A market driven way to value unmarketable employee stock options

Zions Bancorp Auctions Market-Valued Employee Stock Options

Here is a Dow Jones article about the offering:

"An innovative Internet securities auction by Zions Bancorporation (ZION), set for Wednesday and Thursday, may provide an attractive opportunity to investors, but if it does, that could undermine the entire purpose of the auction. Bidding opens at 9:30 a.m. EDT for an offering of “Esoars,” a derivative security designed to mimic the value of employee stock options. Zions isn’t making the offering in order to profit directly, but instead hopes to create an accounting tool that will allow companies to reduce their reported expense for granting stock options. Zions intends to profit by selling that tool.

The Securities and Exchange Commission, which will ultimately decide the validity of Zions’ proposed accounting technique, has said that a market-based method may be preferable to traditional options accounting models. “The SEC suggested they wanted a market price, and we are giving them the opportunity to see a market price,”

The valuation of ESO using the market based method can vary significantly from the standard Black-Schole method. For the Zoins ESOs that the price will fall somewhere in a range of about $5 to the low teens versus $16 using Black-Scholes.

New call for hedonic damages? Emotional distress damages can not be taxed

From the THE ASSOCIATED PRESS
Tax code on emotional damages tossed

WASHINGTON -- The federal government may not tax the money plaintiffs receive as compensation for emotional distress and other intangible injuries, a federal appeals court said Tuesday.... it could mean the end of tax bills following a variety of trials, from civil rights disputes to employment discrimination cases.

The court ruled that such awards, like the$70,000 judgment for emotional distress and injury to reputation following a 1994 whistleblower case against the New York Air National Guard that lead to the decision, were not income but "compensation for the loss of a personal attribute." In that sense, they are akin to awards for physical injuries, which are tax exempt, the court said.

Illegal aliens can recover lost U.S. wages

In Balbuena v. IDR Realty LLC, New York State's highest court, The New York Court of Appeals, declined to bar illegal aliens who are plaintiffs in personal injury lawsuits from recovering wages lost as a result of their injuries.

The Washington Legal Foundation (WLF), as defendants in other similar cases have argued, argued that such awards are preempted by federal law because they undermine federal immigration policy by encouraging more illegal aliens to enter the country.

The court did not agree with the WLF.

BACKGROUND ON THE CASE:

This personal injury tort suit was filed by Gorgonio Balbuena, an illegal alien who was
severely injured while working for Taman Management Corp. Balbuena’s right to recover for his injuries and medical expenses was notchallenged; but Balbuena also claimed that he was entitled to recover the wages he could have earned in this country had he not been injured.

The intermediate appellate court held that he should be able to recover lost wages based on the average wages a similarly skilled worker earns in his native Mexico. Both sides appealed from that decision.

A copy of WLF’s brief is posted on its web site, www.wlf.org.

Should Forensic economists experts do independent background checks?

In lost profits cases and business interuption cases, it is routine for the economist to perform a thorough search into the background of the business. Economists in these cases at a minumum will search thru pages and pages of websites to look at the nature of the business, public news, and search public records.

In injury, death, and employment cases, unless the information is brought to the attention of the expert, this type of search is not done for the target of the lost earnings analysis.

However, should this be done?

More an more information about a person's background, such as criminal history, is easily accessible on the web. For instance, in a post at Gritsforbreakfast, Texas Jail Inmate Locators Online, he found a website that list arrest record sources for all 50 states ( this page ) on ancestorhunt.com, a genealogy site. Other information, like it or not, is fairly easy to obtain.