for attracting and retaining top talent and motivating employees to think like shareholders and share in the long-term value they help create. Unfortunately, the accounting and reporting requirements of these programs can also make for an intensive reporting burden. Read on for a few best practices to minimize the financial reporting hurdles of share-based compensation.