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NASPP Essentials

Accounting for Equity Compensation in the United States
Dec 31,2019

Written for readers without an accounting background, this article provides a summary of the treatment of stock compensation under US GAAP. Also includes highlights of differences between the US GAAP and IFRS with respect to stock compensation.

Latest Developments

GRIST Report: 'Grant date' communication requirement for stock compensation
Aug 22,2005

This GRIST was revised to provide further explanation of the old APB 25 and FAS 123 "grant date" definition and the changes in FAS 123(R) in the Grant date definition and Existing practice and new interpretation sections 

Do Some Clawback Policies Trigger Variable Stock Plan Accounting?
May 21,2014

Companies must be careful that their clawback policies do not subject their equity grants to variable accounting treatment. This memo from Towers Watson explains what the concern is.

GRIST Report: Section 162(m) 'Negative Discretion' May Require Variable Accounting for Share Plans
Nov 29,2006

A common feature of incentive plans, negative discretion provisions let compensation committees use subjective criteria to reduce otherwise objectively determined awards, without violating the performance pay exception to the Code section 162(m) limit on deductible compensation. These provisions might, however, create unwelcome accounting results if used in performance-based equity plans. According to some accounting firms, the possibility that a compensation committee will exercise negative discretion suggests that the FAS 123(R) grant date does not occur until the committee decides whether to use its discretion – so variable accounting applies until that time. After introducing the key concepts, this article analyzes the accounting issues and outlines steps companies may wish to take to avoid adverse accounting.

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The National Association of Stock Plan Professionals is the largest and oldest professional association for the stock and executive compensation community, with over two decades of leadership providing expert resources, education and other benefits for our more than 6,000 members across 32 affiliated chapters.


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