How Might Companies Value ESOs?

There has been a steady growth in the use of employee equity compensation plans, and in the use of executive stock options (ESOs) in particular, along with a rise in shareholder and public perceptions that the values of compensation plans are not always fully disclosed. The IFSA of Australia recently called for separate reporting in financial statements of numbers and values of ESOs. Companies, when negotiating employment contracts, frequently agree to compensate an executive if a share option plan is subsequently not approved by shareholders. These facts suggest that reporting the value of an ESO plan is a useful and important exercise. We outline a model for the valuation of ESOs typically issued by Australian listed companies and illustrate the application of the model with a case study.     

Right atrial abnormality

Occasionally, a prominent P wave is encountered in a life insurance applicant's electrocardiogram. Prominent P waves may be normal variants or alert the medical director to prognostically significant structural heart or pulmonary disease. This case study reviews the commonly used criteria for the ECG pattern of right atrial abnormality and some of the pitfalls associated with its use.     

Left axis deviation

Left axis deviation is one of the most commonly encountered ECG abnormalities. Its presence should alert medical directors and underwriters to the possibility of underlying structural heart disease. Many of the causes of left axis deviation are apparent from the clinical findings. Left anterior fascicular block is one of the commonest causes of left axis deviation and has specific ECG criteria for its diagnosis.     

Poor R-wave progression

Poor R-wave progression is a common ECG pattern, which is often inconclusively interpreted by medical directors. Although this ECG pattern is commonly attributed to anterior myocardial infarction, it may also be caused by left bundle branch block, Wolff-Parkinson-White syndrome, right and left ventricular hypertrophy as well as by faulty ECG recording technique. Failure to make a definitive interpretation of this pattern may result in a delay or loss of business.     

Price and margin rigidity in deflation: The great depression

The major hypothesis tested in this paper states that rigid price-cost margins in concentrated industries are an important cause of price rigidity. According to this view, while prices in all industries change with unit variable costs, prices in concentrated industries, where unit margins are rigid, change less than those in unconcentrated industries, where unit margins are more flexible. Three earlier and conflicting studies of price behavior in The Great Depression (1929–33) are reexamined. When these studies are subject to the same or similar tests, it is found that price rigidity is identified with concentration in the period considered.