MBA Depot - Stock-Based Compensation and the Cost of Capital

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Stock-Based Compensation and the Cost of Capital

Article discusses the controversy of whether companies should estimate the present value of employee stock options, when granted, and then account for them as a current expense. Though the article is a little dated (referring to an old FASB proposal), the issues addressed continue to be relevant.

See Related:

Background Report: Employee Stock Options (.pdf)
Employee Stock Options: Their Use and Policy Implications
Repricing of Stock Options
It's Not Just How Many, But Who Gets Stock Options That Matters
Are Stock Option Rescissions an Unfair Benefit?
How Employees Value (Often Incorrectly) Their Stock Options
The Danger of Stock Option Grants
Stock Options and Related Plans
Opting for Stock Options
Re-examining Stock Options as a Way to Compensate Executives
Out of Options
One Way to Settle the Controversy over Stock Options: Eliminate Them
Are Stock Options In Your Future?
Stock Option Repricing: Employees Benefit But What about Investors?
Stock Options: The End of the Affair?
Who Rules Accounting?
Valuing Employee Stock Options: A Comparison of Alternative Models (.pdf)
Less Ado about Options
Stock Options and Long Term IPO Performance
What's a Stock Worth?
Toting Up Stock Options
The Technology Entrepreneur's Guidebook
Startup Stock Options
Forget Black-Scholes?
Why the traditional option-pricing model may not be the best way to value employee grants.
Is the Reprice Right? (Part One)
Many companies are repricing underwater stock options in an effort to retain talent. Here are the pros and cons.
Is the Reprice Right? (Part Two)
Many companies are repricing underwater stock options. But others are opting to give employees a choice between keeping underwater options and canceling those options in order to receive a new grant at some point in the future.
Recognize the True Cost of Compensation
Compensation options are a cost to the firm and need to be expensed if financial statements are to reflect the true value of the firm.
An Ounce of Prevention
Here are some innovative ways companies are tweaking options to soften the blow to current shareholders.
Term Sheet - Vesting
Executive Stock Options Boost Company Performance But Options to Rank-and-File Workers Show Minimal Effect

Subject(s): Accounting, Corporate Governance

Source(s): strategy+business

Author(s): Patricia M. Dechow, Richard G. Sloan, Amy P. Sweeney

Posted: 2001-06-22

# Views: 100

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