Accounting for Restricted Stock Plans and Deferred Stock Plans.

Abstract Restricted stock plans and deferred stock plans are frequently used as a means of supplementing executive compensation, along with the generally older and more widely used qualified stock option plans. This article will describe restricted and deferred stock plans and consider various alternative accounting procedures for recording the transactions related to them. Qualified stock option plans will not be reviewed in this article, except where they are related to deferred and restricted stock plans. They have been discussed extensively in the periodical literature as well as in textbooks, and the related accounting issues have been argued interminably. It will be assumed that the reader is familiar with these plans and the accounting controversy surrounding them. The very least that this article can hope to accomplish is to make the reader aware that significant problems exist regarding the accounting for restricted stock plans and deferred stock plans, and that there are logical, but conflicting, alternative solutions available to these problems. Experience has shown two things. First, if the problems are left to the academicians, no single, widely acceptable set of solutions will be forthcoming. Second, if the problems are left to the practitioners, the same conclusion is inevitable unless, of course, the Accounting Principles Board were to act to limit the areas of diversity in accounting for all types of executive compensation plans.