employee stock options

• Employee Stock Options

https://store.theartofservice.com/the-employee-stock-options-toolkit.html

Epic Games - Partial acquisition by Tencent

1 In July 2012, Chinese company Tencent Holdings acquired approximately 48.4% of Epic then

issued share capital, equating to 40 percent of total Epic— inclusive of both stock and

employee stock options, for $330 million. Tencent Holdings has the right to nominate

directors to the board of Epic Games and thus accounted for as an associate of the Group..

Polygon (2013-03-21). Retrieved on 2013-08-23. A number of high profile staff left the company

months after the deal was announced.


Valuation (finance) - Valuation overview

1 #Valuation of options|Option pricing models are used for certain types of financial assets

(e.g., Warrant (finance)|warrants, put options, call options, employee stock options, investments with embedded

options such as a callable bond) and are a complex present value model. The most common option pricing models are the Black–Scholes-Robert C. Merton|Merton

models and lattice model (finance)|lattice models.


Harley-Davidson - Claims of stock price manipulation

1 Immediately prior to this decline, retiring CEO Jeffrey Bleustein profited

$42million on the exercise of employee stock options


Options backdating

1 Cases of backdating employee stock options have drawn public and media attention.


SafeNet - Options Backdating Controversy

1 In 2006 SafeNet got caught up in the options backdating controversy. As a

result both the Chief Executive Officer and the Chief Financial Officer resigned and in 2008 the company's former CFO was sentenced to six months in prison

for manipulating employee stock options.[http://www.reuters.com/article/businessNews/idUSN283001242008012

8 Reuters]https://store.theartofservice.com/the-employee-stock-options-toolkit.html

UnitedHealth Group - Resignation of McGuire

1 McGuire would step down immediately as chairman and

director of UnitedHealth Group, and step down as CEO on December 1, 2006, due to his involvement in the

employee stock options scandal


Employee stock option

1 An 'employee stock option' ('ESO') is commonly viewed as a complex call option on the common

stock of a company, granted by the company to an employee as part of the employee's Remuneration|

remuneration package.[http://www.esopdirect.com/faq.html see

Employee Stock Option FAQ's] Regulators and economists have since specified that employee stock

options is a label that refers to compensation contracts between an employer and an employee

that carries some characteristics of financial options but are not in and of themselves options (that is they

are compensation contracts).


Employee stock option

1 Traditional employee stock options have structural problems, in that when exercised followed by an immediate sale of stock, the

alignment between employee/shareholders is eliminated


Employee stock option - Objectives

1 Many companies use employee stock options plans to retain and attract

employees,[http://www.sec.gov/answers/empopt.htm see Employee Stock

Options Plans], U.S



1 Another substantial reason that companies issue employee stock

options as compensation is to preserve and generate cash flow. The cash flow comes when the company issues new shares and receives the exercise price and receives a tax

deduction equal to the intrinsic value of the ESOs when exercised.



1 Employee stock options are similar to exchange traded call options issued

by a company with respect to its own stock.



1 At any time before exercise, employee stock options can be said to have two components: time value and intrinsic value. Any remaining time value component is forfeited back to the company when early

exercises are made. Most top executives hold their ESOs until near expiration, thereby minimizing the

penalties of early exercise.https://store.theartofservice.com/the-employee-stock-options-toolkit.html

Employee stock option - Features

1 Employee stock options are non-standardized calls that are issued as

a private contract between the employer and employee.


Employee stock option - Overview

1 The employee may also hedge the employee stock options prior to

exercise with exchange traded calls and puts and avoid forfeiture of a

major part of the options value back to the company thereby reducing

risks and delaying taxes.


Employee stock option - Contract differences

1 **Or the options may require the employee or the company meet

certain performance goals or profits (e.g., a 10% increase in sales)The

Complete Guide to Employee Stock Options, Frederick D. Lipman, Prima

Venture, 2001, p.120


Employee stock option - Valuation

1 van Zyl, [http://www.iassa.co.za/wp-content/uploads/2009/06/0703Taylor

vanZyl67No3final.pdf Hedging employee stock options and the

implications for accounting standards], Investment Analysts

Journal, No


Employee stock option - GAAP

1 The US GAAP accounting model for employee stock options and similar

share-based compensation contracts changed substantially in 2005 as

FAS123(revised) began to take effect.


Employee stock option - GAAP

1 Employee stock options have to be expensed under US

GAAP in the US


Employee stock option - Taxation

1 Because most employee stock options are non-transferable, are not

immediately exercisable although they can be readily hedged to reduce risk, the Internal Revenue Service|IRS considers that their fair market value

cannot be readily determined, and therefore no taxable event occurs

when an employee receives an option grant


Employee stock option - Criticism

1 Alan Greenspan was critical of the structure of present day options

structure, so John Olagues created a new form of employee stock option

called dynamic employee stock options, which restructure the ESOs

and SARs to make them far better for the employee, the employer and

wealth managers.


Rational pricing - The replicating portfolio

1 (Another case where the modelling assumptions may depart from

rational pricing is the Employee_stock_option#Valuation|

valuation of employee stock options.)


Option (finance) - Other option types

1 Another important class of options, particularly in the U.S., are employee stock options, which are awarded by a company to their employees as a

form of incentive compensation


Option (finance) - Trading

1 With few exceptions, there are no secondary markets for employee

stock options. These must either be exercised by the original grantee or

allowed to expire worthless.


Company secretary - Roles and responsibilities

1 Company in all sectors have high level responsibilities including governance structures and mechanisms,

corporate conduct within an organisation's regulatory environment, board, shareholder and trustee meetings,

compliance with legal, regulatory and listing requirements, the training and induction of non-

executives and trustees, contact with regulatory and external bodies, reports and circulars to

shareholders/trustees, management of employee benefits such as pensions and employee stock options|employee share schemes, insurance administration and

organisation, the negotiation of contracts, risk management, property administration and organisation

and the interpretation of financial accounts.


Compensation and benefits - The basic components of employee compensation and benefits

1 4. 'Equity-based compensation' – stock or pseudo stock programs an employer uses to provide actual or

perceived ownership in the company which ties an employee's

compensation to the long-term success of the company. The most common examples are Employee

stock options|stock options.


Compensation and benefits - Equity-based compensation

1 Equity based compensation is an employer compensation plan using the employer’s shares as employee compensation. The most common

form is Employee stock options|stock options, yet employers use additional

vehicles such as restricted stock, restricted stock units (RSU),

employee stock purchase plan (ESPP), and stock appreciation rights

(SAR).https://store.theartofservice.com/the-employee-stock-options-toolkit.html

Warrant (finance) - Comparison with call options

1 When a call option is exercised, the owner of the call option receives an existing share from an assigned call

writer (except in the case of employee stock options, where new shares are created and issued by the

company upon exercise)


Capitalization table

1 The cap table is widely used by entrepreneurs, venture capitalists, and investment bankers to model

and to analyze such events as ownership dilution, issuing employee

stock options, or issuing new securities


Stock dilution

1 This increase in the number of shares outstanding can result from a

primary market offering (including an initial public offering), employees

exercising employee stock options|stock options, or by conversion of

convertible bonds, preferred shares or warrant (finance)|warrants into

stock


Stock dilution - Market value of the business

1 When this shortfall is triggered by the exercise of employee stock options, it is a measure of wage

expense


Golden handcuffs

1 'Golden handcuffs' are a system of financial incentives designed to keep

an employee from leaving the company. These can include

employee stock options that will not vest for several years, but are more often contractual obligations to give

back lucrative bonuses or other compensation if the employee leaves

for another company.https://store.theartofservice.com/the-employee-stock-options-toolkit.html

Deferred compensation

1 'Deferred compensation' is an arrangement in which a portion of an employee's income

is paid out at a date after which that income is actually earned. Examples of

deferred compensation include pensions, retirement plans, and employee stock options. The primary benefit of most

deferred compensation is the deferral of tax to the date(s) at which the employee

actually receives the income.


Yahoo! HotJobs - Concept

1 Various tools within the site allowed users to calculate ideal salaries,

research plans and employee stock options as well as have a Job Tip of

the Day emailed to them


Compensation in the United States - Employee stock options

1 Employee stock options are mostly offered to management with

restrictions on the option (such as Vesting#Employee_rights|vesting and limited transferability), in an

attempt to align the holder's interest with those of the business

shareholders


Compensation in the United States - Taxation of employee stock options in the United States

1 Because most employee stock options are non-transferable and are not immediately exercisable although they can be readily hedged to reduce risk, the Internal Revenue Service|IRS considers that their fair market value

cannot be readily determined, and therefore no taxable event occurs

when an employee receives an option grant


For More Information, Visit:

• https://store.theartofservice.com/the-employee-stock-options-toolkit.html

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employee stock options

Documents

common stock

embedded options

options claims

immediate sale of stock

options group resignation

common option pricing

company months

mertonmerton models