Should have paid more attention in investments class. Quick question on how employee stock options are calc’d (ones you buy, not RSU/PSUs)....

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Assume $100k comp, 20% target for options grant, $5 FMV at time of grant
- I assumed the grant would be $20k/$5 = 4k shares
- Reading more, the plan states “quantity determinesld using Black Scholes.” The rough Black Scholes math tells me a $5 option is worth $1.80. That would mean the grant is actually $20k/1.8 = 11k shares

Quite the swing. Is that right?

In your assumptions, is $5 the FMV of the option or the company’s current stock price? Or something else?

Your terminology isn’t clear to me. An option that is already valued wouldn’t be put through B-S to get another value

Welcome to Wayfair

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