Sooner or later, a company that issues equity awards likely will have to modify them in some way.
Maybe an industry-wide shock has put existing performance targets out of reach. Or an acquisition has brought additional earnings that would yield a windfall well beyond the maximum payout. Perhaps the board would like to accelerate a retiring executive’s shares in recognition of years of outstanding service. Whatever the circumstances, each modification is one of a kind—a reflection of the company’s objectives, business model, and overall compensation philosophy.
Newly updated for 2019, our modifications white paper provides a holistic discussion of the share-based payment accounting model for modifications.
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Here are some of the most common types of modifications and the implications they have for the financial statement and proxy.
ASU 2017-09 is intended to clarify when changes to share-based payment awards must be accounted for as modifications. Does it succeed?
Takis Makridis · 8/30/2017
FASB released an exposure draft on the application of modification accounting guidance under ASC 718. Here’s a summary of the proposed changes.