The Secret to Valuing Employee Stock Options

Method of Valuation of ESOP ≠ Valuation of Equity

There are Three Methods of Valuation
1. Monte Carlo Simulation
2. Black & Scholes Merton
3. Binomial Method

Valuation is required in the following 3 cases:

1. IndAS – Generally required at the time of Grant and Also at each reporting date in case of cash-settled options.

2. IncomeTax – Valuation of shares (not options) required by merchant banker Benefit treated as Perquisite

3. ManagementEvaluation – Valuation before granting ESOPs to assess impact

Want to know more about the valuations of ESOPs you can watch our webinar on YouTube