What HR Professionals need to know about Stock-based Compensation Accounting

This presentation was designed and written with HR Professionals in mind. The presentation begins with an introduction to stock options which outlines the two main types of options for stock in detail. The two dimensions of options are discussed along with the reason why companies offer stock based compensation (SBC). The presentation then flows into the types of SBC and the details involved in how they work starting from the board of directors and ending at the employee. The material delves deeper into SBC with methods of expensing them and Employee Share Purchase Plans. ESPP’s and their benefits are explained in detail explaining by both companies and employees like them. The presentation goes on to talk about the global trends for the stock options mentioned above.

Stock option pricing is explained as well as the factors that impact call option pricing such as the current price, strike price, time to option expiry, expected interest rate, expected dividend and expected volatility. Once the formulae are explained, an example of expense recognition is outlined involving straight-line amortization and accelerated amortization. Historical method, empirical method and simplified method are detailed under the expected life estimations followed by the impact of options on financial statements. The conclusion of the presentation describes how options have two key impacts on these statements which include debiting expenses and crediting equity, retained earnings reduction, notes to financial statements and the increase of the number of diluted shares. After the presentation, the floor will be open for questions from the audience.

The attendees could be any of the following categories:

• HR professionals
• Stock plan administrators
• Finance professionals with limited experience about stock-based compensation accounting

The audience will achieve the following learning objective

• Understanding the reasons and importance for expensing stock-based compensation
• Appreciating the effort that the accounting department needs to go through while accounting for stock-based compensation
• Learn how to design a stock-based compensation plan that will achieve the HR objectives while keeping the accounting for stock-based compensation easy and auditable

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		Ramy Taraboulsi SyncBASE Inc View Profile