Stock Options

Plain Vanilla Option and SAR Valuations

With almost 20 years of employee stock option valuation experience, Equity Methods delivers clean, auditable fair values using plain English explanations. Our analysis is performed in a data-intensive programming environment—not Excel—to work with an unlimited number of records, automate calculations, and reduce risk. Our work is even covered by a SOC-1 report so that you and your auditors can be comfortable with the process.

Services

We can help you in the following areas:

  • Implement stock option valuation best practices that are robust to your specific circumstances, using the Black-Scholes formula, custom lattice models, or Monte Carlo simulations
  • Use a marketplace participant framework to develop the expected term assumption: exclude non-representative historical data and control for unique events, changing granting patterns, and employee behavior
  • Evaluate different volatility estimation methods, including historical volatility, implied volatility, and peer firm volatility
  • For private and newly public companies, determine appropriate ASC 718 volatility peer lists and compute leverage-adjusted volatilities in accordance with current industry best practices
  • Determine fair value discounts for post-vesting restrictions using industry-accepted and audit-friendly models
  • Perform mark-to-market valuations for liability awards (including cash-settled SARs) or nonemployee awards, using methods that are internally consistent with your other valuations and appropriate for the unique circumstances of these awards
  • Determine fair value estimates for RSUs that are not dividend-protected, using valid techniques to model the value of dividends that will be foregone during vesting
  • Customize models and inputs for your unique circumstances, including phantom shares, dollar-denominated awards, custom payoff functions, and dividend equivalent rights
  • Perform valuations under IFRS 2, meeting the unique challenges of tranche-level calculations

Realize greater control, repeatability, and auditability of results by working with a seasoned valuation practice that has strong relationships with all major public accounting firms.

Contact Us About Plain Vanilla Option and SAR Valuations