SEC Updates Guidance On Share-Based Compensation Disclosures In IPOs

On February 6, 2014, the Division of Corporation Finance of the Securities and Exchange Commission (the "SEC") updated Section 9520 of its Financial Reporting Manual regarding share-based compensation disclosures in initial public offering ("IPO") prospectuses.  The updates revise prior SEC guidance recommending that issuers, in their disclosure of pre-IPO share-based compensation, include tabular disclosure (for the twelve-month period preceding the most recent balance sheet date) regarding the number of instruments granted, the exercise price, the fair value of the underlying stock and the fair value of instruments granted, as well as narrative disclosure describing the factors that contributed to significant changes in the fair value of the underlying stock during the relevant twelve-month period.  Updated Section 9520 no longer requires this level of detail.  Instead, the SEC Staff will consider, in assessing the adequacy of share-based compensation disclosure,