Valuation of stock compensation under ASC 718: Principles and Practice

Understand the what, why, and how of equity compensation!

Derivatives such as options have been used to reward employees for many years, and executive pay packages often include features of complex derivative securities such as options and restricted stock with vesting schedules based on various contingencies.

This is an area in which accounting rules and valuation practice are uniquely intertwined. While practitioners may have a handle on the accounting for these complex instruments, they may still view the methods and tools employed in assessing their value as a mysterious "black-box." Our presenters will provide more than a glimpse of what's "under the hood" in the relevant valuation techniques such as lattice models and Monte Carlo simulation, and how these relate to regulations such as ASC 718 and the new Pay versus Performance (PvP) requirements for proxy statements.

Join our industry experts as they present an overview of the types of tools used in valuing these complex financial instruments found in many compensation packages, and how they can be identified.

Key Topics

• Understand stock-based compensation under ASC 718
• Award types and characteristics
• Market Awards and Monte Carlo Simulation
• Pay vs Performance

Learning Outcomes

• Identify how Black-Scholes and Monte Carlo simulations are applied within valuation models
• Recognize how various inputs drive valuations
• Compare different models e.g. lattice, Black-Scholes, Monte Carlo.
• Determine main issues and common challenges for practitioners and auditors/regulators

Who Will Benefit

• Valuation practitioners
• Auditors
• Investment managers
• Banking product developers and controllers
• CFO analysts