Accounting Research Tool
Chapter 10 — Business Combinations

10.7 Stay Bonus Arrangement

10.7 Compensation Arrangements

An acquiree in a business combination may have agreements in place to provide specified employees with additional compensation predicated upon a change in control of the acquiree. Such arrangements could have been established either before or after the negotiations began for the business combination. When determining whether the acquirer should account for these arrangements as part of the business combination or separately as compensation, entities must use judgment and consider the specific facts and circumstances as discussed below and in Section 10.2. However, if a business combination results in additional compensation arrangements payable to the acquirer’s employees, these payments are always accounted for as compensation costs in the acquirer’s financial statements.