Stock Options Valuations (409A)

Today’s regulatory environment demands that stock options be managed correctly, which involves various valuation issues. The valuation analyst must have a working knowledge of stock option plans, in addition to business valuations, to be able to take into consideration unique factors that options present. The valuation team at ASL has extensive knowledge in the design and administration of stock option plans, including valuation of the options, and can guide you through the regulations that exist.


With the issuance of Section 409A of the Internal Revenue Code, public and private companies must now follow specific rules on the granting and valuation of stock options. If they fail to follow the rules outlined by Section 409A, the optionees will be at risk for an immediate tax on their options, including an additional 20% penalty tax. Section 409A relates to the income tax aspects of the granting of options, rather than the expensing of options compensation costs in the financial statements.