Employee Stock Options - NQSOs & ISOs Message Board

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Strategies & Market Trends : Employee Stock Options - NQSOs & ISOs

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To: rkral who wrote (741)	4/27/2005 3:24:08 PM
From: Stock Farmer	Read Replies (1) of 786

Ron, ref your question can anybody explain how [adoptiong SFAS 123R] results in gain... see p 13 under notes to financial statements. We early adopted SFAS No. 123(R) as of January 1, 2005, which requires measurement of compensation cost for stock-based awards at grant date fair value. The fair value of restricted stock and restricted stock units is determined based on the number of shares granted and the quoted price of our common stock, while the fair value of stock options is determined using a Black-Scholes valuation model. The fair value is recognized as an expense over the service period, net of estimated forfeitures, using the accelerated method under SFAS 123(R). Because we implemented SFAS 123(R), we no longer have stock awards subject to variable accounting treatment. The requirement of SFAS 123(R) to estimate future forfeitures resulted in a cumulative benefit from accounting change of $26 million which reflects the net cumulative impact of estimating forfeitures in the determination of period expense, rather than recording forfeitures when they occur as previously permitted.

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