Last December, the FASB issued its final rule, FAS 123R, requiring companies to treat stock options as a compensation expense. While this new rule will dilute earnings to some degree, it gives dealmakers the freedom to design equity awards—like those with performance conditions—that would have historically resulted in significant earnings charges and volatility.
This Deal Flash!™ discusses some of the major effects the new standard will have on the design of equity awards, including those drawn up following an acquisition. With the new standard scheduled to take effect in July 2005 for public companies, and January 2006 for private ones, deal principals should lose no time in assessing how the new rule will affect their current and future equity compensation and employee retention strategies.
Publications Search Page
