The encyclopedia · Finance & Accounting · Financial decision · 2021–2025
Celsius modified stock awards for departing staff and misstated two quarters
The energy-drink company changed stock-award terms for six leavers without applying modification accounting, understating expenses in two 10-Qs.
Celsius Holdings
What happened
In 2021, Celsius Holdings modified the terms of stock awards held by six departing employees and retiring board members. Under GAAP, a modification of an equity award requires re-measurement of the compensation cost. Celsius did not apply the modification accounting, and its general and administrative expenses were materially understated as a result.
The error flowed into the company's Q2 and Q3 2021 quarterly reports and into two earnings releases furnished on Forms 8-K. The SEC also found that Celsius failed to maintain adequate disclosure controls from 2019 through 2023.
In January 2025 Celsius agreed to a cease-and-desist order and paid a $3 million civil penalty.
Why it happened
- Stock-compensation modification accounting is a technical area, and a fast-growing company may not have the accounting depth to handle it.
- The awards were for departing employees, so the modification looked like a routine separation matter rather than an accounting event.
- Disclosure controls that do not reach non-financial disclosures miss the equity-award changes that drive the numbers.
The lesson
A stock-award modification is an accounting event, not an HR event — if the terms change, the numbers change, and the controls need to connect the two.
Sources
- SEC AAER-4559: In the Matter of Celsius Holdings, Inc., Release No. 34-102227
- JD Supra: SEC Charges Celsius Holdings With Improper Accounting for Stock Awards and Disclosure Control Failures
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