L2 Syllabus – Exam Topics 2018
Accounting 2018
1) ASC 260
A) Basic EPS
i) Effect on Stock Compensation
B) Diluted EPS
i) RSAs/RSUs
ii) Stock Options and SARs
iii) Treatment of Unamortized Expense
2) ASC 505-50
A) Awards Granted to Non-Employees
i) Measurement and Recognition of Compensation Cost
ii) Measurement Date
3) 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
H) Treatment of Withdrawals
4) Forfeiture Rate
A) Accounting for Forfeitures As They Occur
B) Adjusting to Actual Outcome
C) Changes in Forfeiture Methodology
D) Changes in Estimates
i) Dynamic Method
ii) Static Method
E) Initial Estimate
5) Grants to Employees
A) Definition of Employee
B) Measurement Date
i) Communication of Grants
ii) General Understanding
iii) Grants Contingent on Shareholder Approval
6) International
A) Role of the IASB
7) Liability Treatment
A) Adjustments to Fair Value
B) Cash Settlements
8) Measurement of Compensation Cost
A) Dividends on RSAs/RSUs
B) Non-payment of Dividends on RSUs
C) RSAs/RSUs
D) Shares Tendered to Cover Tax Withholding
E) Stock Options and Stock-Settled SARs
F) Vesting Contingent Upon Market Conditions vs. Service/Performance Conditions
9) Modifications
A) Definition of Modification
B) Non-Price Related Changes
i) Additional Compensation Cost
C) Repricing
i) Treatment of Cancelled Option
10)Performance Condition Awards
A) Expense Recognition For Changes In Quantity
11) Recognition of Compensation Cost
A) Cancellation/Expiration
i) Vested Options
B) Derived Service Period
C) Explicit Service Period
D) Implicit Service Period
E) Non-Substantive Service Conditions
F) Straight-line and Accelerated Accrual
12) Role of the FASB
13)Staff Accounting Bulletin No. 107
A) Valuation
i) Simplified Expected Term Formula
14) Tax Accounting
A) Non-Qualified Arrangements
i) DTAs
ii) Excess Tax Benefits
iii) Shortfalls
B) Qualified Arrangements
15)Valuation by Privately Held Companies
16) 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) Required Factors
F) Volatility
G) Volatility for Private Companies
17) Valuation Models
A) Black-Scholes
B) Lattice Models
L2 Syllabus – Exam Topics 2018
Corporate and Securities Law 2018
1)Blue Sky Laws
A)General Understanding
2)Corporate Governance
A)Clawbacks
B)Pay Ratio Disclosure
C)Shareholder Concerns and Considerations
i)When is Plan Approval Required?
D)Stock Market Regulations
i)Street Name vs. RegisteredShareholders
3)Corporate Law
A)Authorization to Grant Equity
i)Board of Directors vs. Committee
B)Board of Directors
i)Independence Rules
(a)Compensation CommitteeQualification
C)Voting Rights
i)RSAs vs. RSUs
4)Federal Reserve Act
A)Fundamentals of Regulation T
i)Broker-Assisted Option ExercisesMargin Rules
5)Plan Provisions
A)Plan Design Considerations
i)Amendments
(a)Maintaining Compliance,RequiredShareholderApproval
6)Sarbanes-Oxley Act of 2002
A)General Understanding
i)Internal Controls
7)Securities Act of 1933
A)Form S-8
i)Effect of Delinquent Annual orQuarterly Filings
ii)Prospectus
iii) Technical Requirements
iv)Uses and Basic Filing Obligations
(a)Coverage forGifted/Transferred Stock
(b)Information Dissemination
(c)Permissible Offerees of Securities Registered
(d)Registering Resales on FormS-8
v)Which Issuers May Use Form S-8
(a)Form S-8 Availability
iii)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
iv)Rule 701
i)Application to Post IPO Sales
ii)General Understanding
iii)Resale Provisions of Affiliates
iv)Resale Provisions of Non-Affiliates
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 and CD&A
D) Rule 10b5-1
i) Trading Plans
E) Section 16
i) Persons Subject to Section 16
F) 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
G) Section 16(a) Reporting
i) Deemed Execution Date
ii) Equity Award Expiration or Cancellation
iii) Equity Grants
iv) Exercise
v) Form 3, Form 4, Form 5
vi) General Reporting Guidelines
vii) Post-Termination Reporting
viii) Restricted Stock (Awards & Units) — Vest/Release
ix) Transfer
H) Section 16(b) Short-Swing Profits
i) Calculation of Six-Month Period
I) 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
L2 Syllabus – Exam Topics 2018
Equity Plan Design, Analysis, and Administration 2018
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 an Equity Award
iii) Definition of Vesting
C) Performance Awards
i) General Knowledge & Understanding
D) Phantom Stock
i) Features of Phantom Stock
E) Restricted Stock Plans
i) Features
ii) Dividends and Dividend Equivalents
iii) Methods of Tax Payment
iv) Par Value Award Consideration
v) Purchase Price
vi) Repurchase Upon Termination
vii) Restricted Stock Awards
(a) Issuance of Shares
viii) Restricted Stock Units
(a) Issuance of Shares
F) Stock Appreciation Rights (SARs)
i) Basic Characteristics – SARs
ii) Payout Amount – Cash
iii) Payout Amount - Stock
G) Stock Options
i) Grant Term/Expiration
2) External Considerations
A) Plan Features
3) Governing and Supporting Documents
A) Plan Prospectus
i) Distribution Methods
B) Grant Agreement
i) Definition of a Grant Agreement
ii) Required Elements
iii) Vesting Provisions
C)Grant Procedures
i) Internal Approval and Controls
D) Notice of Exercise
E) Plan Provisions
i) Administration of the Plan
ii) Change in Control Provisions
iii) Death
iv) Disability/LOA
v) Dividends and Dividend Equivalent Rights
vi) Duration of Plan
vii)Early Exercise Provisions
viii) Eligible Employees – ESPP
ix) Eligible Employees – Options
x) Evergreen
xi) Fair Market Value Definition
xii) Grant Perspective
xiii) Merger and Acquisition Application
xiv) Minimum Exercise Price
xv) Performance Measures
xvi) Retirement
xvii) Share Reserves
xviii) Splits
xix) Termination
xx) 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) Policies and Procedures
i) Sarbanes-Oxley
F) Vesting Requirements
5) Understanding of Transactional Functions
A) 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
6) Transfer Agent
A) Reserves
B) Issuance Authority
L2 Syllabus – Exam Topics 2018
Taxation 2018
1) Basics of Taxation
A) Terms and Definitions
i) Capital Gain/Loss
ii) Ordinary Income
2) Evergreen Provisions
A) Application to ISOs and ESPPs
i) Maximum Share Limits
3) IRC Section 162(m) – Certain Excess Employee Remuneration
A) Employer Tax Treatment
i) Qualification as Performance Based Compensation
B) Plan Design
C) Requirements
4) IRC Section 409A
A) Deferral Elections
i) Non-performance Awards
B) General Understanding
5) IRC Section 422 - ISOs
A) Employee Tax Treatment
i) Alternative Minimum Tax
ii) Dispositions
(a) Decline in Stock Value After Purchase
iii) Early Exercise
iv) Holding Period
(a) Disqualified Versus Qualified
B) Employer Tax Treatment
i) Deduction and Reporting Requirement
C) Maintaining ISO Status
i) Changes in Employment Status
ii) Plan or Grant Modifications
D) Special Circumstances
i) Mergers and Consolidations
E) Statutory Requirements
i) Eligibility
ii) Grant Requirements
iiI) Limitation on Size
iv) More than 10% Owners
v) Plan Requirements
6) IRC Section 423 - ESPPs
A) Employee Tax Treatment
i) Dispositions
(a) Decline in Stock Value After Purchase
B) Employer Tax Treatment
i) Deduction and Reporting Requirements
C) Statutory Requirements
i) Employee Eligibility
ii) Plan Requirements
iii) Purchase Limit
D) International Considerations
7) IRC Section 6039
A) Reporting and Penalties
B) Requirements and Tracking
i) Application to ESPPs
ii) Application to ISOs
8) IRC Section 83
A) 83(b) Elections
i) Election Procedures
ii) Income and Tax Implications
B) General Understanding
9) Loans and Promissory Notes
10)Non IRC Section 423 – ESPPs
A) Employee Tax Treatment
B) Employer Tax Treatment
11) NSOs
A) Employee Tax Treatment
i) Capital Gain/Loss
ii) Early Exercise
iii) Recognition of Income - Amount and Timing
B) Employer Tax Treatment
i) Deductions
ii) Reporting Requirements
C) Special Circumstances
i) Gifting and Transferability
D) Withholding
12)Performance Awards
A) Employee Tax Treatment
i) Income and Withholding
B) Employer Tax Treatment
i) Corporate Tax Deductions
ii) Reporting and Withholding Obligations
13) Restricted Stock
A) Dividends and Dividend Equivalents
B) Employee Tax Treatment
i) Deferrals
ii) Retirement
iii) Section 83(b) Election
C) Employer Tax Treatment
i) Corporate Tax Deductions
ii) Reporting and Withholding Obligations
14) Special Circumstances
A) Death
i) Equity Grants (Not Tax- Qualified)
ii) IRC Section 422 – ISOs
iii) IRC Section 423 - ESPPs
B) Divorce
i) Equity Grants (Not Tax- Qualified)
ii) IRC Section 422 – ISOs
iii) IRC Section 423 – ESPPs
C) LOA/Disability
i) Equity Grants (Not Tax- Qualified)
ii) IRC Section 422 – ISOs
iii) IRC Section 423 – ESPPs
15) Stock Appreciation Rights (SARs)
A) Employee Tax Treatment
B) Employer Tax Treatment
16)Technical Issues
A) Cost Basis Reporting
i) Form 1099-B
B) Withholding
i) Non-Employees and Directors
ii) Tax Deposit Timing