What’s new?

Starting August 10, 2023, companies that issue NSOs and RSUs with event-based performance conditions attached to their vesting schedules will now be able to automatically calculate and expense these awards in their SBC Expense, Disclosure, and Dilution reports. Previously, companies that gave out awards with event-based performance conditions calculated their SBC Expense, Disclosure, and Dilution values manually outside of Carta. 

Who is this available for? 

All Carta Cap Table users with Financial Reporting in their subscription. If you do not yet have Financial Reporting in your subscription, please talk to your Account Manager or email 718@carta.com.

How does it work? 

• Log in to Carta, and navigate to Compliance & Tax > Financial Reporting. 
• Create a new report. The date range for the report should include the date when a performance award was granted.  
• Once an award has met all performance conditions, there will be a true-up of the expense and any values will be allocated accurately as per FASB US GAAP guidance.
• If the performance conditions have not been met, the expense will be reported as 0 per US GAAP guidance.

What’s an event-based performance condition? 

If an award has a performance condition, it means that the award has a vesting condition that is subject to performance-based criteria. An event-based performance condition is one in which vesting is contingent on a liquidity event such as an IPO.  Carta’s cap table includes support for NSO and RSU awards with event-based performance conditions. Now, companies that issue NSOs or RSUs with event-based performance conditions can automatically expense these options in their financial reports. 

How does Carta calculate the fair value assumptions? 

Companies can choose to use either Carta’s default fair value assumption or to create a customized one. Carta’s default fair values assumption is calculated with the Black Scholes pricing model, using your company’s Fair Reporting Value at an award’s grant date. 

Can I create reports using both US GAAP and IFRS scenarios?  

Not at this time. Companies can only expense awards with event-based performance conditions in US GAAP. 

Can I attach event-based performance conditions to a specific vest date? 

Yes. As of September 14, 2023, companies that issue NSOs and RSUs with event-based performance conditions attached to a specific vesting date can be expensed using our Financial Reporting tool.  

Where do I go if I have more questions about financial reporting? 

If you have more questions about our Financial Reporting product, please contact 718@carta.com.