October 5, 2015
Board Resolutions for Performance Metrics: FASB Causes Changes
– Broc Romanek, CompensationStandards.com
This is how this memo from Frederic W. Cook begins:
This alert is a reminder to compensation professionals that, beginning with 2016 financial statements, the concept “extraordinary items” as a technical accounting term will no longer exist. Going forward, the correct terminology will be items that are “unusual in nature” or “infrequently occurring,” as explained below. This will be important when drafting beginning-of-year resolutions establishing performance measures and goals for incentive plans. Any pre-exclusionary language should refer to items that are unusual in nature or infrequently occurring, and references to extraordinary items should be of the generic sense and not explicitly referencing accounting rules. Shareholder-approved plan documents and grant agreements should also be reviewed and changed as appropriate.