Typical tasks should include the following:

  • Program maintenance:
    • New grants,
    • Exercises,
    • Forfeitures and
    • Expirations

  • Update Risk Free Rates,
  • Update Stock Prices,
  • Process Stock Splits and Stock Dividends,
  • Review Plan Expiration Dates,
  • Review and Document Equity Grant Modifications,
  • Exercise Vested Restricted Stock Grants.

To assist with the update process, you may wish to download the Stock Informatics Maintenance Checklist by clicking Here.

Year End Planning 


Throughout the year it is wise to update your Equity Grant Accounting so that adjustments can be made to your monthly expense accruals and to insure that there are no year-end surprises.

Equity Grant Administration Tips

Stock Price Volatility - Volatility Informatics


Community Bank Quarterly Stock Price Volatility Surveys are regularly published which have been widely recognized as a trusted source for bank CFO's and CPA's since 2007. Learn More.

Be Connected, Involved and Proactive 


Unfortunately, equity award plan administrators may not always be informed of important changes to equity grant plans and learn of new awards after they have been approved. 

Without the proper involvement of plan administrators in the design and implementation of equity awards, additional costs and expenses may be incurred unnecessarily.

  • Use modeling to illustrate different award scenarios before the final decision is made. Create either an example award within Stock Informatics, or for even faster results download the Stock Informatics Excel based Black Scholes Model by clicking Here.
  • Make sure that equity award grant exercise prices conform to the policy set forth in your plan document and ASC 718 (FAS 123R). Generally, the exercise price per share of stock options must be equal to or greater than the fair market value (i.e. market price) of the employer's stock at grant date.
  • Encourage your compensation committee to issue equity awards monthly or quarterly to keep the management of the plan reasonable. Daily or even weekly awards will dramatically increase your administration.
  • Encourage your compensation committee and outside legal counsel to specify percentages of options vesting each period rather than a set number of options that will vest. Reciting the number of shares vesting has program pitfalls and headaches especially if an organization later declares a stock split or stock dividend, or if the number of shares vesting does not convert evenly into percentages. Keep it simple - request that percentages be used.
  • Monitor your Equity Grant Plans to avoid an unexpected surprise that no shares are available for issuance.
  • Be aware of the number of grants available for issuance under each Plan.
  • Track the expiration dates of your Plans.  Plans typically have established lives of ten years

Document Employee Terminations


Stay in contact with your Human Resources Department concerning terminations. Terminated employees and directors should promptly receive current equity grant transaction statements along with clear instructions for initiating exercises and the related cost.

Prompt communication of vested grants is crucial to quickly resolving any misunderstandings - particularly if your company has had any stock splits or stock dividends which can have a significant impact on exercise prices and the number of grants.

Black Scholes Assumptions

It is important to document

Black Scholes compensation

cost assumptions for your

new awards.

As preparation for year end audit,

you are encouraged to maintain documentation substantiating your assumptions for each grant.  

Remember for each grant made, you should reconsider each variable, not merely carrying forward assumptions from the last grant. 

  • Expected Life,
  • Expected Stock Price Volatility, and
  • Expected Cash Dividend Yield.

Data Informatics, LLC

Equity Grant Modifications


Many boards and compensation committees

make well intentioned modifications to existing

equity awards. However, they may not realize

that even the slightest modification could trigger

additional procedures, calculations and expense

under ASC 718 (FAS 123R).

Essentially, if the modification makes an existing equity award more valuable to the recipient, its cost must be re-measured as if the old award was turned in and a new award was then granted. Typically, this results in recognition of the unrecognized cost from the existing award plus the incremental cost of the "new" award. 

Play it safe - before any modifications are made, seek appropriate advice from your accountant or attorney.  Do not assume that modifying underwater grants is a simple, no-cost and straightforward process.

Click Here to download our Overview of Equity Award Modification.