Compensation toolkit: Impact of M&A activity on awards

In our Toolkit podcast series, we take a deep dive into one accounting topic each month that goes beyond the basics and into areas that require judgment. This month, we are covering stock-based compensation – a complex subject with a variety of accounting and reporting considerations.

In this episode, Heather Horn was joined by PwC partners Gina Klein and Jay Seliber to discuss the complexities of stock-based compensation accounting arising from merger and acquisition activity. 

In this episode, you will hear them discuss:

• 1:49 - Key business issues associated with stock-based awards in a transaction  
• 6:14 - Accounting considerations for awards from the sale of a business
• 11:03 - Modifying awards in response to a planned change in control
• 20:36 - Considerations for vesting conditions tied to the closing of a transaction 
• 24:05 - Transactions where the buyer replaces the seller’s awards
• 29:24 - Other common examples of award structuring as part of M&A activity
• 40:25 - Key points when accounting for stock-based awards during transactions

Want to learn more? Refer to previous episodes in our Compensation toolkit series on challenges for private company awards, making sense of stock award modifications, equity or liability classification, and unraveling complex vesting conditions. Also refer to our Stock-based compensation guide for more helpful information.

Gina Klein is a partner leading PwC’s HR Accounting Advisory practice in Workforce Transformation where she works with companies to address the financial reporting, design, and operational issues associated with employee compensation, including stock compensation, pension plans, and other employee benefit arrangements. Gina has also spent time in PwC’s National Office, advising clients on complex accounting matters related to employee compensation under both IFRS and US GAAP.

Jay Seliber is a partner in PwC’s National Office. He leverages over 30 years of experience to help clients with their most complex accounting matters, particularly in the areas of mergers and acquisitions, revenue recognition, stock compensation, earnings per share, employee benefits, restructurings, impairments, and financing transactions. Jay is presently PwC's representative on the FASB's Emerging Issues Task Force.

Heather Horn is PwC’s National Office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series. With over 30 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.

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