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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.

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