Data Informatics, LLC
  • Sign In
  • Create Account

  • My Account
  • Signed in as:

  • filler@godaddy.com


  • My Account
  • Sign out

  • Home
  • | Informatics Solutions
    • Stock Informatics
    • Bank Informatics
    • Volatility Informatics
  • | Client Resources
    • Risk Free Rates
    • Admin Tips
    • Customer Downloads
  • | Demo - Zoom
  • | Contact Us
  • | About
  • More
    • Home
    • | Informatics Solutions
      • Stock Informatics
      • Bank Informatics
      • Volatility Informatics
    • | Client Resources
      • Risk Free Rates
      • Admin Tips
      • Customer Downloads
    • | Demo - Zoom
    • | Contact Us
    • | About
Data Informatics, LLC

Signed in as:

filler@godaddy.com

  • Home
  • | Informatics Solutions
    • Stock Informatics
    • Bank Informatics
    • Volatility Informatics
  • | Client Resources
    • Risk Free Rates
    • Admin Tips
    • Customer Downloads
  • | Demo - Zoom
  • | Contact Us
  • | About

Account


  • My Account
  • Sign out


  • Sign In
  • My Account

Equity Grant Administration Tips

Stay 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 our Stock Informatics Excel-based Black Scholes Model.
  • 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 more 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 after which no new grants are usually issued.

Downloads Available at Bottom of Page

Year End Planning

Equity Grant Modifications

Equity Grant Modifications

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 ensure that there are no year-end surprises.


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 below:

Equity Grant Modifications

Equity Grant Modifications

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.

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 for vested grants.


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 the year-end audit, you are encouraged to maintain documentation substantiating your assumptions for each grant.


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

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

Download Files:

Black Scholes Excel Model (xlsx)

Download

Stock Informatics Maintenance Check List (pdf)

Download
  • | About

Data Informatics, LLC

Winston-Salem, North Carolina, United States

(208) 726-4636

Copyright © 2025 Data Informatics, LLC - All Rights Reserved.

Powered by