Replies to post #100303 on InterDigital Inc (IDCC)

[olddog967]

Ron: I found this before when I was looking into RSUs. As noted, accounting for performance based RSUs could vary from normal accounting procedures. You could probably make more sense from the cited rules than I could.

Accounting for restricted stock and RSUs. In general, the accounting treatment for restricted stock and RSUs is similar, assuming the awards vest based on time, and that RSUs are settled only in stock. Under APB 25, Accounting for Stock Issued to Employees, and SFAS 123,
Accounting for Stock-Based Compensation, the fair value of the stock on the grant date (unadjusted for sales restrictions or vesting provisions) is amortized over the vesting period. However, if the vesting is based on performance criteria, variable accounting applies under APB 25. In contrast, under SFAS 123, the accounting to be applied to a performance based award is more akin to fixed plan accounting because compensation cost is estimated at the grant date for the number of instruments that are expected to vest based on performance-related conditions. However, adjustments would be made for subsequent changes in the expected or actual outcome
of performance-related conditions until the vesting date.

http://www.itaa.org/software/finance/docs/augsept.pdf.


All I can find is a general rule which states that the value of RSUs at the date of grant are amortized into expense over the vesting period. What I can't find is any detail as to how this amortization over the vesting period is calculated.

[rmarchma]

New Incentive Plan compensation expense for 2005 appears to be in the neighborhood of $11m to $12m, a $4m to $5m increase over the 2004 LTI Plan amounts. This represents an expense of $2.75m to $3m per quarter for 2005, versus last year's $2.33m per quarter ($7m divided by 3 quarters). BTW the RSUs are being amortized by some type of "accelerated" method, and not by a straight-line prorata method, hence the front-loading effect.