SEC Staff Issues Guidance on "Spring-Loaded" Compensation
Commentary by Steven Lofchie
The SEC issued accounting guidelines as to how companies should disclose and account for "spring-loaded awards" granted as compensation to executives.
Staff Accounting Bulletin No. 120 defines "spring-loaded awards" as share-based compensation arrangements, including stock options, that are awarded to executives shortly before the company announces positive market-moving information, such as an earnings release with better-than-expected results. The SEC stated that in awarding any non-routine spring-loaded compensation, companies must reflect the additional value of the award generated as a result of the market-moving information.
The SAB goes into effect upon its publication in the Federal Register.
Commentary
It Don't Mean a Thing (If It Ain't Got That Spring) (or something like that).