September 12, 2005
SEC’s First Thoughts on Option Valuation Through Market Instruments
On Friday, the SEC issued a press release with a statement by Chairman Cox regarding the use of market instruments to value employee stock options, along with a Statement from the SEC’s Chief Accountant and an Office of Economic Analysis Memo.
According to this NY Times article on Saturday, the SEC rejected Cisco’s proposal to issue exchange-traded employee options – but stated that it was open to other ideas about how market instruments could be used to value employee options (and the SEC’s OEA even suggested two alternatives, albeit the SEC’s Chief Accountant expressed skepticism about whether companies would quickly embrace them).
In the article, the Cisco CFO is quoted as saying that the company would continue to explore ways of using market instruments to value its options. Cisco’s dead proposal received investor backlash because it was seen as an attempt to avoid disclosing the true value of options in its financials.
At the NASPP’s “13th Annual Conference,” there will be eight panels – plus an address by the FASB Chair Bob Herz – that will deal with option expensing. Plus the NASPP just announced that it has enhanced its “Option Expensing Portal” to include a FAS 123(R) Q&A Forum that is manned by a special 123(R) Task Force.
Disney Case Appealed
Last week, Milberg Weiss Bershad & Schulman filed a notice of appeal with the Delaware Supreme Court over the August 9th opinion by Delaware Chancery Chancellor William Chandler that the Disney board did not breach its fiduciary duties over the firing of Ovitz and paying a severance package of $130 for the “non-cause” termination.
On CompensationStandards.com, we continue to post oodles of memos analyzing the Disney decision – one of my favorites is this Davis Polk memo.
More on the Meaning of the Federal Court Dismissing the SEC’s Reg FD Lawsuit Against Siebel
In this podcast, Stan Keller, Partner of Palmer & Dodge, explains the implications of the federal court dismissing the SEC’s Regulation FD lawsuit against Siebel Systems and two of its officers, including:
– What is the background of the Siebel case?
– What did Judge Daniels decide in dismissing the SEC’s lawsuit?
– What is the meaning of this case for company spokespersons?
– Do you think the SEC will appeal the case?