Rees Morrison’s Morsels #164: the long and the short of it

Value of equity awards. I heard recently that a “binomial calculation” is more complex than Black-Scholes but more accurate (See my post of Jan. 17, 2006: Black-Scholes formula uses standard deviations; Jan. 24, 2006: software to calculate the formula; July 25, 2007: the binomial method; July 27, 2007: the lattice-binomial method of valuation; and Jan. 20, 2009: restricted stock.). That compensation expert told me that as a rough rule of thumb the value of an option is 1/3rd of the stock price when awarded. He also mentioned FAS 127 and FAS 123r that promulgate rules about these calculations.

ACC membership numbers from Docket circulation. The ACC Docket Statement of Ownership, dated Oct. 20, 2011 and published in December (at 94), says that the organization averaged during the previous 12 months 24,153 “mailed outside county paid subscriptions.” (I’m not sure if copies mailed within DC, presumably the “county” of ACC, adds to that number.) They also averaged 2,819 “paid subscriptions outside the mails”. Doesn’t this suggest that the membership of the Association of Corporate Counsel was just above 24,000 during that period?

Complexity increase over time in software license agreements. SmartMoney, Feb. 2012 at 59, cites research by NYU School of Law on the elaboration of software license agreements. From 2003 until 2010, the average number of words in those agreements grew from 1,615 to 2,235. That increase of 38.4 percent in 7 years bespeaks the increasing legal concerns of software publishers – and perhaps the general trend for contracts to metastasize.

Detail on what is charged to legal budgets. Are U.S. law departments charged for employer taxes and matches to 401K contributions and various supplemental retirement plans? I note one other point I heard. Benefit loads used to be about 30 percent but now in many US companies have dropped closer to 20 percent as employers have phased out pension contributions and cut back on medical and other coverage. If the general counsel is charged for the benefits of the department’s employees, this would drop the budget a bit.

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