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SEC Staff Issues Guidance on "Spring-Loaded" Compensation

Steven Lofchie 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.

Primary Sources

  1. SEC Press Release: SEC Staff Issues Accounting Guidance on "Spring-Loaded" Compensation Awards to Executives
  2. Staff Accounting Bulletin No. 120

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Tags

Regulated Activities
Accounting and Audit Disclosures Employee Matters
Sub-Activity
Employee Compensation
Regulated Entities
Issuers of Securities
Sub-Entity
SEC-Registered Issuers
Body of Law
Securities Law
Jurisdiction
US - Federal
Organization
SEC