1. ESOs: Introduction
  2. ESOs: Accounting For Employee Stock Options
  3. ESOs: Using the Black-Scholes Model
  4. ESOs: Using the Binomial Model
  5. ESOs: Dilution - Part 1
  6. ESOs: Dilution - Part 2
  7. ESOs: Conclusion

by David Harper

In this tutorial we review the accounting and valuation treatment of employee stock options (ESOs) and illustrate the best ways for investors to incorporate them into their analysis of stock. In the next section, we begin with a summary of the accounting treatment of ESOs, and then in the third and fourth sections we progress into a review of the primary options-pricing models: the Black-Scholes and its likely successor in 2005, the binomial model. In the fifth and sixth sections, we will consider adjustments you can make to incorporate the cost impact of stock options into your equity valuations.


ESOs: Accounting For Employee Stock Options
Related Articles
  1. Managing Wealth

    Employee Stock Options (ESO)

    Employee stock options are a form of equity compensation granted by companies to their employees and executives.
  2. Trading

    Expensing Employee Stock Options: Is There A Better Way?

    In 2009, Senators Carl Levin and John McCain introduced a bill to stop the excessive deductions for ESOs. But is there another solution?
Frequently Asked Questions
  1. What is a reasonable amount of debt?

    It really depends on numerous factors - what stage of life you are at, your spending and saving habits, the stability of ...
  2. How are IRA withdrawals taxed?

    Learn how IRA withdrawals are taxed at retirement age and for qualified withdrawals. Consider the different tax consequences ...
  3. How does CareCredit for pets work?

    Understand how using a CareCredit credit card aids pet parents in the payment of potentially high veterinary care costs.
  4. Do 401k contributions reduce AGI and/or MAGI?

    Discover how contributing to a 401(k) plan can reduce your AGI and/or MAGI. Also learn by how much and how this differs from ...
Trading Center