Q: Follow up on your SBC comment on HPS:
there is nothing in the SBC situation that should be of any surprise here. If options are granted then there are consequences.
My point is: management is fully aware already of SBC impact so why would they wait for quarterly results with disclosure?
Don’t they have a duty to disclose material information impact ahead of the results?
there is nothing in the SBC situation that should be of any surprise here. If options are granted then there are consequences.
My point is: management is fully aware already of SBC impact so why would they wait for quarterly results with disclosure?
Don’t they have a duty to disclose material information impact ahead of the results?
5i Research Answer:
When options are granted to management or employees, companies are generally required to disclose these grants in a timely manner. SBC is a pretty routine charge for most companies and management did fulfill its duty by disclosing the charges in the quarterly financial statements which would be timely. Continually disclosing the timing and amounts when options/grants are exercised and issued throughout a quarter would be redundant. If a significant amount of options were granted in a merger or acquisition, then it would be material and make sense to disclose the information. The non-cash and routine nature of the charge is why HPS.A and most companies do not disclose SBC charges prior to earnings.