期权期货及其他衍生产品第9版赫尔课件.ppt

Chapter 16Employee Stock Options Nature of Employee Stock Options Employee stock options are call options issued by a company on its own stock They are often at-the-money at the time of issue They often last as long as 10 years Options, Futures, and Other Derivatives, 9th Edition, Copyright © John C. Hull 2014 2 Typical Features of Employee Stock Options (page 355) There is a vesting period during which options cannot be exercised When employees leave during the vesting period options are forfeited When employees leave after the vesting period in-the-money options are exercised immediately and out of the money options are forfeited Employees are not permitted to sell options When options are exercised the company issues new shares Options, Futures, and Other Derivatives, 9th Edition, Copyright © John C. Hull 2014 3 Exercise Decision To realize cash from an employee stock option the employee must exercise the options and sell the underlying shares Even when the underlying stock pays no dividend an employee stock option (unlike a regular call option) is often exercised early Options, Futures, and Other Derivatives, 9th Edition, Copyright © John C. Hull 2014 4 Drawbacks of Employee Stock Options Gain to executives from good performance is much greater than the penalty for bad performance Executives do very well when the stock market as a whole goes up, even if their firm does relatively poorly Executives are encouraged to focus on short-term performance at the expense of long-term performance Executives are tempted to time announcements or take other decisions that maximize the value of the options Options, Futures, and Other Derivatives, 9th Edition, Copyright © John C. Hull 2014 5 Accounting for Employee Stock Options Prior to 1995 the cost of an employee stock option on the income statement was its intrinsic value on the issue date After 1995 a “fair value” had to be reported in the notes (but expensing fair value on the income statement was optional) Since 2005 bo