Direct Tracing Share-Based Compensation

A growing trend among larger companies is to push share-based compensation costs further down the organizational chart. We call this “direct tracing.” It’s a hallmark of management accounting, affecting all types of costs from direct materials to shared overhead. But share-based compensation expense still tends to be stuck at the top of the house (i.e., in a generic corporate cost center account).

This Issue Brief takes a comprehensive look at direct tracing, explaining how it works and showing how companies can benefit from it.