Financial Reporting Valuation

Equity-Based Compensation Valuation

Mercer Capital provides independent valuation of stock options, restricted stock units, stock appreciation rights, performance share units, and other equity-based compensation awarded to employees

ASC 718 Compensation – Stock Compensation (formerly SFAS 123R) mandates the recognition of equity-based employee compensation as an expense. IFRS 2 Share-Based Payment contains similar requirements for the accounting of equity-based compensation according to the international financial reporting standards.

Valuation of equity-based employee compensation is also necessary in the context of tax compliance. Stock options and stock appreciation rights may be part of non-qualified deferred compensation plans regulated by Section 409A of the Internal Revenue Code. Compliance with Section 409A requires “a reasonable application of a reasonable valuation method” to determine the fair market value of the stock of a company that awards equity-based employee compensation.

Our valuation of equity-based compensation is tailored to the specific type of award granted. The typical valuation methods considered include Black Scholes, binomial lattice modeling, and Monte Carlo simulation.

Related Services

  • Employee stock option valuation services
  • Stock appreciation rights valuation services
  • Restricted stock units valuation services
  • Performance share units valuation services

Contact a Mercer Capital professional for more specific information about our equity-based compensation valuation services.

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