Blogging Employee Benefits

January 15, 2006

SFAS 123R Proposed Rule for Certain Stock Options

Filed under: Accounting, Executive Compensation — Fuguerre @ 2:48 pm

At its January 11 board meeting, the Financial Accounting Standards Board launched a new project to address the accounting classification under SFAS 123R of a share-based payment arrangement that allows a cash settlement upon change in control. [Board Meeting Handout, pp 10-14] Under past accounting guidance, equity classification of the option had been appropriate. Under SFAS 123R, the provision would require liability classification, based on the guidance in SFAS 150.

FASB staff recommends requiring the entity to assess the probability of the occurrence of the contingent event. An award with a change-in-control provision would then be classified as equity until the occurrence of the control change is probable, after which the award would be classified as liability.

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3 Comments »

  1. See FSP FAS-123r-d for text of the proposed new rule.

    Comment deadline is 1/31/06.

    Comment by Fuguerre — January 17, 2006 @ 10:01 pm

  2. See also Board Meeting Minutes from the 1/11 meeting.

    Comment by Fuguerre — January 23, 2006 @ 5:59 pm

  3. […] In this morning’s Board meeting, the Financial Accounting Standards Board moved to finalize FSP FAS-123r-d, a proposed FASB Staff Position regarding the proper accounting classification under SFAS 123R for a share-based payment arrangement that allows a cash settlement upon change in control. [FASB Board Meeting Handout, 2/1/06, pp 6-7] Background: See BeneBlog 1/25/06. […]

    Pingback by BeneBlog » Blog Archive » FASB Moves To Finalize Rule on Certain Stock Options — February 1, 2006 @ 1:54 pm


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