Defining Issues | December 2021

 

Insight

SEC issues guidance for spring-loaded comp awards

SEC staff provides recognition and disclosure considerations for issuers that grant spring-loaded share-based payment awards.

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

  • 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.

Related content

Subscribe to our newsletter

Receive timely updates on accounting and financial reporting topics from KPMG.

Receive timely updates on accounting and financial reporting topics from KPMG.

ARO

Use our Accounting Research Online for financial reporting resources.

Use our Accounting Research Online for financial reporting resources.