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Share-Based Compensation

Minimize risk and uncertainty, and maximize transparency, in your financial and tax reporting.

The new flexible share-based compensation standard is complex, and choices made can have a significant impact on a company’s financials.  There are many assumptions and tough decisions that management must make.  Expertise - and to a greater extent, independence - are essential.

American Appraisal is recognized as a preferred solution provider for valuing share-based compensation, whether for financial or tax reporting.  Each year, we help private and public companies manage their compensation expenses by providing sound valuation services.

When do I need a valuation?
Valuation services may be required when firms have issued the following types of securities:

  • Employee stock options
  • Stock appreciation rights
  • Restricted stock units
  • Performance-based restricted stock units with embedded market conditions
  • Other derivative securities

Our services

  • We provide valuation services on a global basis for virtually every public and private market sector.  Our qualified staff is skilled in the valuation of financial instruments and can help manage the aspects of the underlying models.  Broadly speaking, we provide the following compensation-related valuation services:
  • Assistance in complying with worldwide accounting standards including ASC 718 and IFRS 2
  • Valuation of underlying securities, including stock, units and assets, and/or the value of derivative instruments referencing the securities
  • Benchmark studies, including volatility, risk-free rate and forfeitures, to assist with your internal valuation procedures
  • Development of supportable assumptions
  • Determination and application of appropriate valuation models

Valuation techniques
Valuations of share-based compensation and equity awards for ASC 718 and Section 409A purposes often rely on numerous assumptions and variables, and may require complex modeling using sophisticated software to determine their fair value.  Applying the right model is essential for capturing the conditions and features of the options or restricted units.

American Appraisal has experience using a wide range of techniques, including:

  • Black-Scholes
  • Binomial lattice
  • Monte Carlo simulations

We do not work alone.  We work with you to fully understand the conditions and features of your company and securities.  Continuous communication with you, your auditor and your advisors is the key to working efficiently.  We are familiar with audit standards; many of our consultants have substantive Big 4 audit firm experience.  This knowledge simplifies SAS reviews undertaken by our Clients’ auditors.

Financial reporting has been subject to interpretation and re-interpretation, with the SEC, FASB, IASB and PCAOB leading the charge for change.  “Reduce complexity, increase overall understandability and compel transparency” is the mantra; convergence of accounting and valuation is the mandate. 

American Appraisal’s approach to valuation helps companies comply with transparency and reporting requirements.  We simplify financial reporting by appropriately recognizing Clients’ accounting requirements as well as their business imperatives. 

We are independent.
American Appraisal focuses exclusively on valuation and related solutions.  Our objectivity is highly valued by our Clients and their audit committees. We approach every engagement with one goal: minimizing risk and uncertainty.

  • This is our only business.
  • We are independent of other attest, rating agency, investment banking or other conflicts.
  • Our independence ensures the sustainability of conclusions, thereby avoiding the potential for subsequent reclassification of the expense and/or restatement of your operating statements.

We are glocal.

  • American Appraisal, the world’s only truly glocal valuation firm™, comprises 900 employees operating from major cities throughout Asia-Pacific, Europe, and North and South America.
  • Approximately 60% of the firm’s revenue originates and is earned outside of the United States.

We are experts.
Breadth and depth of expertise eliminates the need to rely on subcontractors.  Our Consultants have the experience necessary to value virtually any business interest, tangible or intangible asset.

  • Focused on and committed to valuation since 1896
  • Professional chairmanships include the Appraisal Issues Task Force and the Appraisal Standards Board (the FASB of our profession)
  • Unrivaled interaction with key valuation-standard-setting agencies including ASA, FASB, IASB, IVSC, AITF and PCAOB
  • Rounded exposure through working with Big 4 audit/valuation teams
  • Credentials include CPA, CFA, ASA and ABV

We are focused on Client needs.
American Appraisal is employee owned.  We are not merely involved in valuation; we are unequivocally committed to meeting Client needs.   On every engagement, direct Client access to the firm’s senior management is always the norm, never an exception.

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