Employee Stock Option Valuation -
Proper Valuation is Critical in Divorce Proceedings
Employee stock options can represent the majority of wealth for a family. If these important assets are not properly valued in a divorce proceeding, then there will not be a proper distribution of wealth to each spouse in the divorce settlement. How do you make sure that you are getting your fair share of that wealth? The divorce valuation is crucial to success. Use our option valuation services to find the fair value of the options. Don't let yourself get shortchanged in the divorce settlement. If you make the mistake of assuming that the assets will be distributed equitably, you may find yourself taken advantage of.
Why Stock Option Valuation is So Important in a Divorce Case
- Stock options granted to one spouse may represent a significant portion of the marital wealth.
- The other spouse may not realize or understand the true value of those options.
- Options are worth much more than most people realize.
- Courts do not have established standards and reliable procedures for valuing stock options.
What is an Employee Option?
Companies grant options to employees as incentives, hiring bonuses, rewards, and as compensation for their work. An Employee Option grants the owner the right, but not the obligation, to purchase stock in the company at a specified price, called the strike price, on or before the expiration date of the option. Employee options are often granted for long periods, such as ten years.
What is the Future Payoff of an Option?
An option's future payoff depends on the future stock price, which is uncertain. If the market price of the underlying stock goes above the strike price, the option holder can exercise the option by purchasing the stock at the lower strike price and then selling that stock at the market price, thus realizing a profit equal to the market price minus the strike price. However if the option expires with the market price of the underlying stock below the strike price, then the option is not worth anything at expiration. But during the term of the option, even if the market price is below the strike price, the option does have value and in many cases this value can be very significant. It is easy to understand that options can have value even if the market price is below the strike price because there is the probability that the price of the stock will rise above the strike price before the option expires.
How do You Determine Fair Value for Options?
Our option valuation methods use Nobel-Prize Winning formulas that have been well proven in the marketplace to determine fair value for options. The Financial Accounting Standards Board (FASB) requires companies to expense their options properly at fair value. We use all of the factors that they recommend for determining fair value: the exercise price of the option, the expected term of the option, the current expected dividends on the underlying share, and the risk-free interest rate. In fact MindXpansion also provides our option valuation services to other companies so that they can properly expense the options they grant. If you are interested in our services for proper expensing of company options to meet the requirements of the FASB, please visit our website for expensing company options.
We provide employee stock option valuation services to family law attorneys for litigation of their divorce cases so that they can protect their clients' property rights. We also provide our services directly to people going through a divorce so that they can understand the true value of employee options held by them or their spouse and to provide data to their attorneys for proper protection of their interests in these important marital assets. We use several different option valuation models, such as the Nobel Prize winning Black-Scholes option pricing model or lattice binomial models, depending on the needs of the customer.
Our option valuation services are attractively priced and easy to use. We offer the lowest prices in the industry. Customer satisfaction is our highest priority.
Services to Meet Your Needs
We can make market fair value calculations for both public and private companies. Standard services that should meet your needs are listed in more detail on our services webpage. Contact us for any specific requirements you have that are not listed, so that we can customize our services to meet your specific needs.
Service 1 (Valuation): We Calculate Fair Value for Your Options
We will calculate fair value for your options, using all of the factors that are stipulated by the FASB: the exercise price of the option, the expected term of the option, the current expected dividends on the underlying share, and the risk-free interest rate. We use several different option valuation models, such as the Nobel Prize winning Black-Scholes option pricing model or lattice models, depending on the needs of the customer. Submit your option information to determine the fair value of your options.