Accounting Research Tool
On the Radar

Share-Based Payment Awards

October 2023
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On the Radar
Share-Based Payment Awards

To incentivize employee performance and align the interests of employees and shareholders, entities often grant share-based payment awards — including stock options, restricted stock, restricted stock units, stock appreciation rights, and other equity-based instruments — in exchange for services. To a lesser extent, entities also grant such awards to compensate vendors for goods and services or as sales incentives to customers.


Compared with the recovery provisions of Section 304 of the Sarbanes-Oxley Act of 2002 that (1) are triggered when an accounting restatement results from an issuer’s misconduct and (2) only apply to CEOs and CFOs, the final rule’s scope includes a broader list of executive officers, including former executive officers.
Cheap stock refers to issuances of equity securities before an IPO in which the value of the shares is below the IPO price.