Calculate the value of employee stock options (ESO) for both publicly traded and privately held companies in compliance with the FASB's ASC Topic 718.

The BVR/DVA Stock Option & Compliance Calculator, developed by Derivative Valuation Associates, LLC, offers significant value using linked databases to calculate the appropriate measure of expected volatility as well as forward looking risk-free rates, which is unlike other software products that simply ask for these inputs. Currently, this is the only online calculator that is suitable for valuing ESOs in privately held businesses as it takes into account specific factors that distinguish ESOs in closely held firms from publicly traded stock options.

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In 2005, the FAS issued FASB 123R which required fair valuation of employee stock options issued as compensation to employees and the use of state-of-the-art option valuation models by appraisers. In 2009 the Financial Accounting Standards Board (FASB) created the FASB Accounting Standards Codification (ASC).  Included in the Codification was ASC Topic 718 (that now supersedes FASB 123R) which requires that all equity options granted to employees must be accounted at “fair value” which is measured at the option’s grant date. If your work consists of FASB 123R / ASC 718 valuations and calculations, the Compliance Calculator will quickly and easily evaluate the “reasonableness” of the ESO valuations.

Highlights of the Calculator:

• This tool allows for the valuation of both public and non-public employee stock options utilizing the preferred binomial lattice option-pricing model for American-type call options
  
  
• It implements the Hull-White model to value employee stock options for public companies
  
  
• It uses the same basic methodology as the public company model to value employee stock options for closely held companies, however, certain modifications handle the interactions between stock values and option values. Given a total equity value, the Calculator iterates through possible stock prices using a bisection method, until the total value of stocks and options is equal to the total equity value
  
  
• It includes a volatility calculator that ensures accuracy of your valuation by calculating the projected volatility using empirical data and a GARCH (Generalized AutoRegressive Conditional Heteroscedasticity) technique. Volatility can be calculated based on a user determined list of public companies or on an industry sector or group and market capital range
  
  
• It uses daily treasury yield curve rates to calculate the appropriate risk-free rate. The daily yield curve, which relates the yield on a security to its time to maturity is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market. These market yields are calculated from composites of quotations obtained by the Federal Reserve Bank of New York.
  

If you have additional questions, please visit our FAQs page, call us at 503-291-7963, or email us at customerService@BVResources.com.