Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )

operating expenses to allowfor the factthat the expected effect of option issues in future periods will be smaller. Inmakingfore ...

Adjusted pretax operating income $5,786 million If we use this pretax operating income as our base for forecasting future operat ...

Thevalueofoptiongrants asa percentofrevenuesin the mostrecentyearis6.39percent.AswithCisco,welowerthis value to 3 percent over t ...

assumption. For instance, we could assume that options issuedwillrepresentafixedpercentoftheoutstandingstock eachperiod,andbaset ...

badnewsforstockholders.Infact,ifweviewoptiongrantsas compensation, they are part of the normal cost of doing business for a youn ...

option grants at fair market value. Such expensing, it is argued, will catch the market by surprise and lead to significantvalua ...

haveloweroptionexpensesthanexpected(giventheindustry standards) and decreasing at companies that have higher optionexpensesthane ...

should be indifferent between them. When managers are rewardedprimarilywithoptions,wealterthisbalance.Since options are rendered ...

Buildingonthethemethatoptionholdersgainwhenequity becomesmorerisky,wewouldanticipatemoredebtinfirms with more options outstandin ...

payoutstendtobeloweratfirmswithemployeeoptionsthan at otherwise similar firms without these options. 32 Kahle(2004)presents evid ...

trading them. These restricted stock issues have made a comebackinrecentyearsastheabusesofemployeeoptions havecometolight. InJul ...

rosefrom closetozeroin 2001 to 2.9645millionin 2002 before falling to 2.1 million in 2003. The switch to restricted stock is lik ...

is stock bonus plans, where the granting of shares is contingentonthefirmreaching aspecifiedoperatingtarget such as doubling of ...

34 The FASB goes on to add that determining the discount requires the analyst’s judgment. Valuing Restricted Stock Aswenotedearl ...

2.Hedging/borrowingconstraints.Employeeswithrestricted stock mayvery wellbe able toavoid thebiggestcosts of illiquidity iftheyca ...

Discounted Cash Flow Valuations Aswithemployeeoptions,therearethreedimensionsalong whichrestrictedstockissuescanaffectvalue.Rest ...

operating expense and should reduce the current year’s operating and net income. Expected restricted stock issues in the future ...

capitalization involves multiplying the number of shares outstanding by the observed market price. Since restricted stockshouldh ...

disproportionaterewardsforanyeffortsthattheywereputting in,withoptionspackagesvaluedintensofmillionsofdollars. The second was th ...

switchingjobswillbegreatestwhentheopportunitytodoso ishighest.Foramoreextensivediscussionofthismotiveand someempiricalevidence,s ...