Private Company Stock Options: Determining Fair Market Value in ...

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Modifications and Extensions • Any modification of an “in-the-money” option, other than an extension of term, is treated as new grant • If option term is extended, the option is treated as having a deferral from the date of grant 22
Modifications and Extensions • Modification – Any change in option that may provide optionee with • direct or indirect reduction in stock price • an additional deferral feature • an extended exercise period 23
Page 1 and 2: Private Company Stock Options: Dete
Page 3 and 4: The Law • American Jobs Creation
Page 5 and 6: The Law • 409A penalizes: - Disco
Page 7 and 8: The Law • Penalty for non-complia
Page 9 and 10: Valuation Methods • To qualify fo
Page 11 and 12: Valuation Methods • Factors to co
Page 13 and 14: Valuation “Quasi” Safe Harbor
Page 15 and 16: Valuation “Quasi” Safe Harbor
Page 17 and 18: Case Study • Emerging technology
Page 19 and 20: Scenario 1 • IPO likely in 2006 o
Page 21: Scenario 3 • Neither IPO nor sale
Page 25 and 26: Modifications and Extensions • Ex
Page 27 and 28: Remedial Measures • Alternative 1
Page 29 and 30: Accounting Considerations • AICPA
Page 31 and 32: GOODWIN PROCTER LLP Boston Exchange

Private Company Stock Options: Determining Fair Market Value in ...

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