Accounting Standards Update No. 2016-09 (“ASU 2016-09”) eliminates the APIC pool. Now excess tax benefits and deficiencies will impact the income statement which materially increases uncertainty on the P&L related to equity compensation. Our clients among companies generally are facing the complexity of ongoing quarterly true-up of all projected tax benefits related to equity compensation. I.e., option exercises or lack thereof as well as Restricted Stock vesting and payouts of relative TSR and absolute TSR based awards will now impact a company’s effective tax rate for the quarter and the reporting of quarterly EPS.
In light of ASU 2016-09 our clients are looking to forecast this uncertain effect. FAS Solutions is uniquely positioned to help. Projecting the dollar amounts is complex for each outstanding grant both old and new. There is inter-dependency both directly and indirectly on future stock prices and the labor market. With the industry’s most sophisticated predictive modeling techniques and an unsurpassed database of cross company equity compensation information, we can predict this impact for our clients. With our high quality intensity-based Monte Carlo models we can customize this forecast very specifically and rigorously for each company. Our clients have the advantage of a quarterly crystal-ball in which to see the forward-looking projection of payouts from outstanding TSR awards and options. This is not your father’s Excel spreadsheet. This is one of the most critical forecasts for the CFO and his/her finance team. Contact us for more information.