Wednesday, November 23, 2005

The New Share Plan Metrics

Until recently, the ubiquitous use of stock options made competitive comparisons a relatively easy process. Now, significant changes in plan design - triggered by new accounting rules, the corporate governance climate, and emerging "standards" from a variety of constituencies –render the old metrics inadequate. Overhang, run rate, Black-Scholes values, and other measures give an inaccurate view of pay levels and value transfer, leading to misguided decisions.

As companies assess alternative forms of share-based awards – performance-based options, stock-settled SARs, restricted stock and RSUs, performance shares – as well as changes in the mix between equity and cash, the decision process requires assumptions about the "value" and "cost" of each type of award. Firms attempting to understand their competitive position using survey data and their compliance with investor requirements face new challenges given the outdated methodologies being used. This session explains the emerging metrics and techniques being used by leading companies in understanding the value and cost of share-based payments in this new environment and presents a model for navigating through the complex decision process. The presentation includes a preview of new standards in 2006 from organizations including the SEC, ISS, S&P, ABI and others.

Attend a Web seminar on this topic, presented by Global Equity Organization, on 11 January 2006. http://www.globalequity.org/events/webseminar/index.html#Register

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