Stock Option Valuations - 409A
It is extremely important in today’s regulatory environment that stock options are
managed correctly, which includes all the various valuation issues that surround
options. Because of this, the valuation analyst must have a working knowledge
of stock option plans, in addition to business valuations, in order to be able to
take into consideration all the unique factors that options present. The valuation
staff at GROCO has extensive knowledge in the design, administration and valuation
of stock option plans and can guide you through the regulations that exist.
409A
With the issuance of Section 409A of the Internal Revenue
Code, public and private companies must now follow specific rules on the granting
and valuation of stock options. If they fail to follow the rules outlined
by 409A, the optionees will be at risk for an immediate tax on their options, including
an additional 20%. For clarification, 409A relates to the grant price valuation
as opposed to the expensing of options under FAS123.
GROCO Business Valuation Articles:
Secondary Market May Impact 409A Valuations
For more information, go to:
409A Valuation Issues Q&A
Notice 2006-4 Valuation Issues
Notice 2006-79 Extends Effective Date
Notice
2007-86 Extends Effecitve Date Again
409A Now Effective
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