employee stock options
TRANSCRIPT
• 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.
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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.
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
Options backdating
1 Cases of backdating employee stock options have drawn public and media attention.
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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).
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
Employee stock option - Objectives
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.
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
Employee stock option - Objectives
1 Employee stock options are similar to exchange traded call options issued
by a company with respect to its own stock.
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
Employee stock option - Objectives
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.
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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.
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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.
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
Employee stock option - GAAP
1 Employee stock options have to be expensed under US
GAAP in the US
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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.
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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.)
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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.
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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.
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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.
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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)
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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.
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
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
https://store.theartofservice.com/the-employee-stock-options-toolkit.html
For More Information, Visit:
• https://store.theartofservice.com/the-employee-stock-options-toolkit.html
The Art of Servicehttps://store.theartofservice.com