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Research Center : Article

Feb 01,2009 | Radford

Accelerated Vesting of Underwater Options: Hidden Accounting

Companies are considering accelerating vesting of time-based underwater stock options to take the benefit of moving forward future stock option compensation expense into the current reporting period. Some recent examples of companies taking this action are Dell and Linear Technology1 . At first glance, companies conclude that the acceleration causes an immediate recognition of unamortized option expense into the current quarter. However, there are some hidden accounting consequences to consider prior to taking this action.

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