Benefits Of Employee Compensation And Benefits - 1729 Words

Employee compensation and benefits provides many different alternatives for employers to reward and retain their employees both near and long term. It is standard set of programs that are designed to reward and motivate employees to perform at exceptional levels as well as retaining these good employees for many years. Employee compensation and benefits has been an ongoing discussion of the Financial Accounting Standards Board (FASB) for quite some time. One key area is not only to provide guidance, but to simplify a complicated process. While there is a wide range of benefits offered by employers, the three of the areas of compensation and benefits that will be analyzed will be stock compensation, pensions and other post- retirement†¦show more content†¦The Financial Accounting Standards Board (FASB) has worked diligently to not only provide guidance on all of the benefit options, but to also simplify the process for both employer and employee. The three options that wi ll be discussed in this research will be stock option benefits, pension benefits and post-retirement benefits such as healthcare and life insurance. Stock options provide equity in the company to the employee. Pensions provide periodic payments to the employee after retirement from an investment fund that either the employee, employer or both has contributed to. Post- retirement benefits such as health care and life insurance are generally provided after retirement without previous funding. All of these benefits have specific accounting treatments and disclosures that are mandated by the FASB Employee stock option (ESO) provide equity to the employee in the company’s stock that can be cashed in at a later date. Stocks are generally offered at a set price to the employee and are an option to the employee and not an obligation. Basic guidance for the treatment of the ESO’s was provided in FASB statement number 123 (FAS 123) which recommended but did not require compan ies to record the ESO expense based on the ESO’s grant date â€Å"fair market value† (Brown Lee, 2011). FAS 123 allowed firms to use the intrinsic value method provided that the information was disclosed in the financial