Black-Scholes Valuations

DLC Home|Webinars|Continuing Education|HR Resources|College Instructors|Training History|Order History

Course Number:22
Category:Executive Compensation
Field of Study:Taxes
Audience:Compensation Professionals, HR Managers, HR Generalists
Level of Difficulty:Advanced
Delivery Method:QAS Self Study
Prerequisites: Moderate algebraic training
Advanced Preparation:None
SHRM BASK:As defined by the SHRM Body of Applied Skills and Knowledge (BASK), this self-study course relates to competencies in Data Analysis with functional areas in Total Rewards.
OverviewWhile stock options are not as widely used as an element of compensation as they once were, they are still an important part of executive pay, especially for startups and tech companies compensating for lower salaries or creating an incentive for rapid growth. Stock options are particularly useful in aligning employees’ goals with those of the organization and can make up a significant portion of executive compensation. The Black-Scholes formula is used to place a “fair” value on stock options before they are exercised. It is important to be able to do this because accounting rules require that stock options be expensed based on their fair value at time of grant. Other reasons for valuing stock options before exercise would be for an executive to compare his current compensation with an offer from another company, valuing assets, and tax planning.
Learning Objectives:
  • Recognize the role of stock options in executive compensation
  • Identify the pros and cons for a company to use stock options for executive compensation
  • Differentiate between ISO (qualified) and NSO (nonqualified) stock options
  • Identify three ways to handle stock options that have reached their vesting date
  • Specify why obtaining the fair value of a stock option may be necessary
  • Identify the Financial Accounting Standards Board rules governing stock options
  • Define “intrinsic value” and “time value”
  • Differentiate between a European option and an American option
  • Identify the elements and assumptions of the Black-Scholes formula
  • Recognize how to obtain the risk-free interest rate and volatility measure of a stock
  • Differentiate between a call and a put option
  • Calculate a value (or values using different assumptions) using the Black-Scholes formula
Credit & Professional
Continuing
Education Information:

  • SHRM-CP/SHRM-SCP Credit Information:

    ERI Distance Learning Center is recognized by SHRM to offer Professional Development Credits (PDCs) for SHRM-CP® or SHRM-SCP® recertification activities. This program is valid for 2 PDCs for the SHRM-CP® or SHRM-SCP®. For more information about certification or recertification, please visit www.shrmcertification.org.

    SHRM Preferred Provider

  • aPHR/PHR/SPHR/GPHR Credit Information:

    ERI Distance Learning Center is a recognized provider of recertification credits. The HR Certification Institute® (HRCI®) has pre-approved this activity for 2 HR (General) credit hour(s) towards aPHR™, PHR®, SPHR®, and GPHR® recertification.

    HRCI Approved Provider
    HR Certification Institute’s® (www.HRCI.org) official seal confirms that ERI Distance Learning Center meets the criteria for pre-approved recertification credit(s) for any of HRCI’s eight credentials, including SPHR® and PHR®.

  • CCP/CBP/GRP/WLCP Credit Information:

    This online course qualifies for recertification credit for the Certified Compensation Professional (CCP®), Certified Benefits Professional® (CBP), Global Remuneration Professional (GRP®), and Work-Life Certified Professional (WLCP®) designations granted by WorldatWork Society of Certified Professionals. For more information on recertification, visit the Society website at www.worldatworksociety.org.

  • CPE QAS Self Study Credit Information:

    National Registry QAS Self Study - Course approved for 2 credit(s) in these states:

    Alabama, Alaska, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virgin Islands, Virginia, Washington, West Virginia, Wyoming

    Course approved for 2 credit(s) in Vermont

Start Free Course Buy Courses For Credit
Additional Information:
*The Course Credit List displays credits and credit types offered by location.
FAQs Policies
World at Work
CPE Sponsors - Registry
CPE Sponsors - QAS
CAC
CCC

The ERI Distance Learning Center is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: https://www.nasbaregistry.org/

ERI Economic Research Institute is recognized by SHRM to offer Professional Development Credits (PDCs) for the SHRM-CP® or SHRM-SCP®