ARTICLE · 29 NOVEMBER 2006

Discretionary Adjustments To Outstanding Awards Under Equity Compensation Plans May Create Additional Compensation Expense

Willkie Farr & Gallagher

Explore more from Willkie Farr & Gallagher

Major U.S. accounting firms have recently announced an interpretation of FAS 123(R) that would potentially require companies to take an additional compensation charge for antidilution adjustments made to outstanding awards under equity compensation plans.

United StatesFinance and Banking

Frank Daniele

Major U.S. accounting firms have recently announced an interpretation of FAS 123(R) that would potentially require companies to take an additional compensation charge for antidilution adjustments made to outstanding awards under equity compensation plans. The plans of concern are those that provide for discretionary adjustment in connection with equity restructurings (e.g., stock splits, stock dividends, extraordinary cash dividends, spin-offs and recapitalizations).

Under FAS 123(R), any modification to the terms of an outstanding equity-based award requires the issuer to measure the fair value of the award after the modification. If the fair value of the modified award exceeds the fair value of the award at the time it was granted, the issuer is required to record an additional compensation expense equal to the excess.

We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.

Register for freeORLog in

Related Articles

OCC Issues Examiner Framework For Banks’ Use Of Artificial Intelligence

United StatesFinance and Banking

CFPB Opens Debanking Investigation Into Nine Large National Banks

United StatesFinance and Banking

OCC Finalizes Stablecoin Rules That Supervise Issuers Like Banks

United StatesFinance and Banking

Why Healthcare Remains One Of The Most Active NMTC Sectors

United StatesFinance and Banking

Butler Snow LLP

The SEC’s Innovation Exemption

United StatesFinance and Banking

Foley & Lardner LLP

Legal Intelligence Newsletters: sign up for the latest legal and regulatory news on your chosen topics

Read more about

Related Comparative Guides

Comparative Guide

Project Finance

Comparative Guide

Banking & Finance

Comparative Guide

Securitisation

Comparative Guide

Lending & Secured Finance

See more popular content from

Finance and Banking

CFPB Director Cordray Defends Consumer Data Collection Practice

On Wednesday, July 15, CFPB Director Richard Cordray assured the Senate Banking, Housing and Urban Affairs Committee, as well as the public, that data collected by the CFPB could not be used to personally identify any consumer.

United StatesFinance and Banking

Troutman Pepper Locke LLP

Federal Register: Federal Reserve Board, FDIC And OCC Modify Community Bank Leverage Ratio

The final rule goes into effect on November 9, 2020.

United StatesFinance and Banking

Hogan Lovells Cadwalader

Investment Firm Seeks To List Double-Leveraged ETFs Based On Single Stocks

In a registration filing with the SEC, an investment firm is seeking approval of a series of double-leveraged bullish and bearish exchange-traded funds ("ETFs") that each track the performance of a single U.S.-listed equity security.

United StatesFinance and Banking

Hogan Lovells Cadwalader

Global Climate Change Disclosure Initiatives And Board Corporate Governance Considerations

Climate disclosure regulations are among the most significant and complex challenges faced by companies and boards, with a variety of requirements emanating this year from numerous governmental authorities...

United StatesFinance and Banking

FCTM Breaking News: CME Sues CFTC Over Approval Of Bitcoin Perpetual Futures Contract

The Chicago Mercantile Exchange has filed a lawsuit against the CFTC challenging its approval of Kalshi's bitcoin perpetual futures contract, arguing that perpetual contracts should be classified as swaps rather...

United StatesFinance and Banking

Lowenstein Sandler LLP

SEC Advances “Responsible Retailization” Through A Potential Accredited Investor Exam And Potential Regulated Fund Reforms

On September 30, 2026, the Securities and Exchange Commission (SEC) issued two rule proposals and five notices aimed at expanding investors’ access to private markets. The package would add ways to qualify as an accredited investor, including passing a new exam administered by the Financial Industry Regulatory Authority (FINRA), broaden performance-based compensation and modernize regulated funds, including interval funds and business development companies (BDCs).

United StatesFinance and Banking

Proskauer Rose LLP

OCC And FDIC Redefine “Unsafe Or Unsound Practices”: The New Supervisory Framework For Banks

The OCC and FDIC have jointly issued a final rule establishing the first binding regulatory definition of "unsafe or unsound practice" for banks, introducing a three-tiered supervisory framework...

United StatesFinance and Banking

Crowell & Moring LLP

SEC Proposes Rule Amendments To Expand Retail Access To Private Markets

The SEC has proposed sweeping amendments to expand retail investor access to private market strategies, including changes to performance-based compensation rules for registered investment advisers and modernization of the interval fund framework. The proposals also explore new credential-based pathways for individuals to qualify as accredited investors, potentially opening private offerings to a broader pool of eligible participants.

United StatesFinance and Banking

Duane Morris LLP

SEC Approves FINRA’s New “Outside Activities” Rule

The Securities and Exchange Commission has approved FINRA Rule 3290, which will replace existing rules governing outside business activities and private securities transactions for registered persons. This new rule narrows the scope to focus on investment-related activities while maintaining similar supervisory obligations for member firms. Understanding the key changes and implementation requirements will be critical for broker-dealers as they update their compliance policies and procedures.

United StatesFinance and Banking

SEC Proposes Rule Changes And Seeks Comments On Additional Accredited Investor Pathways

The Securities and Exchange Commission has proposed six new pathways for individuals to qualify as accredited investors, moving beyond traditional income and wealth thresholds. These changes would allow qualification through professional certifications like CPA, CFA, and CFP designations, as well as through a new FINRA-administered exam testing securities knowledge.

United StatesFinance and Banking

Taft, Stettinius & Hollister LLP