FINANCIAL REPORTING COMPLIANCE
OPTION VALUATION
Commencing in the first fiscal year subsequent to June 15, 2005, all publicly traded companies are required to count stock-based compensation as a cost against earnings in accordance with SFAS 123 (revised).
In addition to the requirement to expense stock options, the standard recommends that companies jettison the use of the Black-Scholes model in favor of the use of lattice models.
Houlihan uses our own model comprised of 'stacked' lattices as well as key inputs developed from client data such as exercise behavior, forfeiture patterns, and vesting schedules, to estimate the magnitude of your options expense.
Houlihan provides assistance to clients in addressing a variety of employee stock option issues pursuant to SFAS 123.
OUR SERVICES
- A formal opinion of value estimated using lattice-based methods and prepared in accordance with SFAS 123R
- Estimates of specific model inputs such as early exercise, termination, retirement probabilities, and annual volatility
- A review and commentary on models, data, and conclusions prepared by the client