EPS Implications of Equity Compensation Awards

Stock-based compensation has a direct impact on both basic and diluted earnings per share. This naturally leads to scrutiny from investors, analysts, and regulators alike.

In this Equity Methods white paper, we walk through the core calculations and special considerations for equity compensation’s impact on EPS. We also dive into advanced topics like trend analysis and forcasting the future dilutive effect of stock-based compensation awards. The paper wraps with a review of the dilutive impact of complex securities—think convertible debt—which use the distinct if-converted method. Throughout, you’ll find references to the relevant accounting guidance in ASC 260.