Our Services
Equity Methods is a solutions company that meets the most pressing equity compensation needs of organizations that place a large reliance on equity compensation. Our solutions are technology-driven and delivered under a hands-on, consultative approach. Clients engage Equity Methods to assist in plan design, equity award valuation, and financial reporting (including tax). Equity Methods is a wholly owned subsidiary of Bank of America Merrill Lynch, which provides a broad range of retirement and benefit plan solutions to both corporations and individuals. Collectively, no other company can deliver services with an equivalent level of depth and breadth.
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Valuation
Equity Methods was initially founded based on the research and expert work performed by what is today the Equity Methods Valuation Group. Members of this group are quoted throughout SAB 107, and since 2003 have served more than 300 clients and performed thousands of valuations, ranging from valuation assumption derivation to custom lattice/Monte Carlo simulation modeling to value awards with market conditions.
We deploy PhD-level expertise in econometrics and quantitative finance, and the Equity Methods Valuation Group is certified in the SAS programming language. By performing the entirety of its work in an enterprise-level professional programming language, Equity Methods is able to deliver the highest degree of control, robustness, and repeatability in its client work. Our experience shows this mitigates external audit risk by simplifying the ability to reproduce results or create ad hoc supporting materials in response to auditor questions. Needless to say, when working with large datasets, a programmatic approach is necessary in order to catch data issues and create transparency around everything done to the data throughout the analysis.
Typical projects supported by the Equity Methods Valuation Group include stock option valuation assumption development projects as well as custom Monte Carlo simulations for awards containing market conditions.
Learn more about the complexities involved in equity award valuation and how Equity Methods’ services can yield substantial risk reductions to your equity compensation compliance initiatives.
Financial Reporting
Simply put, no other company is responsible for creating more compensation expense, deferred tax, and diluted earnings per share entries than Equity Methods. We support 20 percent of both the Fortune 100 and Fortune 1,000 in financial reporting, and have achieved success through a commitment toward customization.
Equity Methods recognizes that there is no pre-scripted 45-minute product demo that can accurately address your company’s unique and complex accounting issues. Equity Methods is focused on your reporting circumstances, your hot-button issues, and your specific end-state requirements. We believe it is inappropriate to merely scratch the surface by saying things like “we handle performance awards” – we avoid shrink-wrapping incredibly complex issues, and instead, adopt a rigorous and methodical discovery process that sets the table for a customized implementation. Just on the topic of performance awards, we have been assisting Fortune 100 companies for over four years, and we have yet to see two identical performance award plans!
Our practice has also been developed on the perspective that merely building a sophisticated calculator will run the risk of taking you two steps forward and then one step backward. Correctly applying the theory and rules of ASC 718 to equity award data is certainly the most challenging compliance dimension, but alongside it is the task of marrying output reports to each client’s internal reporting environment. How can custom reports be created to streamline posting to the GL? Does management like to match prior period forecasts to current period accruals? Does the tax department require reports segmented using different indicative data fields than the external reporting group is using? We believe these types of questions are essential to arriving at a fully automated reporting process that is free of manual intervention.
Our edge in delivering financial reporting solutions is that we leverage multiple pieces of technology, all of which are professionally programmed and developed by Equity Methods consultants. Our platforms are modular, which enables us to work with a core set of calculation procedures that do not change from client to client, while attaching to these procedures specific client customization requirements.
Equity Methods’ financial reporting solutions work in tandem with your administration system, and are not intended to replace it. Having deep subject matter expertise in the tax and accounting for equity compensation areas, our Financial Reporting Group is internationally regarded for designing and automating end-to-end financial reporting processes that turn clients into reviewers from doers by eliminating manual process intervention.
Learn more about Equity Methods breadth of financial reporting competencies, and how we’ve applied our technology and expertise to deliver value to our clients through automated financial reporting solutions.
Plan Design
We provide management consulting services to help translate board-level compensation to the broader recipient base. Rather than relying on a follow-the-leader approach of replicating peer firms’ compensation programs, we employ a discovery-based process to weigh a number of firm-specific factors. Our analysis takes into consideration the risk profile of target award recipients and share pool/overhang limitations, seeking to align compensation with the broader firm strategy. We study the incentives of competing award designs while considering how seemingly clever award designs are likely to be perceived and accepted by the specific employees being targeted.
Through our extensive experience valuing and reporting on equity awards, we are able to consider a wide array of potential design alternatives. We are also adept in understanding why certain award designs frequently run into dead ends and require modification. Finally, our mastery of the related valuation and reporting challenges helps ensure that our clients are not negatively surprised by the actual P&L implications of the awards they grant.
Whether you are looking to refine your compensation strategy outside the executive office or are contemplating a modification, Equity Methods has the experience and expertise to deliver rigorous guidance designed to match your compensation program to your corporate strategy.
Contact an Equity Methods consultant to discuss your situation and to learn how we can provide added value when structuring your equity award plans.
