Archive for 2013

On the eve of the high-profile Twitter IPO last week, Senators Carl Levin (D – Michigan) and John McCain (R – Arizona) issued a joint statement calling for the elimination of the corporate tax deduction (“loophole”) for share-based compensation of employees at fair value. Invoking the federal deficit and the horror of the “sequester,” these gentlemen further stated that the “Joint Committee on Taxation has estimated that ending this tax break would raise $23 billion for the US Treasury.”

Now, we’re ...

As part of our Share-Based Payment (SBP) Best Practice Series, Montgomery Investment Technology is pleased to provide you with our research which focuses on the valuation techniques and disclosures based on the 2012 10-K and DEF14A filings of the Dow Jones Industrial Average companies. We have compiled a two page report illustrating how the Dow 30 companies are complying with Accounting Standards Codification 718 (formerly FAS 123R) and what forms of Share-Based Payments each company provides. This report ...

Montgomery Investment Technology is pleased to bring you a series of White Papers which explain the structure, risks, and rewards of employee stock options from the point of view of the recipients (participants in a stock option award program). In the first installment, we explain how an employee stock option works and point out the key features which should be understood by every recipient. The second installment discusses the value represented by an employee stock option as compared ...

For the past five years, US equities have been on a stunning uptrend, with the S&P 500 Exchange Traded Fund (ETF: SPY) increasing from 94.55 for the week of June 1, 2009 to 164.80 for the week of June 3, 2013. This move has been good news for recipients of employee stock options (ESOs) and other forms of share-based payment. Recent comments by Federal Reserve Chairman Ben Bernanke have been met with dramatic responses in both equity and ...

Much has been said about some of the high profile IPOs in recent years (Zynga, Facebook, Groupon, LinkedIn) questioning whether the tax deduction that the corporations are receiving is justifiable when the companies have a pre-tax income.

Facebook is an excellent example. Pre-tax, they managed to swing to a profit. After income taxes, they are to receive an approximately $500 million refund.

There are a couple of reasons for this situation:

Net Operating Loss carry ...

Equity Compensation is a vehicle for paying employees, directors and other consultants for work they perform for an organization. The most popular form of Equity Compensation is the Employee Stock Option (ESO).

ESOs come in two major forms that companies need to be aware of prior to making grants to their employees through an equity compensation plan. The types of employee stock options are Incentive Stock Options (ISOs) and Non-Qualified Stock Options (NQs).

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