This week we continue our compensation toolkit series with insightful advice for classifying stock options as equity or a liability.
In our Toolkit podcast series, we take a deep dive into one accounting topic each month that goes beyond the basics and into areas that require judgment. This month, we are covering stock-based compensation – a complex subject with a variety of accounting and reporting considerations.
In this episode, Heather Horn was joined by PwC National Office subject matter specialists Jay Seliber and Nicole Berman to discuss the challenging topic of classifying stock option awards as equity or a liability.
In this episode, you will hear them discuss:
  • 1:32 - An overview of equity and liability classification of stock options and their key differences
  • 5:26 - Common examples of exceptions to the general classification rules
  • 16:31 - Accounting for awards with redemption features
  • 30:30 - How to think about awards with put or call features
  • 36:56 - Accounting for awards with repurchase features
  • 43:27 - Final advice for dealing with equity and liability classification of stock options

Want to learn more? Refer to the first episode in our compensation toolkit series on unraveling complex vesting conditions, along with earlier podcasts on stock-based compensation podcasts including back to basics, award modifications and presentation and disclosure. For more on stock-based compensation, refer to our Stock-based compensation guide. Stay tuned for more insightful episodes in the coming weeks.
About our guests
Jay Seliber is a partner in PwC’s National Office. He leverages over 30 years of experience to help clients with their most complex accounting matters, particularly in the areas of mergers and acquisitions, revenue recognition, stock compensation, earnings per share, employee benefits, restructurings, impairments, and financing transactions. Jay is presently PwC's representative on the FASB's Emerging Issues Task Force.
Nicole Berman is a Director in PwC's National Office. She advises clients on the accounting for complex transactions related to revenue recognition and employee compensation matters, including stock-based compensation, pensions, OPEB, and restructurings, under both US GAAP and IFRS.
Ken Stoler is a partner in PwC’s National Office with over 25 years of experience. Ken specializes in financial reporting and plan design issues related to equity compensation arrangements, retirement and healthcare plans, and other benefits, helping companies navigate their employee compensation issues during an IPO, spin off, acquisition, or other major transaction or event.
About our host
Heather Horn is PwC’s National Office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series. With over 30 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.
Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to
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