L2 Syllabus - Exam Topics 2015
Accounting 2015
1) ASC 260
A) Basic EPS
i) Effect of Stock Compensation
B) Diluted EPS
i) Calculation of Tax Benefit Shares
ii) ISOs
iii) NSOs
iv) RSAs/RSUs
v) Treatment of Unamortized Expense
2) ASC 505-50
A) Awards Granted to Non-Employees
i) Measurement Date
ii) Measurement of Compensation Cost
iii) Recognition of Compensation Cost
3) Disclosures
4) ESPP
A) Fair Value
B) Grant Date
C) Look-Back Feature
D) Option-Like Features
E) Period Over Which Expense is Accrued
F) Purchase Discount
G) Treatment of Forfeitures
5) Forfeiture Rate
A) Adjusting to Actual Outcome
B) Changes in Estimates
i) Dynamic Method
ii) Static Method
C) Initial Estimate
6) Grants to Employees
A) Definition of Employee
B) Measurement Date
i) Communication of Grants
ii) General Understanding
iii) Grants Contingent on Shareholder Approval
7) International
A) Role of the IASB
8) Liability Treatment
A) Adjustments to Fair Value
B) Required Cash Settlements
9) Measurement of Compensation Cost
A) Cash-settled RSUs; Phantom Stock
B) Dividends on RSAs/RSUs
C) Net, Pyramid, and Swap Exercises
D) Non-payment of Dividends on RSUs
E) RSAs/RSUs
F) Shares Tendered to Cover Tax Withholding
G) Stock Options
H) Vesting Contingent Upon Market Conditions
I) Vesting Contingent Upon Service/Performance Conditions
10)Modifications
A) Additional Compensation Cost
B) Change in Employment Status (with Modification of Award)
C) Definition of Modification
D) Non-Price Related Changes
E) Treatment of Cancelled Option
11)Performance Condition Awards
A) Expense Recognition for Changes in Quantity
12) Recognition of Compensation Cost
A) Arrangements Granted to Employees
B) Cancellation/Expiration
i) Vested Options
C) Change in Employment Status (No Modification of Awards)
D) Derived Service Period
E) Explicit Service Period
F) Implicit Service Period
G) Liability Awards
H) Non-Substantive Service Conditions
I) Straight-line and Accelerated Accrual
13) Role of FASB
14)Staff Accounting Bulletin No. 107
A) Valuation
i) Simplified Expected Term Formula
15)Tax Accounting
A) Nonqualified Arrangements
i) APIC
ii) DTAs
iii) Shortfalls
B) Qualified Arrangements
16)Valuation by Privately Held Companies
17) Valuation Factors
A) Equity Treatment
i) Fair Value Not Adjusted for Changes in Model Inputs
B) Expected Term
C) Impact on Value
i) Dividend Yield
ii) Expected Term
iii) Interest Rate
iv) Volatility
D) Interest Rate Selection
E) Post-Vesting Termination
F) Required Factors
G) Suboptimal Exercise Factor
H) Volatility
I) Volatility for Private Companies
18) Valuation Models
A) Black-Scholes
B) Lattice Models
L2 Syllabus - Exam Topics 2015
Corporate and Securities Law 2015
1) Corporate Governance
A) Shareholder Concerns and
Considerations
i) When is Plan Approval Required?
B) Stock Market Regulations
i) Street Name vs. Registered Shareholders
2) Corporate Law
A) Authorization to Grant Equity
i) Board of Directors vs. Committee
B) Board of Directors
i) Independence Rules
(a) Compensation Committee Qualification
C) Characteristics of Corporate Entities
i) Public vs. Private Corporations
D) Dividends
E) Stock Issuance
F) Stock Splits
G) Voting Rights
i) RSAs vs. RSUs
3) Divorce
A) Basic Technical Issues Upon Transfer
i) Practical Legal Issues
4) Federal Reserve Act
A) Fundamentals of Regulation T
i) Broker-Assisted Option Exercises - Margin Rules
5) Plan Provisions
A) Plan Design Considerations
i) Amendments
(a) Maintaining compliance, requiring shareholder approval
ii) Basic Corporate Governance
6) Sarbanes-Oxley Act of 2002
A) General Understanding
7) Securities Act of 1933
A) Form S-8
i) Effect of Delinquent Annual or Quarterly Filings
ii) Prospectus
iii) Technical Requirements
iv) Uses and Basic Filing Obligations
(a) Coverage for Gifted/Transferred Stock
(b) Information Dissemination
(c) Permissible Offerees of Securities Registered
(d) Registering Resales on Form S-8
v) Which Issuers May Use Form S-8
(a) Form S-8 Availability
B) Rule 144
i) Affiliate
ii) Control Securities
iii) Form 144
iv) Holding Period
(a) Calculation
(b) Other Requirements
v) Restricted Securities
vi) Use and Limitations
C) Rule 701
i) Application to Post IPO Sales
ii) General Understanding
iii) Resale Provisions of Affiliates
iv) Resale Provisions of NonAffiliates
8) Securities Exchange Act of 1934
A) General Understanding of Insider Trading
i) Trading Windows and Blackout Periods
B) General Understanding of Insider Trading Under Rule 10b-5
i) Basic Rules and Issues
C) Regulation S-K
i) Annual Compensation
(a) Compensation of Directors
(b) Determining NEOs
ii) Grants of Plan Based Awards
iii) Item 405
(a) 16(a) Late Filing Consequences
iv) Option Exercises and Stock Vested
v) Outstanding Equity Awards at Fiscal Year End
vi) Plan Disclosures
(a) Non-Approved Plans
vii) Summary Compensation Table & CD&A
D) Rule 10b5-1
i) Trading Plans
E) Section 12
i) Reporting Thresholds
F) Section 16
ii) Persons Subject to Section 16
G) Section 16 Reporting Requirements and Matching Exemptions
i) Adjustment of Ownership for ESPP
ii) Approval Requirements
iii) Delivery of Previously Owned Stock in Payment of Option Exercise Price
iv) Exemptions
L2 Syllabus - Exam Topics 2015
H) Section 16(a) Reporting
i) Equity Award Expiration or Cancellation
ii) Equity Grants
iii) Exercise
iv) Form 3, Form 4, Form 5
v) General Reporting Guidelines
vi) Post-Termination Reporting
vii) Restricted Stock (Awards & Units) — Vest/Release
viii) Transfer
I) Section 16(b) Short-Swing Profits
i) Calculation of Six-Month Period
J) Terminology
i) Annual and Special
Meetings of Shareholders
ii) Record Date
9) Securities Law - General Understanding
A) General Understanding of Multiple Classes of Stock
i) Preferred, Convertible, Options on Different Classes, etc.
B) Par Value
10)Transfer Agent
A) Issuance Authority
B) Reserves
L2 Syllabus - Exam Topics 2015
Equity Plan Design, Analysis and Administration 2015
1) Characteristics of Equity Awards
A) ESPP Features
i) Enrollment Date
ii) Enrollment Process
iii) General Knowledge & Understanding
iv) Offering Period
v) Price Determination
vi) Purchase Date
vii) Purchase Period
B) Grants/Awards
i) Calculating Vesting
ii) Definition of Equity Grant
iii) Definition of Vesting
iv) Grant Term/Expiration
C) Performance Awards
D) Restricted Stock Plans
i) Administration Processes
ii) Advantages and Disadvantages
iii) Issuance of Shares - RSAs
iv) Issuance of Shares - RSUs
v) Methods of Tax Payment
vi) Par Value Award Consideration
vii) Purchase Price
viii) Repurchase Upon Termination
ix) Restricted Stock Awards
x) Restricted Stock Units
E) Stock Appreciation Rights (SARs)
i) Basic Characteristics - SARs
ii) Payout Amount - Cash
iii) Payout Amount - Stock
F) Stock Options
i) Definition of Exercise
2) External Considerations
A) Shareholder Concerns and Considerations
i) Plan Features
3) Governing and Supporting Documents
A) Collateral (Auxiliary) Documents
i) Prospectus
(a) Distribution Methods
B) Grant Agreement
i) Definition of a Grant Agreement
ii) Required Elements
iii) Vesting Provisions
C) Grant Procedures
i) Internal Approval & Controls
D) Notice of Exercise
E) Plan Provisions
i) Administration of the Plan
ii) Change in Control Provisions
iii) Death
iv) Disability/LOA
v) Duration of Plan
vi) Early Exercise Provisions
vii) Eligible Employees - ESPP
viii) Eligible Employees - Options
ix) Evergreen
x) Fair Market Value Definition
xi) Merger and Acquisition Application
xii) Minimum Exercise Price
xiii) Performance Measures
xiv) Retirement
xv) Share Reserves
xvi) Splits
xvii) Termination
xviii) Transferability
(a) Divorce
(b) Transferable Stock Options
4) Planning
A) Basic ESPP Provisions
i) Dilution
B) Choosing an Equity Plan
C) Domestic Data Protection
D) International Planning Considerations
i) Data Protection
ii) Employment Laws
iii) Implementing Global Stock Plans
E) Plan Design Considerations
i) Grant Perspective
F) Policies and Procedures
i) Purpose and Objectives
ii) Sarbanes-Oxley
G) Vesting Requirements
5) Understanding of Transactional Functions
A) Exercise Processes
i) Same-Day-Sale Processes
B) Exercising Methods
i) Broker-Assisted Exercises (STC, SDS)
ii) Cash (Also Known as Exercise and Hold)
iii) Net Exercise
iv) Stock Swaps
(a) Procedures and Mechanics
L2 Syllabus - Exam Topics 2015
Taxation 2015
1) Basics of Taxation
A) Terms and Definitions
i) Capital Gain/Loss
ii) Estimated Tax Payments
iii) Ordinary Income
2) Evergreen Provisions
A) Application to ISOs and ESPPs
i) Maximum Share Limits
3) IRC Section 83
A) Making 83(b) Elections
i) Benefits and Risks
ii) Election Procedures
4) IRC Section 162(m) - Certain Excess Employee Remuneration
A) Employer Tax Treatment
i) Performance Based Compensation
B) Full-Value Awards
5) IRC Section 409A
A) Compliance / Noncompliance Consequences
B) Deferral Elections
i) Non-performance Awards
C) Exemptions to 409A
D) General Understanding
6) IRC Section 422 - ISOs
A) Amendments and/or Modifications
i) Maintaining ISO Status
(a) Changes in Employment Status
(b) Plan or Grant Modifications
B) Employee Tax Treatment
i) Alternative Minimum Tax
ii) Dispositions
iii) Early Exercise
iv) Holding Period
(a) Disqualified Versus Qualified
C) Employer Tax Treatment
i) Dispositions
D) Special Circumstances
i) Mergers and Consolidations
E) Statutory Requirements
i) Eligibility
ii) Grant and Plan Requirements
7) IRC Section 423 - ESPPs
A) Employee Tax Treatment
i) Dispositions
B) Employer Tax Treatment
i) Deduction and Reporting Requirements
C) Statutory Requirements
i) Employee Eligibility
ii) Plan Requirements
8) IRC Section 6039
A) Reporting and Penalties
B) Requirements and Tracking
i) Application to ESPPs
ii) Application to ISOs
9) Loans and Promissory Notes
10)Non IRC Section 423 - ESPPs
A) Employee Tax Treatment
B) Employer Tax Treatment
i) General Provisions
11) NSOs
A) Employee Tax Treatment
i) Capital Gain/Loss Basis
ii) Early Exercise
iii) Recognition of Income – Amount and Timing
B) Employer Tax Treatment
i) Deduction and Reporting Requirements
C) Special Circumstances
i) Gifting and Transferability
D) Withholding
12)Performance Awards
A) Corporate Tax Deduction
B) Income and Withholding
C) Pro-rata Payouts Upon Retirement
13) Restricted Stock
A) Dividends and Dividend Equivalents
B) Employee Tax Treatment
i) Income and Withholding
ii) Retirement
iii) Section 83(b) Election
C) Employer Tax Treatment
i) Corporate Tax Deductions
ii) Withholding Obligations
14) Special Circumstances
A) Death
i) IRC Section 422 - ISOs
ii) IRC Section 423 - ESPPs
iii) Nonqualified Grants
B) Divorce
i) IRC Section 422 - ISOs
ii) IRC Section 423 - ESPPs
iii) Nonqualified Grants
C) LOA
i) IRC Section 422 - ISOs
ii) IRC Section 423 - ESPPs
iii) Nonqualified Grants
15) Stock Appreciation Rights
(SARs)
A) Employee Tax Treatment
B) Employer Tax Treatment
16)Stock Swaps
A) ISO
B) NSO
17)Technical Issues
A) Cost Basis Reporting
i) Form 1099-B
B) Withholding
i) Non-Employees and
Directors
ii) Tax Deposit Timing