FASB Decides on Grant Date, SAR, and Cash-Based Stock Award Issues; Effect on ESOPs Unclear

At its August 13 meeting, the Financial Accounting Standards Board (FASB) decided that stock-based compensation that is normally settled in cash, even if it nominally could be settled in shares, should be treated be treated as liabilities, following recent guidance from FASB under FAS 150. The board also tentatively decided that stock-based compensation that has traits similar to financial instruments subject to FAS 150's rules should be treated as liabilities. It is not clear whether ESOPs would be covered by this new ruling as well.