Companies have for years relied on this practice, often to dole out speedy profits to executives, assuming the announcement lifts the stock price. Investors have long considered it misleading, and the SEC monitors related activity for potential securities violations. Spring-loaded options tend to be priced the same day that companies grant them.

“It is important that companies’ accounting and disclosures reflect the economics and terms of these compensation arrangements,” SEC Chairman Gary Gensler said in a statement. “This gets to the SEC’s remit to protect investors.”

The guidance follows events involving Eastman Kodak Co. ’s stock last year. Rochester, N.Y.-based Kodak’s stock surged in July 2020 to its highest level in six years shortly after the company and a federal agency announced the company was set to receive a $765 million loan to help make drugs to protect against coronavirus.

Kodak handed out options to executives the day before the loan was officially announced. Those options, some of which vested the day they were granted, soared in value with the stock. Executive Chairman Jim Continenza stood to reap more than $95 million from the stock increase if he had exercised options at then-current prices. He did not exercise his options at the time. The company has not been charged with securities violations. Eastman Kodak did not immediately respond to a request for comment.

The SEC said its staff has observed many instances of companies spring loading non-routine stock awards, a practice that merits “particular scrutiny” from executives at public companies tasked with handling compensation and financial-reporting governance issues. Under the guidance, the SEC said companies should consider whether it’s appropriate to adjust the current share price or the expected volatility for the share price when estimating the cost of its share-based payment transactions.

The regulator provided examples of scenarios in which soon-to-be-public companies and businesses accounting for certain financial instruments could measure the cost of these awards. For example, public companies cannot retrospectively apply their method of estimating the costs to awards it granted while they were private. That’s because it would require companies to make estimates of a prior period, which could vary widely from estimates it previously would have made, the SEC said.

SEC accounting guidance differs from rules in that it is interpretations and practices that the corporate-finance division and office of the chief accountant adhere to in overseeing disclosure requirements.

 Some top executives in recent years have manipulated stock prices to increase their option compensation, including through spring loading and other awards practices, according to academic research by three finance professors published last year tracking 1,500 publicly traded companies from 2007 to 2012.

Spring loading continues to be widespread because companies still have an incentive to release bad news before an options grant and good news after, said Robert Daines, professor of law and business at Stanford University and one of the study’s researchers along with Grant McQueen of Brigham Young University and Rob Schonlau of Colorado State University.

“The stock price is artificially low for a relatively long period of time right around their grant in a predictable way,” he said, referring to spring loading.

The SEC guidance around spring loading doesn’t go far enough, said Paul B.W. Miller, emeritus professor of accounting at the University of Colorado at Colorado Springs. Like other U.S. accounting standards on share-based compensation, it doesn’t convey the true value transferred to companies’ employees, he said.

“Any answer that fails to present the full value of the options as compensation expense when granted is unsuitable,” Mr. Miller said.