Wow, there are 16 different ways to count performance share awards! Well, there may not be 16 different ways, but there are 16 different purposes for which a company must count its performance share awards, some of which are the same, but many of which are different. When a company or compensation committee awards performance shares or performance share units, the number of shares delivered to the participant generally depends upon the degree of satisfaction of the performance goals set forth in the award agreement.
The company must count, track, and disclose the number of performance share awards for the following different purposes, organized in roughly the order in which they arise:
- The Stock Incentive Plan’s Overall Authorized Share Reserve
- Stock Exchange Rules
- Form S-8
- The Stock Plan’s Annual Per Participant Share Sub-Limit
- Form 4
- Form 8-K
- Earnings Per Share
- ISS Burn Rate Calculations
- The Proxy Statement Compensation Discussion and Analysis
- Summary Compensation Table
- Grants of Plan-Based Awards Table
- Outstanding Equity Awards at Fiscal Year-End Table
- Stock Vested Table
- New Plan Benefits Table
- The Equity Compensation Plan Information Table in the Proxy Statement or Form 10-K
- Expensing under FASB Topic ASC 718
Of course, a company would be required to count and report other types of equity awards for most of these sixteen different purposes, but 100 shares of restricted stock remain 100 shares of restricted stock for all future reports.
I would need sixteen more blog posts to discuss each of these in detail and I am not willing to do that. However, the two most recent issues of The Corporate Executive (the second issue is still in printing) have more detail on each of these sixteen purposes.
This information may assist you with compliance or ruin your day. I apologize if it is the latter.