Present-value approach that courts use to value stock options in dissolution case requires the court to measure the present value of a stock option and award the aggrieved party a lump-sum cash award at the time of dissolution, and when calculating the stock options’ present value under this approach, the Black-Scholes formula is the most widely known model, and it is a complex method that reflects the interrelationship between market value and exercisability by taking into account eleven different variables; two other models, the Shelton model and the Kassouf model, rely on regression analysis of historical relationships among economic variables to estimate statistically the expected value of the option.
Laura Morgan is a Family Law Consultant. Laura is available for consultation, brief writing and research on family law issues throughout the country. She can be reached through her website. www.famlawconsult.com