FASB Changes Accounting for Share-Based Compensation

The Financial Accounting Standards Board’s new standard for reporting on employee share-based compensation makes some notable changes to the treatment of excess tax benefits and tax deficiencies. While these changes will simplify the reporting process for financial services companies that pay such compensation, changes in the treatment of certain forfeitures also could increase income statement volatility for some. In addition, the new standard also affects the statement of cash flows and the computation of diluted earnings per share. Early adoption of the new standard is permitted, but banks should carefully consider the implications of early adoption.