December 26, 2007

SEC Issues Year-End Stock Option Expensing Guidance

On Friday, the SEC issued Staff Accounting Bulletin No. 110 regarding option expensing guidance. As explained in this press release, SAB 110 provides guidance on the use of a “simplified” method (as discussed in SAB No. 107, issued back in March) in developing an estimate of expected term of “plain vanilla” options in accordance with FAS 123(R). In particular, the Staff indicated in SAB 107 that it will accept a company’s election to use the simplified method, regardless of whether the company has sufficient information to make more refined estimates of expected term.

At the time SAB 107 was issued, the Staff believed that more detailed external information about employee exercise behavior (e.g., employee exercise patterns by industry and/or other categories of companies) would, over time, become readily available to companies. Therefore, the Staff stated in SAB 107 that it would not expect a company to use the simplified method for share option grants after December 31, 2007. The Staff understands that such detailed information about employee exercise behavior may not be widely available by December 31, 2007. Accordingly, the Staff will continue to accept, under certain circumstances, the use of the simplified method beyond December 31, 2007.

A New Section 16 Litigation Strategy

Alan Dye has written about this new-fangled Section 16(b) litigation strategy in a couple of recent issues of Section 16 Updates, but it’s worth noting again as told in this Seatle Times article. The plaintiffs’ bar will continue to be enterprising…

Why Are You Working This Week?

We’ll be experimenting with these Web Polls over the next few weeks:

Opinion Polls & Market Research

– Broc Romanek