Comments on: California Stock Option Plans Get Friendlier http://blog.jparkhill.com/2007/03/06/california-stock-option-plans-get-friendlier/ Business and Legal Notes, mostly Wed, 31 Mar 2010 15:12:39 -0700 http://wordpress.org/?v=2.9.2 hourly 1 By: Jay Parkhill http://blog.jparkhill.com/2007/03/06/california-stock-option-plans-get-friendlier/comment-page-1/#comment-72 Jay Parkhill Wed, 07 Mar 2007 15:08:14 +0000 http://blog.jparkhill.com/2007/03/06/california-stock-option-plans-get-friendlier/#comment-72 Good question. To my knowledge there is no discussion of 409A-like legislation at the California level. People are still trying to figure out exactly what 409A means and mostly just wishing it would go away, it seems to me. Early stage companies that have conducted an outside, professional-investor financing can often use that as a pretty good baseline for determining stock price. I have occasionally referred clients for official 409A valuation analyses, but most companies seem content to do the valuation in-house. The biggest trick is figuring out the proper discount of common to preferred stock- and I have found no strong consensus there. Good question. To my knowledge there is no discussion of 409A-like legislation at the California level. People are still trying to figure out exactly what 409A means and mostly just wishing it would go away, it seems to me.

Early stage companies that have conducted an outside, professional-investor financing can often use that as a pretty good baseline for determining stock price.

I have occasionally referred clients for official 409A valuation analyses, but most companies seem content to do the valuation in-house. The biggest trick is figuring out the proper discount of common to preferred stock- and I have found no strong consensus there.

]]> By: Bruce Brumberg http://blog.jparkhill.com/2007/03/06/california-stock-option-plans-get-friendlier/comment-page-1/#comment-71 Bruce Brumberg Wed, 07 Mar 2007 13:35:08 +0000 http://blog.jparkhill.com/2007/03/06/california-stock-option-plans-get-friendlier/#comment-71 Thank you for this blog posting. Useful to know about these upcoming expected changes in stock option laws. Is there any discussion of changes in the California tax code related to infamous IRC Section 409A for options that are considered discounted because they are either intentionally or unintentionally backdated? What are you recommending that very early stage and later stage start ups do to justify/show the reasonable fair market value of their exercise price to satisfy both IRC and California tax laws? Bruce Brumberg, Editor www.myStockOptions.com Thank you for this blog posting. Useful to know about these upcoming expected changes in stock option laws. Is there any discussion of changes in the California tax code related to infamous IRC Section 409A for options that are considered discounted because they are either intentionally or unintentionally backdated?

What are you recommending that very early stage and later stage start ups do to justify/show the reasonable fair market value of their exercise price to satisfy both IRC and California tax laws?

Bruce Brumberg, Editor
http://www.myStockOptions.com

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