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Accounting for Phantom Stock: A Comprehensive Guide
Author: Eleanor Vance, CPA, CMA, with 15 years of experience in financial reporting and compensation planning for publicly traded companies, specializing in equity-based compensation.
Publisher: Financial Reporting Insights, a leading publisher of authoritative guides and resources for financial professionals, known for its accuracy and in-depth analysis of complex accounting issues.
Editor: David Miller, CFA, with 20 years of experience in investment banking and financial analysis, specializing in equity valuation and compensation structures.
Summary: This comprehensive guide provides a detailed explanation of accounting for phantom stock, covering its definition, accounting treatment under various accounting standards (primarily US GAAP and IFRS), and best practices to avoid common pitfalls. We will explore the implications for both the company granting the phantom stock and the recipient, highlighting key considerations for proper financial reporting and tax implications.
Keywords: accounting for phantom stock, phantom stock accounting, phantom stock compensation, equity compensation accounting, stock appreciation rights, SARs, US GAAP, IFRS, financial reporting, tax implications, best practices, common pitfalls
1. Introduction to Phantom Stock
Phantom stock, also known as stock appreciation rights (SARs), is a form of equity-based compensation that grants employees the right to receive a cash payment equal to the appreciation in the value of a company's stock over a specified period. Unlike actual stock options, employees don't receive shares of the company's stock; they receive a cash payout reflecting the increase in the stock price. Understanding the intricacies of accounting for phantom stock is crucial for accurate financial reporting and compliance.
2. Accounting for Phantom Stock under US GAAP
Under US GAAP (Generally Accepted Accounting Principles), accounting for phantom stock primarily involves recognizing the expense over the service period. The fair value of the phantom stock award is estimated at the grant date using option-pricing models, and this expense is recognized over the vesting period using a systematic and rational method. This is usually done on a straight-line basis, unless a different method is more appropriate to reflect the pattern of employee service. The expense is recognized in the income statement, while a corresponding liability is recorded on the balance sheet.
3. Accounting for Phantom Stock under IFRS
International Financial Reporting Standards (IFRS) also require the expensing of phantom stock over the service period. However, there might be subtle differences in the application compared to US GAAP, particularly in the valuation techniques and the treatment of specific contingencies or conditions associated with the awards. Companies adopting IFRS should consult the relevant IFRS standards and interpretative guidance to ensure accurate accounting.
4. Valuation of Phantom Stock
Accurate valuation is critical in accounting for phantom stock. Option pricing models, such as the Black-Scholes model, are commonly used to determine the fair value at the grant date. Several factors influence the valuation, including the current market price of the company's stock, the volatility of the stock price, the expected dividend yield, the time to vesting, and the expected forfeiture rate. Professional valuation expertise is often needed for complex situations.
5. Tax Implications of Phantom Stock
The tax implications of phantom stock differ for both the company and the employee. For the company, the expense recognized for accounting purposes is usually deductible. For employees, the cash payment received upon vesting is typically subject to income tax as ordinary income. Understanding the relevant tax laws and regulations is crucial for both parties.
6. Disclosure Requirements
Comprehensive disclosure of phantom stock awards is essential for transparency. Companies need to provide details about the number of awards granted, the fair value at the grant date, the vesting terms, and any significant changes in the terms of the awards. This information is typically found in the notes to the financial statements.
7. Best Practices in Accounting for Phantom Stock
Establish a clear and well-defined plan for granting and accounting for phantom stock awards.
Use a robust valuation model to determine fair value at the grant date.
Maintain meticulous records of all transactions related to phantom stock.
Regularly review the accounting treatment to ensure compliance with relevant accounting standards.
Seek expert advice when dealing with complex issues.
8. Common Pitfalls to Avoid
Incorrect valuation of phantom stock.
Improper expense recognition over the vesting period.
Inadequate disclosure of phantom stock awards in the financial statements.
Failure to consider tax implications.
9. Conclusion
Accounting for phantom stock requires a thorough understanding of accounting standards, valuation techniques, and tax regulations. By following best practices and avoiding common pitfalls, companies can ensure accurate financial reporting and comply with relevant regulations. Professional guidance is often recommended, especially in complex situations.
FAQs
1. What is the difference between phantom stock and stock options? Phantom stock provides a cash payment based on stock appreciation, while stock options give the right to purchase shares at a predetermined price.
2. How is the fair value of phantom stock determined? Option-pricing models, such as Black-Scholes, are typically used, considering factors like stock price, volatility, time to vest, and expected forfeiture.
3. What accounting standard governs the accounting for phantom stock? Primarily US GAAP (ASC 718) and IFRS 2.
4. Over what period is the expense for phantom stock recognized? Generally, over the vesting period using a systematic and rational method (often straight-line).
5. Are there tax implications for the company granting phantom stock? Yes, the expense is usually deductible.
6. What are the tax implications for the employee receiving phantom stock? The cash payment upon vesting is usually taxed as ordinary income.
7. What disclosures are required for phantom stock? Details on the number of awards, fair value, vesting terms, and significant changes should be disclosed in the financial statements.
8. What happens if an employee leaves the company before vesting? The outcome depends on the specific terms of the award; it might be forfeited or paid out based on the terms.
9. Is it necessary to consult with a professional when accounting for phantom stock? It is highly recommended, especially for complex situations or when significant uncertainties exist.
Related Articles:
1. Equity-Based Compensation: A Comprehensive Overview: This article provides a broad overview of various equity-based compensation methods, including phantom stock.
2. Option Pricing Models in Equity Compensation: Explores the various option pricing models used in valuing equity-based compensation instruments, including phantom stock.
3. IFRS 2: A Detailed Explanation: Focuses on the specific requirements of IFRS 2 related to share-based payment transactions, including phantom stock.
4. ASC 718: Comprehensive Guide: A deep dive into the US GAAP standard governing share-based payment, explaining its application to phantom stock.
5. Tax Implications of Equity-Based Compensation: A detailed analysis of the tax consequences for both the employer and employee related to various forms of equity compensation, including phantom stock.
6. Valuation Techniques for Equity-Based Compensation: Explains different valuation methods used to determine the fair value of equity-based compensation.
7. Best Practices in Designing Equity Compensation Plans: Provides guidance on designing effective and compliant equity compensation plans, considering various factors including phantom stock.
8. Risk Management in Equity Compensation: Explores the various risks associated with equity compensation and how to effectively manage them.
9. Case Studies in Accounting for Phantom Stock: Presents real-world examples of how companies have accounted for phantom stock, highlighting both successful and problematic situations.
| accounting for phantom stock: Equity Alternatives Joseph S. Adams, Barbara Baksa, Daniel D. Coleman, Daniel Janich, David R. Johanson, Blair Jones, Kay Kemp, Corey M. Rosen, Martin Staubus, Robin Struve, Dan Walter, Eimear Elzy, National Center for Employee Ownership (U.S.), 2012-01-01 |
| accounting for phantom stock: FRS 102 , 2015 |
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| accounting for phantom stock: Wiley IFRS 2008 Barry J. Epstein, Eva K. Jermakowicz, 2008-03-28 The one indispensable guide to IFRS compliance Wiley IFRS 2008 is the comprehensive source for guidance in applying IFRS to complex, real-world fact situations, and is equally valuable for preparers, auditors, and users of financial reports. To facilitate the reader's understanding, the book includes both examples created to explain particular IFRS requirements and selections from actual published financial statements, which have been copiously provided throughout, illustrating all key concepts. Barry J. Epstein (Chicago, IL) is a partner with Russell Novak & Company, LLP, where he specializes in technical and litigation consultation on U.S. and international accounting and auditing matters and corporate governance. Eva K. Jermakowicz, PhD, CPA (Nashville, TN) is a university professor and a leading consultant to international organizations and businesses. She is a frequent speaker at international venues and has 25 years of teaching experience. |
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| accounting for phantom stock: Accountants' Handbook, Special Industries and Special Topics D. R. Carmichael, Paul H. Rosenfield, 2003-05-13 The premier accounting reference, revised and expanded The Accountants' Handbook series has the longest tradition of any reference of providing comprehensive coverage of the field to both accounting professionals and professionals in other fields who need or desire quick, understandable, and thorough exposure to complex accounting-related subjects. Like its predecessors, the Tenth Edition is designed as a single reference source that provides answers to all reasonable questions on accounting and financial reporting asked by accountants, auditors, bankers, lawyers, financial analysts, and other preparers and users of accounting information. Written by nationally recognized accounting professionals, including partners in major public accounting firms, financial executives, financial analysts, and other relevant business professionals, the Handbook covers both financial accounting and reporting and industry specific accounting issues in separate volumes for easy reference. Its comprehensive content provides analysis on over 43 critical areas of accounting. |
| accounting for phantom stock: Compensation Committee Handbook James F. Reda, Stewart Reifler, Laura G. Thatcher, 2004-10-27 This Second Edition provides a comprehensive review of the issues facing compensation committees and covers functional issues such as organising, planning, and best practice tips. Compliance advice on the implications of Sarbanes-Oxley and other regulations is addressed along with new requirements on disclosures of financial transactions involving management and principal stockholders. |
| accounting for phantom stock: Financial Shenanigans Howard M. Schilit, 2002-03-22 Techniques to uncover and avoid accounting frauds and scams Inflated profits . . . Suspicious write-offs . . . Shifted expenses . . . These and other dubious financial maneuvers have taken on a contemporary twist as companies pull out the stops in seeking to satisfy Wall Street. Financial Shenanigans pulls back the curtain on the current climate of accounting fraud. It presents tools that anyone who is potentially affected by misleading business valuationsfrom investors and lenders to managers and auditorscan use to research and read financial reports, and to identify early warning signs of a company's problems. A bestseller in its first edition, Financial Shenanigans has been thoroughly updated for today's marketplace. New chapters, data, and research reveal contemporary shenanigans that have been known to fool even veteran researchers. |
| accounting for phantom stock: The Portable MBA in Finance and Accounting Theodore Grossman, John Leslie Livingstone, 2009-10-08 The most comprehensive and authoritative review of B-School fundamentals—from top accounting and finance professors For years, the Portable MBA series has tracked the core curricula of leading business schools to teach you the fundamentals you need to know about business-without the extreme costs of earning an MBA degree. The Portable MBA in Finance and Accounting covers all the core methods and techniques you would learn in business school, using real-life examples to deliver clear, practical guidance on finance and accounting. The new edition also includes free downloadable spreadsheets and web resources. If you’re in charge of making decisions at your own or someone else’s business, you need the best information and insight on modern finance and accounting practice. This reliable, information-packed resource shows you how to understand the numbers, plan and forecast for the future, and make key strategic decisions. Plus, this new edition covers the effects of Sarbanes-Oxley, applying ethical accounting standards, and offers career advice. • Completely updated with new examples, new topics, and full coverage of topical issues in finance and accounting—fifty percent new material • The most comprehensive and authoritative book in its category • Teaches you virtually everything you'd learn about finance and accounting in today's best business schools Whether you’re thinking of starting your own business or you already have and just need to brush up on finance and accounting basics, this is the only guide you need. |
| accounting for phantom stock: The Portable MBA in Finance and Accounting John Leslie Livingstone, Theodore Grossman, 2001-11-02 The Portable MBA in Finance and Accounting erzielte die zweithöchsten Verkaufszahlen (über 80.000 Exemplare) in der PMBA-Serie. Dieses Thema ist ein Dauerbrenner; auch erfahrene Manager oder MBAs möchten gerne ihr Finanzwissen auffrischen. Für Leser ohne wirtschaftliche Erfahrung oder Vorkenntnisse bietet dieses Buch ausgezeichnete Materialien zu den Grundlagen des Finanzwesens und der Rechnungslegung. In der modernen Geschäftswelt sind Finanzwissen und fundierte Fähigkeiten im Bereich Budgetierung und Finanzplanung wichtiger denn je. Die dritte Auflage wurde gründlich aktualisiert und enthält fünf neue bzw. radikal überarbeitete Kapitel: Interpretation von Bilanzen, Informationstechnologie im Finanzbereich, Investitionsplanung, Informationstechnologie und das Unternehmen und Unternehmensbewertung. Vier Kapital wurden gründlich überarbeitet: Kosten-Umsatz-Gewinn-Analyse, Prognosen und Budgetierung, Produktivitätsmessung und Geschäftsplan (Business Plan). Neun Kapitel wurden durch kleinere Anpassungen aktualisiert: Analyse von Geschäftsergebnissen, Activity-Based-Costing, Wahl einer Gesellschaftsform, Steuern und Geschäftsentscheidungen, Globale Geschäftstätigkeit, Management von Finanzrisiken, Börsengang, Gesellschaftsorgane und profitables Wachstum durch Akquisitionen. |
| accounting for phantom stock: The Complete Guide to Employee Stock Options Frederick D. Lipman, 2001 Numerous private and public companies offer stock option plans every year to motivate, retain, and reward employees. But implementing the right stock option plan can be a complex and daunting undertaking, without the proper guidance.The Complete Guide to Employee Stock Optionsunravels the mystery of creating a meaningful equity compensation plan for employees that is favorable for the business. Author and attorney Frederick D. Lipman describes in complete detail the legal, operational, and motivational aspects of developing a stock option program, whether it's for the new start-up looking to attract top talent or the venerable company looking for ways to reward its best performing employees. Readers will discover how to: * Understand the pros and cons of different option plans* Implement the right plan to meet the company's future plans* Motivate key employees with equity compensation* Minimize the risk of losing equity in a volatile market* And much moreThis book also includes useful information for employees who want to understand what their stock options mean and how to maximize their profitability. Complete wi |
| accounting for phantom stock: 2008 CCH Accounting for Compensation Arrangements Donald P. Delves, 2007 CCH Accounting for Compensation Arrangements offers professionals comprehensive guidance for applying the complex and expansive requirements of FASB Statement No. 123 (Revised 2004), Share-Based Payment. It discusses the financial reporting implications of stock-based compensation arrangements for employees, employee stock purchase plans, certain other compensation arrangements for employees, and share awards to nonemployees for goods and services. |
| accounting for phantom stock: Damodaran on Valuation Aswath Damodaran, 2016-02-08 Aswath Damodaran is simply the best valuation teacher around. If you are interested in the theory or practice of valuation, you should have Damodaran on Valuation on your bookshelf. You can bet that I do. -- Michael J. Mauboussin, Chief Investment Strategist, Legg Mason Capital Management and author of More Than You Know: Finding Financial Wisdom in Unconventional Places In order to be a successful CEO, corporate strategist, or analyst, understanding the valuation process is a necessity. The second edition of Damodaran on Valuation stands out as the most reliable book for answering many of today?s critical valuation questions. Completely revised and updated, this edition is the ideal book on valuation for CEOs and corporate strategists. You'll gain an understanding of the vitality of today?s valuation models and develop the acumen needed for the most complex and subtle valuation scenarios you will face. |
| accounting for phantom stock: Crash Course in Accounting and Financial Statement Analysis Matan Feldman, Arkady Libman, 2011-07-20 Seamlessly bridging academic accounting with real-life applications, Crash Course in Accounting and Financial Statement Analysis, Second Edition is the perfect guide to a complete understanding of accounting and financial statement analysis for those with no prior accounting background and those who seek a refresher. |
| accounting for phantom stock: Accountants' Handbook, Volume 1 D. R. Carmichael, O. Ray Whittington, Lynford Graham, 2007-06-04 This highly regarded reference is relied on by a considerable part of the accounting profession in their day-to-day work. This handbook is the first place many accountants look to find answers to practice questions. Its comprehensive scope is widely recognized and relied on. It is designed as a single reference source that provides answers to all reasonable questions on accounting and financial reporting asked by accountants, auditors, bankers, lawyers, financial analysts, and other preparers and users of accounting information. |
| accounting for phantom stock: Forensic Accounting For Dummies Frimette Kass-Shraibman, Vijay S. Sampath, 2011-01-13 A practical, hands-on guide to forensic accounting Careers in forensic accounting are hot-US News & World Report recently designated forensic accounting as one of the eight most secure career tracks in America., Forensic accountants work in most major accounting firms and demand for their services is growing with then increasing need for investigations of mergers and acquisitions, tax inquiries, and economic crime. In addition, forensic accountants perform specialized audits, and assist in all kinds of civil litigation, and are often involved in terrorist investigations. Forensic Accounting For Dummies will track to a course and explain the concepts and methods of forensic accounting. Covers everything a forensic accountant may face, from investigations of mergers and acquisitions to tax inquiries to economic crime What to do if you find or suspect financial fraud in your own organization Determining what is fraud and how to investigate Whether you're a student pursuing a career in forensic accounting or just want to understand how to detect and deal with financial fraud, Forensic Accounting For Dummies has you covered. |
| accounting for phantom stock: The Role of the Board of Directors in Enron's Collapse United States. Congress. Senate. Committee on Governmental Affairs. Permanent Subcommittee on Investigations, 2002 |
| accounting for phantom stock: Leveraged ESOPs and Employee Buyouts Scott S. Rodrick, 2000 |
| accounting for phantom stock: Accountants' Handbook, Volume 2 D. R. Carmichael, O. Ray Whittington, Lynford Graham, 2007-04-06 This highly regarded reference is relied on by a considerable part of the accounting profession in their day-to-day work. This handbook is the first place many accountants look to find answers to practice questions. Its comprehensive scope is widely recognized and relied on. It is designed as a single reference source that provides answers to all reasonable questions on accounting and financial reporting asked by accountants, auditors, bankers, lawyers, financial analysts, and other preparers and users of accounting information. |
| accounting for phantom stock: CICA Handbook Canadian Institute of Chartered Accountants, 2010-04 |
| accounting for phantom stock: Essentials of Personal Financial Planning Susan M. Tillery, Thomas N. Tillery, 2018-09-21 ESSENTIALS OF PERSONAL FINANCIAL PLANNING Essentials of Personal Financial Planning was written to challenge the status quo by promoting personal financial planning (PFP) as a profession, not as a sales tool to gather assets under management or facilitate sales of insurance products. The book takes a comprehensive and integrated approach to PFP for accounting students, allowing them to view the profession through the lens of a CPA – with integrity and objectivity. This book systematically introduces the essentials of all the major PFP topics (estate, retirement, investments, insurance, and tax), as well as: The PFP process, concepts and regulatory environment. Professional responsibilities of a CPA personal financial planner and the requirements of the Statement on Standards in PFP Services. Time value of money concepts. The book then builds on these foundational concepts, showing their interconnectivity and professional opportunities, to provide a deeper understanding of PFP and its application. After reading this book, students will be able to apply the knowledge and skills gained from this course to have an immediate and long-term positive impact for themselves and for the clients they serve. |
| accounting for phantom stock: Accountants' Handbook, Financial Accounting and General Topics D. R. Carmichael, Paul H. Rosenfield, 2003-05-12 The premier accounting reference, revised and expanded The Accountants' Handbook series has the longest tradition of any reference of providing comprehensive coverage of the field to both accounting professionals and professionals in other fields who need or desire quick, understandable, and thorough exposure to complex accounting-related subjects. Like its predecessors, the Tenth Edition is designed as a single reference source that provides answers to all reasonable questions on accounting and financial reporting asked by accountants, auditors, bankers, lawyers, financial analysts, and other preparers and users of accounting information. Written by nationally recognized accounting professionals, including partners in major public accounting firms, financial executives, financial analysts, and other relevant business professionals, the Handbook covers both financial accounting and reporting and industry specific accounting issues in separate volumes for easy reference. Its comprehensive content provides analysis on over 43 critical areas of accounting. |
| accounting for phantom stock: Financial Valuation of Employee Stock Ownership Plan Shares Larry R. Cook, 2005-06-14 A must-read for accountants and professionals with a business valuation accreditation or certification, pension actuaries, ERISA lawyers, Financial Valuation of Employee Stock Ownership Plan Shares identifies, explains, and explores the ins and outs of ESOPs, with a focus on what benefits a company/shareholder/plan participant would receive by transacting shares of stock with an ESOP, the formula for an Employee Stock Ownership Plan, stock incentives and their attractiveness to employees, the nature and function of ERISA, Department of Labor, and IRS. It includes training material, the full text of Department of Labor–proposed regulations, details of important court cases, various examples and illustrations to be used as reference and research tools for the experienced and trained valuation professional, and more. |
| accounting for phantom stock: Income Tax Treatment of Cooperatives: Handling of losses Donald A. Frederick, 1993 |
| accounting for phantom stock: Audit and Accounting Guide: Employee Benefit Plans AICPA, 2016-11-21 Considered the industry standard resource, this guide provides practical guidance, essential information and hands-on advice on the many aspects of accounting and authoritative auditing for employee benefit plans. This new 2016 edition is packed with information on new requirements — including the simplification of disclosure requirements for investments in certain entities that calculate net asset value per share (or its equivalent), the simplification of disclosures for fully benefit-responsive investment contracts, plan investment disclosures, and measurement date practical expedient, and a new employee stock ownership plans chapter that includes both accounting and auditing. |
| accounting for phantom stock: Wiley GAAP Steven M. Bragg, 2010-09-21 The most practical, authoritative guide to GAAP Wiley GAAP 2011 contains complete coverage of all levels of GAAP, now indexed to the new ASC. Wiley GAAP renders GAAP more understandable and accessible for research, and has been designed to reduce the amount of time and effort needed to solve accounting research issues. Provides interpretive guidance and a wealth of real-world, content-rich examples and illustrations Offers insight into the application of complex financial reporting rules Contains detailed index for easy reference use Includes a comprehensive cross-reference of accounting topics to the new FASB codification system Offers clear, user-friendly guidance on every pronouncement including FASB Technical Bulletins, AcSEC Practice Bulletins, FASB Implementation Guides, AICPA Statements of Position, and AICPA Accounting Interpretations Other titles by Epstein and Nach: Wiley GAAP Codification Enhanced Other titles by Bragg: Wiley Practitioner's Guide to GAAS 2010 With easy-to-access information, this practicable and reliable resource offers complete coverage of the entire GAAP hierarchy. |
| accounting for phantom stock: Library of Congress Subject Headings Library of Congress. Cataloging Policy and Support Office, 2003 |
| accounting for phantom stock: Executive Compensation Michael S. Sirkin, Lawrence K. Cagney, 2023-09-28 Executive Compensation is an invaluable legal guide through the maze of rules, regulations and practices that govern corporate financial compensation for executive employees. |
| accounting for phantom stock: Tolley's Guide to Employee Share Schemes David Craddock, 2016-10-26 With this new edition of Tolley's Guide to Employee Share Schemes you can be sure you're giving the best, up-to-date guidance on implementing employee share schemes which will save money for your client.The new edition of this title evaluates the range of employee share schemes available, looking at their processes, the statutory and regulatory requirements, HMRC's interpretation of share scheme issues and most importantly the tax benefits associated with the various schemes. You can rely on the detailed and expert guidance contained in this title to ensure you choose the most effective and tax efficient employee share scheme. This indispensable guide is written in a clear, practical style and includes worked examples and case studies throughout. |
| accounting for phantom stock: Hearings, Reports and Prints of the Senate Committee on Finance United States. Congress. Senate. Committee on Finance, 1977 |
| accounting for phantom stock: Revenue Act of 1978 United States. Congress. Senate. Committee on Finance, 1978 |
| accounting for phantom stock: Reporting Requirements for State and Local Government Pension Plans and Tax Treatment of Deferred Amounts Under Nonqualified Deferred Compensation Plans United States. Congress. Senate. Committee on Finance. Subcommittee on Private Pension Plans and Employee Fringe Benefits, 1978 |
| accounting for phantom stock: Reporting Requirements for State and Local Government Pension Plans and Tax Treatment of Differed Amounts Under Nonqualified Deferred Compensation Plans United States. Congress. Senate. Committee on Finance. Subcommittee on Private Pension Plans and Employee Fringe Benefits, 1978 |
| accounting for phantom stock: Library of Congress Subject Headings Library of Congress, 1995 |
| accounting for phantom stock: The Handbook of Financing Growth Kenneth H. Marks, Larry E. Robbins, Gonzalo Fernandez, John P. Funkhouser, D. L. Williams, 2009-08-07 The Second Edition of The Handbook of Financing Growth has been designed to help leaders and advisors gain a solid understanding of the financing strategies, sources, and transactions that will allow them to excel in such an unpredictable environment. Written by an experienced group of practitioners who operate within this dynamic market and fully updated to reflect new market realities this reliable resource outlines the full spectrum of funding alternatives currently available to emerging growth and middle-market companies and presents the practical strategies and techniques you need to be aware of when considering the capitalization, growth, or sale of your, or your client's, company. New material found in this Second Edition includes detailed discussions of positioning a business for value creation before the transaction and how your financing strategy fits into the overall plan for growing and raising capital as well as creating an exit. Among various techniques, the authors address buyouts and recapitalizations as two alternatives to create shareholder liquidity and potentially finance future growth. A new chapter on M&A addresses the acquisition process and how to fund acquisitions and external growth initiatives, while additional case studies highlight bank financing alternatives and growth equity. |
| accounting for phantom stock: Following the Money George Benston, Michael Bromwich, Robert E. Litan, 2004-05-13 A Brookings Institution Press and American Enterprise Institute publication A few years ago, Americans held out their systems of corporate governance and financial disclosure as models to be emulated by the rest of the world. But in late 2001 U.S. policymakers and corporate leaders found themselves facing the largest corporate accounting scandals in American history. The spectacular collapses of Enron and Worldcom—as well as the discovery of accounting irregularities at other large U.S. companies—seemed to call into question the efficacy of the entire system of corporate governance in the United States. In response, Congress quickly enacted a comprehensive package of reform measures in what has come to be known as the Sarbanes-Oxley Act. The New York Stock Exchange and the NASDAQ followed by making fundamental changes to their listing requirements. The private sector acted as well. Accounting firms—watching in horror as one of their largest, Arthur Andersen, collapsed after a criminal conviction for document shredding—tightened their auditing procedures. Stock analysts and ratings agencies, hit hard by a series of disclosures about their failings, changed their practices as well. Will these reforms be enough? Are some counterproductive? Are other shortcomings in the disclosure system still in need of correction? These are among the questions that George Benston, Michael Bromwich, Robert E. Litan, and Alfred Wagenhofer address in Following the Money. While the authors agree that the U.S. system of corporate disclosure and governance is in need of change, they are concerned that policymakers may be overreacting in some areas and taking actions in others that may prove to be ineffective or even counterproductive. Using the Enron case as a point of departure, the authors argue that the major problem lies not in the accounting and auditing standards themselves, but in the system of enforcing those standards. |
| accounting for phantom stock: The Compensation Committee Handbook James F. Reda, Stewart Reifler, Laura G. Thatcher, 2008-03-21 NEW AND UPDATED INFORMATION ON THE LAWS AND REGULATIONS AFFECTING EXECUTIVE COMPENSATION Now in a thoroughly updated Third Edition, Compensation Committee Handbook provides a comprehensive review of the complex issues facing compensation committees in the wake of Sarbanes-Oxley. This new and updated edition addresses a full range of functional issues facing compensation committees, including organizing, planning, and best practices tips. As the responsibilities of the compensation committee continue to increase, the need for practical and comprehensive material has become even more imperative. Complete with compliance advice on the latest rules and regulations that have developed since the publication of the last edition, Compensation Committee Handbook, Third Edition provides the most up-to-date and reliable information on: * The latest regulations impacting executive compensation, including new regulations issued by the SEC, recently revised GAAP accounting rules, and the just-finalized IRS regulations impacting the taxation of stock options * The roles and responsibilities of the compensation committee, including best practice tips and techniques * Selecting and training compensation committee members * How to make compensation committees a performance driver for a company * Practical applications, including incentive compensation and equity-based compensation Compensation Committee Handbook, Third Edition will help all compensation committee members and interested professionals succeed in melding highly complex technical information and concepts with both corporate governance principles and sound business judgment. |
| accounting for phantom stock: The Theory of Corporate Finance Jean Tirole, 2010-08-26 Magnificent.—The Economist From the Nobel Prize–winning economist, a groundbreaking and comprehensive account of corporate finance Recent decades have seen great theoretical and empirical advances in the field of corporate finance. Whereas once the subject addressed mainly the financing of corporations—equity, debt, and valuation—today it also embraces crucial issues of governance, liquidity, risk management, relationships between banks and corporations, and the macroeconomic impact of corporations. However, this progress has left in its wake a jumbled array of concepts and models that students are often hard put to make sense of. Here, one of the world's leading economists offers a lucid, unified, and comprehensive introduction to modern corporate finance theory. Jean Tirole builds his landmark book around a single model, using an incentive or contract theory approach. Filling a major gap in the field, The Theory of Corporate Finance is an indispensable resource for graduate and advanced undergraduate students as well as researchers of corporate finance, industrial organization, political economy, development, and macroeconomics. Tirole conveys the organizing principles that structure the analysis of today's key management and public policy issues, such as the reform of corporate governance and auditing; the role of private equity, financial markets, and takeovers; the efficient determination of leverage, dividends, liquidity, and risk management; and the design of managerial incentive packages. He weaves empirical studies into the book's theoretical analysis. And he places the corporation in its broader environment, both microeconomic and macroeconomic, and examines the two-way interaction between the corporate environment and institutions. Setting a new milestone in the field, The Theory of Corporate Finance will be the authoritative text for years to come. |
| accounting for phantom stock: The Save Your Business Book John Goldhammer, 1993 Provides information, for small business owners, on creditors' claims, bankruptcy, debt restructuring and business reorganization. The text then goes beyond these financial issues to discuss motivating employees, marketing, advertising and work ethics. |
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Phantom Stock Plans - tbhr-law.com
Jun 16, 2010 · The receipt of Phantom Stock is not itself currently taxable, nor does the recipient have to purchase the Phantom Stock with personal funds But receipt of future proceeds is …
Tuesday Series Company Law Master Class Employees Stock …
•A Phantom Option is a form of SAR where appreciation of company share price over an established time period is paid in form of free shares to the employees.
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SYNTHETIC EQUITY: AN INNOVATIVE APPROACH TO …
Equity, or stock, is what provides next-generation advisors a true stake in an advisory business, and from which, over time, and with hard work, reap the rewards of above and beyond ordinary …
ACCOUNTING FOR STOCK COMPENSATION UNDER FASB …
Nov 1, 2021 · This paper summarizes the most pertinent provisions of accounting for stock compensation under Topic 718 and other related FASB and Securities and Exchange …
Stock-based compensation - Viewpoint
fundamental principles of accounting for all types of stock-based compensation, including which arrangements are subject to its scope, measurement date, vesting conditions, expense …
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ACCOUNTING FOR STOCK COMPENSATION UNDER FASB …
Nov 1, 2021 · This paper summarizes the most pertinent provisions of accounting for stock compensation under Topic 718 and other related FASB and Securities and Exchange …
Equity Pitfalls under Section 409A Checklist - Skadden, Arps, …
restricted stock units (RSUs) and stock options to violate Section 409A of the Internal Revenue Code and methods of avoiding these pitfalls. Section 409A of the Internal Revenue Code …
A LAYMAN’S GUIDE TO LLC INCENTIVE COMPENSATION A
outline, is the accounting treatment accorded each type of interest. 2 capital and profits interests, options to acquire LLC interests, and virtual options such as equity appreciation rights. As the …
VESTING OF DEFERRED COMPENSATION: WHEN WORDS ARE …
tax accounting. The practical result, according to the authors, is that employers might preier to nm their promises through section 83 instead of section 409A for its more favorable tax treatment. …
FASB Provides Clarity on FASB Provides Clarity on Accounting …
the accounting treatment of profits interest awards. This move aims to enhance the consistency and under - ... describe phantom share unit awards, one of which would be accounted for …
THE STANDARD STANCE - BDO
be a different accounting treatment if there is a recharge arrangement in place wherein the subsidiary company would reimburse the cost incurred by the parent company for awarding …
Valuing management incentive units - RSM US
compensation (e.g., stock options) in terms of design and accounting treatment ... the company’s stock price and the benchmark index or peer group, with application of the correlation between …
Accounting for Stock Compensation Under FASB ASC Topic …
Mar 20, 2014 · Accounting for Stock Compensation . Under FASB ASC Topic 718 . Overview Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic …
Accounting for Stock Compensation Under FASB ASC Topic …
Apr 6, 2016 · FREDERIC W. COOK & CO., INC. NEW YORK • CHICAGO • LOS ANGELES • SAN FRANCISCO • ATLANTA • HOUSTON • BOSTON April 6, 2016 (Originally April 29, …
INLAND REVENUE BOARD OF MALAYSIA TAX TREATMENT OF …
stock in trade at the end of the accounting period is then valued at this average unit cost. 3.4 “LIFO” (last-in, first-out) means the method which assumes that the stock in ... Stock in trade is …
HAVING YOUR CAKE AND EATING IT TOO: AVOIDING THE S …
John Karayan Accounting For many businesses, maintaining their election to be taxed as Subchapter S corporations is important. This is because S corporations enjoy all of the legal ...
FINANCIAL PLANNING Distributing Company Stock from a …
Stock options and “phantom stock” are not eligible for NUA treatment. • A lump-sum distribution is required. In order to take advantage of the NUA strategy, the entire plan balance must be …
LEGAL FRAMEWORK ON ESOPs - corporateprofessionals.com
Objective of Employee Stock Benefit Schemes To motivate the employees to contribute to the growth and profitability of the Company. To retain the key employees and reduce the attrition …
SELECTED AREAS OF COST Chapter 7 – Bonuses and Incentive …
changes (otherwise known as stock appreciation) individually in the cost principle, in 1996 the Government streamlined FAR 31.205-6(i) and addressed general prohibitions and identified …
Stock Option Plans - Nishith Desai
Mechanism of stock options A stock option is defined under the Guidelines as “a right but not an obligation granted to an employee in pursuance of the employee stock option scheme to apply …
IN THE UNITED STATES DISTRICT COURT FOR THE …
were participants in the Enron Corp. Savings Plan, the Enron Corp. Employee Stock Ownership Plan, the Cash Balance Plan or who received “phantom stock” as compensation.1 Their …
ASPE 3870 Stock-based Compensation and Other Stock …
870 Stock-based Compensation and Other Stock-based Payments This communication contains a general overview of the. topic and is current as of . March 1, 2021. The application of the …
Research ESOPs and Other - Nishith Desai
Non-qualified stock options (“NSOs”): The NSO is a type of ESOP scheme used in USA which involves an offer by an employer to sell its stock to an employee for a specified price at any …
Forfeiture of Stock Awards (by the Book) - Crowe LLP
Accounting for Restricted Stock and Nonstatutory Stock Options For restricted stock and nonstatutory stock options, a deferred tax asset is recorded during the period over which the …
Tax Treatment of Employee Stock Options And Other Forms …
company at a future date. They include “stock options”. 3.2 . Employee Share Ownership (ESOW) plans . The plans allow an employee of a company to own or purchase shares in the company …
Stock Option Plans - Nishith Desai
Mechanism of stock options A stock option is defined under the Guidelines as “a right but not an obligation granted to an employee in pursuance of the employee stock option scheme to apply …
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finance and accounting consequences as well as the optics of making changes to the global incentive compensation strategy in the current market. As such, these equity compensation …
Pay Starts With Z - Zayla
Phantom Stock Time Based Phantom Stock Appreciation Based Performance LTIP Waterfall ... Utilizes company cash v. company stock 3) open-ended liability accounting v. fixed accrual …
HAVING YOUR CAKE AND EATING IT TOO: AVOIDING THE S …
John Karayan Accounting For many businesses, maintaining their election to be taxed as Subchapter S corporations is important. This is because S corporations enjoy all of the legal ...
Employee Stock Option Plans (ESOP) - KPMG
Stock option deduction. −Stock option deduction = ½ of benefit −Prescribed shares (plain vanilla common shares) −Public company employees: options not “in the money” at grant date …
OVERVIEW OF DEFERRED COMPENSATION …
Dec 31, 2008 · 8. Discounted stock options, discounted SARS or membership appreciation rights, restricted share units, phantom stock and other types of equity or synthetic equity …
Corporation tax deductions for share plans - KPMG
is available irrespective of any UK company accounting charge, and any other deduction for the cost of providing the shares is then disallowed; i.e. accounting charges are added back other …
Accounting and financial reporting valuations - KPMG
accounting, companies face many valuation related issues. Therefore, it becomes important to seek ... phantom share schemes, performance share rights/restricted stock units, etc. These …
M&A Basics - Morgan, Lewis & Bockius
Jan 21, 2015 · – Stock rights are options and stock appreciation rights – Exercise price must be at least stock’s fair market value at grant date – Stock rights must be granted on “service …
Stock Option Plans Surveyed by NCS - U.S. Bureau of Labor …
Restricted stock, stock bonus plans, phantom or shadow stock, and stock appreciation rights each were available in fewer than 1 percent of establishments. Provisions data The survey, in …
Equity and Non-Equity Incentive Options - York Howell
B. Accounting Treatment Assuming the typical vesting provisions used by a company described earlier, the grant date fair value of the restricted stock (less any value paid for the shares) …
Stock Options, Restricted Stock, Phantom Stock, Stock …
Phantom stock pays a future cash bonus equal to the value of a certain number of shares. Stock appreciation rights (SARs) provide the right to the increase in the value of a designated …
HOYA Corporation and its Subsidiaries Consolidated Financial …
Cumulative effect of accounting change 533 533 Restated balance at April 1, 2019 623,688 4,552 628,240 Total comprehensive income/(loss) for the year
U.S. GAAP vs. IFRS: Share-based compensation - RSM US
The guidance related to accounting for share-based compensation in U.S. GAAP is included in the Financial Accounting Standards Board’s Accounting Standards Codification (ASC) Topic …
Paper 10 The mechanism of employee stock option plans in …
Stock appreciation rights Phantom plans E. SEC disclosure rules for the corporate insider Relaxations in relation to certain stock option schemes F. New Accounting Norms Financial …
Employee Benefits and their Economics - Vinod Kothari
Phantom Stock Options 13 Phantom Stocks Options also known as Shadow Stocks Options • Is a performance-based incentive plan • Promises an employees/non-employees the right to …
Canada New Stock Option Regime in Effect - KPMG
The new stock option deduction rules are included in the 2021 federal budget implementation bill (Bill C-30), which received Royal Assent on 29 June 2021 and is now law.1 Finance had first …
Microsoft Word - 12083345_2_Stock Option Plan.DOC
EXAMPLE ONLY;YOU SHOULD RETAIN LEGAL COUNSEL TO ADVISE YOUAS TO YOUR SPECIFIC SITUATION PAGE 4 Treasury Regulation §1.409A-1(b)(5)(iv)(B).1 (n) “Forfeiture …
Phantom Stock Plans - tbhr-law.com
Jun 16, 2010 · Phantom Stock Plans for Private Companies Jeffrey P. Hart, Esq. June 16, 2010 2010 New England Retirement Plan Symposium. What is Nonqualified Deferred ... where he …
ESOP Transaction Structures - SES ESOP Strategies
phantom stock) granted to key management to allow key executives to own eventually 10-20% of economic value of entity outside ESOP. Company uses “S” Corp tax-free operation to …
into “Owners” Without Diluting Corporate Control
physical stock, the employee receives "pretend" stock. Even though it's not real, the phantom stock follows the price movement of the company's actual stock." Phantom stock is a …
GAMCO INVESTORS, INC.
combination of stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, phantom stock awards, dividend equivalents, and other stock or cash based …
Succession planning using employee stock ownership plans
buyer for the stock, and it can be structured to purchase any portion of the shares that owners desire to sell. The ESOP may be more likely to buy a minority interest than an unrelated party …
Excellence with Excel for Stock Plan Professionals
Elizabeth Dodge, CEP, Stock & Option Solutions, Inc. Julie Kenia, CEP, Stock & Option Solutions, Inc. Stock & Option Solutions (SOS) is the leading stock administration staffing, consulting and …
Incentive Pay Practices: Publicly Traded Companies
Stock appreciation right (SAR) Phantom stock. n = 180 . What type(s) of long-term incentive programs does your organization offer? Please select all that apply. ©2021 WorldatWork. 17. …
ICAEW TECHNICAL ADVISORY SERVICE
accounting for the issue of a share option in a share-based payment transaction discussed above. Where a holder exercises their option, and the company issues shares as a result, the …
Marc Bello - NACVA
Marc Bello is a nationally recognized expert in business valuation and forensic accounting. He has appeared as an expert ... stock options, restricted stock, phantom stock plans, double dip …
Financial Instruments with Characteristics of Equity - IFRS
10 •An entity issues 1,000 cumulative preference shares for CU1,000, each with an annual dividend of 10%. •The entity has the right to defer dividend payments, and/or the
PUBLIC FINANCIAL DISCLOSURE GUIDE - OGE
Employee Stock Ownership Plan 71 . Employee Stock Purchase Plan 71 . Future Employment Arrangement 72 . Law Firm \(partnership\)73 . Leave of Absence 74 . Legal Practice \(solo …
Equity-Based Alternatives to Stock Options - Hugessen
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