SEC issues guidance for spring-loaded comp awards
Defining Issues | December 2021
SEC staff provides recognition and disclosure considerations for issuers that grant spring-loaded share-based payment awards.
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Staff Accounting Bulletin (SAB) 120 provides recognition and disclosure considerations for issuers who grant share-based payment awards under ASC 718 when the issuer has knowledge of material nonpublic information (‘spring-loaded share-based payment awards’).
Applicability
SEC Staff Accounting Bulletin 120
- Public companies that issue share-based payment awards in the scope of ASC 718
Relevant dates
- Effective immediately
Key Impacts:
The SEC issued interpretive guidance in SAB 120:
- Provides recognition and disclosure considerations for issuers who grant share-based payment awards under ASC 718 when the issuer has knowledge of material nonpublic information. These are commonly referred to as ‘spring-loaded share-based payment awards’. The guidance reflects the SEC staff’s view that material nonpublic information can impact the grant date fair value of spring-loaded share-based payment awards.
- Expresses an expectation that an issuer disclose any adjustments made to its share price or share price input because of spring-loaded share-based payment awards.
- Updates and amends SAB 14 (SEC’s interpretive guidance on various share-based payment topics) and SAB 5 (miscellaneous accounting topics) resulting from recently released share-based payment ASUs.