The purpose of the proposed employee stock option
program is to provide opportunities for motivating, keeping and recruiting skilled employees and the Board is of the opinion that the adoption of a stock option program is to the benefit of the company and the shareholders.
Both valuation models were designed to value freely tradeable options, which employee stock options
The Zions board of directors is expected to approve a grant of employee stock options
on April 24, 2008.
Even though most employee stock options
are granted at-the-money and so have zero intrinsic value (that is, market price minus exercise price), they have positive value at the grant date because of the volatility value of the option.
Because there is no reference market for employee stock options
, SFAS 123 offers companies two ways of presenting their financial reports under Generally Accepted Accounting Principles (GAAP):
Marshall II (Partner, Jones Day), a renowned expert on the topic who has helped hundreds of CEOs and companies update their knowledge this year on important changes to how they should be overseeing and implementing employee stock options
, and covers:
However, these models were not designed to estimate the value of employee stock options
and may not accurately reflect their actual value.
Can accommodate assumptions related to the unique characteristics of employee stock options
Since June 15, certain public companies have been accounting for share-based payment transactions--including employee stock option
compensation--as an expense, often against their will and better judgment.
And third, there is increasing pressure from the accounting profession and securities regulators to expense employee stock options
, once thought of as a no-cost means of attracting talent to entrepreneurial startups.
According to the board, the proposed amendment is designed to enable companies that choose to adopt the preferable fair value based method to report the full effect of employee stock options
in their financial statements immediately upon adoption, and to make available to investors better and more frequent disclosure about the cost of employee stock options
Conditions for variable income and performance criteria - The Board of Directors may at its own discretion determine the conditions for payment of variable income as well as if performance criteria shall be tied to the vesting of employee stock options
SALT LAKE CITY, April 26 /PRNewswire-FirstCall/ -- Zions Bancorporation announced today that it will conduct an auction of Employee Stock Option
Appreciation Rights Securities (ESOARS(TM)) in conjunction with the granting of new employee stock options
The FERF publication, Valuing Employee Stock Options
and Other Share-Based Payments: Complying with FAS 123(R), was authored by Ronald D.
She said FASB's position is very similar on all key points to that of the IASB in requiring companies to use a fair-value approach to recognize the cost of employee stock options
at grant date as an expense on their income statements.