SEC Staff Issues Guidance On "Spring-Loaded" Compensation

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The SEC issued accounting guidelines as to how companies should disclose and account for "spring-loaded awards" granted as compensation to executives.

United States Corporate/Commercial Law

The SEC issued accounting guidelines as to how companies should disclose and account for "spring-loaded awards" granted as compensation to executives.

Staff Accounting Bulletin No. 120 defines "spring-loaded awards" as share-based compensation arrangements, including stock options, that are awarded to executives shortly before the company announces positive market-moving information, such as an earnings release with better-than-expected results. The SEC stated that in awarding any non-routine spring-loaded compensation, companies must reflect the additional value of the award generated as a result of the market-moving information.

The SAB goes into effect upon its publication in the Federal Register.

Commentary / Steven Lofchie

It Don't Mean a Thing (If It Ain't Got That Spring) (or something like that).

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