However after their price has fallen one might reassess the impact on
the value of the options granted so that the compensation doesn't look that disproportionate any more.
Meanwhile, in those companies, the median
value of options granted equals roughly 37 % of an engineer's — and 265 % of a CEO's — base salary, according to Mark Edwards, president of iQuantic, a compensation consulting firm based in San Francisco.
Not exact matches
Such behavior, the researchers argue, suggests that boards indeed tend to think about
grants in terms
of the number
of options, not their dollar
value.
Because
option values can be difficult to understand, boards have tended to issue a certain number
of options from year to year, regardless
of the
grant's dollar
value, rather than calculate a desired dollar
value and vary the number
of options.
Executive compensation figures are also disclosed in the filing, including CEO Dick Costolo, who had a base salary
of $ 200,000 last year, with $ 8.4 million in restricted stock and
options with a
grant - date
value of $ 2.9 million.
The fair
value of options with service conditions was determined at the date
of grant using the Black - Scholes model.
It is much more likely that he will have made a much more modest salary (say, $ 500,000) and to have been
granted stock in the company (or stock
options) the
value of which makes up the rest
of his income for the year.
granted any
options since August 2008, we performed a contemporaneous valuation
of our common stock as
of December 24, 2008 and determined the fair
value to be $ 2.32 per share as
of such date.
This column reflects the aggregate
grant date fair
value computed in accordance with ASC Topic 718
of the
options to purchase shares
of our common stock
granted to the named executive officers.
In August 2012, to create incentives for continued long - term success from the then - recently launched Model S program as well as from Tesla's then - planned Model X and Model 3 programs, and to further align executive compensation with increases in stockholder
value, the Board
granted to Mr. Musk a stock
option award to purchase 5,274,901 shares
of Tesla's common stock (the «2012 CEO Performance Award»), representing 5 %
of Tesla's total issued and outstanding shares at the time
of grant.
The Compensation Committee believes that
options to purchase shares
of our common stock, with an exercise price equal to the market price
of our common stock on the date
of grant, are inherently performance - based and are a very effective tool to motivate our executives to build stockholder
value and reinforce our position as a growth company.
For purposes
of the table in «Executive Compensation — Summary Compensation Table» below, we are required to report pursuant to applicable SEC rules any stock
option grants to Mr. Musk at
values determined as
of their respective
grant dates and which are driven by certain assumptions prescribed by Financial Accounting Board Accounting Standards Codification Topic 718, «Compensation — Stock Compensation» («ASC Topic 718»).
As discussed in the CD&A under «Compensation Components» and «Achieving Compensation Objectives — Pay for Performance,» we have provided incentive compensation in the form
of an annual cash incentive award based on Company, business line and individual qualitative performance results for each fiscal year, and long - term incentive compensation generally in the form
of stock
option grants and, in certain circumstances, RSRs to reward our SEOs for contribution to growth in long - term stockholder
value.
The term
of an incentive stock
option may not exceed ten years, except that with respect to any participant who owns more than 10 %
of the voting power
of all classes
of our outstanding stock, the term must not exceed five years and the exercise price must equal at least 110 %
of the fair market
value on the
grant date subject to the provisions
of our 2015 Plan.
Long - term compensation, generally in the form
of stock
option grants under our Long - Term Incentive Compensation Plan (LTICP), to reward named executives for contributions to growth in stockholder
value over the long term;
Each stock
option gives the recipient the right to receive a number
of Shares upon exercise
of the stock
option and payment
of the stock
option exercise price, which other than for incentive stock
options, shall be the fair market
value of a Share on the
option grant date.
The 2004 Plan permits the
grant of the following types
of Awards: (1) nonstatutory stock
options, incentive stock
options and stock appreciation rights
granted at the fair market
value of our common stock on the date of grant (Fair Market Value Awards), and (2) restricted stock awards and restricted stock units (Full Value Awa
value of our common stock on the date
of grant (Fair Market
Value Awards), and (2) restricted stock awards and restricted stock units (Full Value Awa
Value Awards), and (2) restricted stock awards and restricted stock units (Full
Value Awa
Value Awards).
Because there is no public market for our common stock, our board
of directors determined the common stock fair
value at the stock
option grant date by considering several objective and subjective factors, including the price paid by investors for our preferred stock, our actual and forecasted operating and financial performance, market conditions and performance
of comparable publicly traded companies, developments and milestones in our company, the rights and preferences
of our common and preferred stock, the likelihood
of achieving a liquidity event, and transactions involving our preferred stock.
Provided, however, that an incentive stock
option held by a participant who owns more than 10 %
of the total combined voting power
of all classes
of our stock, or
of certain
of our parent or subsidiary corporations, may not have a term in excess
of five years and must have an exercise price
of at least 110 %
of the fair market
value of our common stock on the
grant date.
nonstatutory stock
options may not be less than 85 %
of the fair market
value of our common stock on the date
of grant.
Given the absence
of a public trading market
of our common stock, and in accordance with the American Institute
of Certified Public Accountants Accounting and Valuation Guide, Valuation
of Privately - Held Company Equity Securities Issued as Compensation, our board
of directors exercised reasonable judgment and considered numerous and subjective factors to determine the best estimate
of fair
value of our common stock, including independent third - party valuations
of our common stock; the prices at which we sold shares
of our convertible preferred stock to outside investors in arms - length transactions; the rights, preferences, and privileges
of our convertible preferred stock relative to those
of our common stock; our operating results, financial position, and capital resources; current business conditions and projections; the lack
of marketability
of our common stock; the hiring
of key personnel and the experience
of our management; the introduction
of new products; our stage
of development and material risks related to our business; the fact that the
option grants involve illiquid securities in a private company; the likelihood
of achieving a liquidity event, such as an initial public offering or a sale
of our company given the prevailing market conditions and the nature and history
of our business; industry trends and competitive environment; trends in consumer spending, including consumer confidence; and overall economic indicators, including gross domestic product, employment, inflation and interest rates, and the general economic outlook.
All stock
options and stock appreciation rights will have an exercise price equal to at least the fair market
value of our common stock on the date the stock
option or stock appreciation right is
granted, except in certain situations in which we are assuming or replacing
options granted by another company that we are acquiring.
For nonstatutory stock
options and incentive stock
options granted to employees who do not own more than 10 %
of the voting power
of all classes
of our outstanding stock, the exercise price must equal at least 100 %
of the fair market
value.
Each non-employee director who, as
of the date
of this offering, is serving on our board
of directors and is expected to continue his or her service following this offering will be
granted an
option to purchase shares
of our Class A common stock with a
grant date fair
value of $ 50,000 (or, if such director is unaffiliated with any significant stockholder
of the Company, $ 75,000) on the date the shares subject to this offering are priced.
On the date the shares subject to this offering are priced, each non-employee director who, as
of the date
of this offering, is serving on our board
of directors and is expected to continue his or her service following this offering will be
granted (a) an
option to purchase shares
of our Class A common stock with a
grant date fair
value of $ 50,000 (or, if such director is unaffiliated with any significant stockholder
of the Company, $ 75,000) and (b) to the extent such director is (i) unaffiliated with any significant stockholder
of the Company and (ii) the chairman
of any committee
of our board
of directors, an additional
option to purchase shares
of our Class A common stock with a fair
value of $ 10,000 with respect to each such chairmanship.
During the year ended December 31, 2016, we
granted options with an aggregate
grant date fair
value of $ 37.8 million to certain employees in conjunction with an acquisition.
Historical stock
options granted to non-employees were
valued on the date
of grant using the Black - Scholes pricing model and are re-
valued each reporting period as they vest.
The total amount to be expensed is determined by reference to the fair
value of the
options or awards at the date they were
granted.
The term
of an incentive stock
option may not exceed 10 years, except that with respect to any participant who owns more than 10 %
of the voting power
of all classes
of our outstanding stock, the term must not exceed 5 years and the exercise price must equal at least 110 %
of the fair market
value on the
grant date.
Based on the valuation
of our common stock completed in March 2012, the fair
value of RSUs and exercise price
of stock
options granted through October 12, 2012 was determined to be $ 14.42 per share.
The exercise price
of stock
options granted under our equity incentive plans is equal to the fair market
value of FedEx's common stock on the date
of grant.
However, for stock market companies, simply creating new shares or issuing stock
options by fiat that are given away to employees without the company selling them at full
value, existing shareholders would experience an economic dilution in profits (dividends) per share going down because
of a larger number
of shares and, importantly, in economic
value, being given away (shares
of the company are literally being simply
granted to someone else, namely employees).
The 2005 Stock Plan provides for the
grant of non-qualified stock
options, stock appreciation rights, limited stock appreciation rights, restricted stock, awards
of shares, RSUs and other awards that are
valued in whole or in part by reference to our stock.
The weighted average fair
value of deferred share bonus plan
options granted during the year was # 3.23 (2016: # 2.80).
A DBSP Award will be
granted over such number
of shares as have at the
grant date a market
value, as determined by our board
of directors, equal to the deferred bonus (the amount
of bonus which is to be delivered in the form
of a conditional award or a nil - cost
option).
However, a participant may not purchase more than shares in each offering period and may not subscribe for more than $ 25,000 in fair market
value of shares
of our common stock (determined at the time the
option is
granted) during any calendar year.
Nonstatutory Stock
Options, or NSOs, will provide for the right to purchase shares
of our common stock at a specified price, which may not be less than fair market
value on the date
of grant, and usually will become exercisable (at the discretion
of the administrator) in one or more installments after the
grant date, subject to the participant's continued employment or service with us and / or subject to the satisfaction
of corporate performance targets and individual performance targets established by the administrator.
The exercise price
of options granted under our 2013 Plan must at least be equal to the fair market
value of our common stock on the date
of grant.
The fair
value of the employee services received in exchange for the
grant of the
options is recognized as an expense.
The exercise price
of options granted under our 2014 Plan must at least be equal to the fair market
value of our Class A common stock on the date
of grant.
Effective January 1, 2011, upon the recommendation
of the GNC, the Board increased to $ 25,000 the annual fee paid to the chair
of each standing Board committee other than the AEC, which remained at $ 30,000; set at $ 25,000 the annual fee paid to the chairs
of the CRC and Risk Committee, which were formed effective January 1, 2011; eliminated the annual stock
option grant; and increased the
value of the annual stock award to $ 140,000.
The term
of an incentive stock
option may not exceed ten years, except that with respect to any participant who owns more than 10 %
of the voting power
of all classes
of our outstanding stock, the term must not exceed five years and the exercise price must equal at least 110 %
of the fair market
value on the
grant date.
The FASB did investors no favor when they allowed one - time costing
options on estimated time -
value at the
grant date, without accruing costs period - by - period to reflect actual dilution by the date
of exercise, which is what matters.
This measure
of dilution (which we refer to as «full - share equivalent
grants») is calculated as -LSB--LRB-(net
options granted / full -
value grant multiplier) + net full -
value awards
granted) / shares outstanding at fiscal year end].
As disclosed in the proxy statement filed in advance
of its 2006 shareholder meeting, in 2005 the Devon board paid CEO J. Larry Nichols a $ 1.1 million salary, a $ 2.2 million bonus (based on a non-formulaic assessment
of performance), and stock and
options with an aggregate
grant - date
value of more than $ 7 million (none
of which was tied to performance measures).
Regardless
of the reported
value of a stock
option on the
grant date, the actual
value realized will depend on the excess, if any,
of the market
value of the Company's common stock over the exercise price if and when the
option is exercised.
This column sets forth the
grant date fair
value of options to purchase shares
of the Company's common stock
granted to the named executive officers during each fiscal year.
In 2009, the federal government overhauled the Title I School Improvement
Grant program, increased its
value to $ 3.5 billion with money from the recovery act, and spelled out four turnaround
options from which perennially failing schools would have to choose to get a share
of the funding.
It looks like the new management
of Broadridge will be highly motivated to boost the
value of this stock since they have started receiving generous stock
option grants.
Our nominees will accept no cash payments for board service, and will not accept any form
of compensation except for stock
option grants at or above market
value.