A reporting entity that awards stock options or similar awards (such as stock appreciation rights) to its employees should provide a rollforward of activity for the most recent year an income statement is presented. As discussed in ASC 718-10-50-2(c)(1)
, the rollforward should include the number and weighted-average exercise price (or conversion ratios) of the following groups of awards:
• Outstanding at the beginning of the year
• Granted during the year
• Exercised or converted during the year
• Forfeited during the year
• Expired during the year
• Outstanding at the end of the year
• Exercisable or convertible at the end of the year
For fully vested awards and awards expected to vest, ASC 718-10-50-2(e)
requires separate disclosure of the following for awards outstanding and awards currently exercisable (or convertible), at the date of the latest balance sheet:
• The number
• The weighted-average exercise price (or conversion ratio)
• Aggregate intrinsic value
• Weighted-average remaining contractual term
If a reporting entity elects to account for forfeitures when they occur in accordance with ASC 718-10-35-3
, these disclosures also apply to unvested shares for which the requisite service period has not been rendered but for which the vesting is expected based on achievement of a performance condition.
A reporting entity should provide a description of its policy, if any, for issuing shares upon award exercise (or stock unit conversion), including the source of those shares (that is, new shares or treasury stock). If a reporting entity expects to repurchase shares in the following annual period, the reporting entity should disclose an estimate of the number (or range) of shares it will repurchase during that period.
Question FSP 15-2 addresses the issue of whether disclosure is required for awards when no compensation cost was recognized in the period.
Question FSP 15-2
Is a reporting entity required to include awards that are granted for which no compensation expense has been recognized (e.g., because the awards vest upon a performance condition that is not currently probable of occurring) in the rollforward?
Yes. ASC 718
requires disclosure of awards granted during the year regardless of whether compensation expense has been recognized. However, if the grant date criteria in ASC 718
was not met (e.g., the key terms and conditions have not been communicated), then those awards should not be included as granted in the rollforward. This guidance is also applicable for other types of awards. See FSP 15.4.3