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

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Best Practices • Consider likelihood and timing of IPO or sale event • Adopt valuation method, either appraisal or written report • Apply valuation method consistently • Reduce frequency of grants and vesting dates • Be careful of modifications • Consider increased use of restricted stock 30
GOODWIN PROCTER LLP Boston Exchange Place Boston, Massachusetts 02109 (617) 570-1000 New York 599 Lexington Avenue New York, New York 10022 (212) 813-8800 Washington, DC 901 New York Avenue, NW Washington, DC 20001 (202) 346-4000 www.goodwinprocter.com 31
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 and 22: Scenario 3 • Neither IPO nor sale
Page 23 and 24: Modifications and Extensions • Mo
Page 25 and 26: Modifications and Extensions • Ex
Page 27 and 28: Remedial Measures • Alternative 1
Page 29: Accounting Considerations • AICPA

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