Corridor Rule

The corridor rule is used in reporting to make sure that a company’s ability to pay yearly pensions doesn’t cause its stock to plummet. The rule states that a company must report if the pensions it pays out have surpassed a gain or loss of 10% of what it needs to fulfill those pensions.

If that happens, the corridor rule says the gain or loss can be built into the income statement over time rather than all at once, so that the company’s numbers are not affected so much so that there is a change in stock price.