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Rotman Canadian Woman Entrepreneur of the Year Awards:
Presented by BMO Financial Group
Celebrating More than a Decade of Entrepreneurial Excellence

TORONTO, November 13, 2002 --

With companies still reluctant to expense executive stock options, a new report by two finance professors at the University of Toronto's Rotman School of Management suggests that the methodology to determine the fair value of executive stock options set out by Accounting Standards Boards in the United States and Canada can be implemented with some enhancements.

In their report for Ontario Teachers' Pension Plan, Prof. John C. Hull, the Maple Financial Group Chair in Derivatives and Risk Management, and Prof. Alan S. White, the Peter L. Mitchelson/SIT Investment Associates Foundation Professor of Investment Strategy, say that their enhanced version of the valuation procedures suggested in Financial Accounting Standards Board Statement 123 overcome many of the objections of industry participants to those procedures.

"We believe it is possible to properly value options, contrary to popular opinion. Profs. Hull and White provide a practical approach to the valuation problem that can be used by any public company," says Brian J. Gibson, Senior Vice- President, Global Active Equities, Ontario Teachers' Pension Plan.

"The valuation methods suggested in FASB 123 seven years ago give reasonable results, but they can be improved upon," says Prof. Hull. "From a valuation perspective the most difficult feature of executive stock options is that they cannot be traded and tend to be exercised earlier than similar over-the-counter or exchange-traded options. We propose an approach for dealing with this."

The complete report is available at www.otpp.com/web/website.nsf/web/cghottopics. Software created by Prof. Hull and Prof. White for calculating the value of stock options can be downloaded from www.rotman.utoronto.ca/~hull/esops/. A further article on executive stock options written by Profs. Hull and White can be downloaded from www.rotman.utoronto.ca/~hull/downloadablepublications

Recently ranked by The Wall Street Journal and BusinessWeek among the best business schools in the world, the University of Toronto's Joseph L. Rotman School of Management offers leading-edge research and degree programs, including the prestigious Rotman MBA and Part-Time MBA programs, the One-Year MBA for Executives, a first-rate Doctoral program, the distinctive Master of Management & Professional Accounting program, the undergraduate Commerce program in partnership with the Faculty of Arts and Science, combined programs with the University of Toronto faculties of Law, Engineering and Nursing, and an innovative series of Executive Programs tailored to the current needs of businesses and individual managers.

The $68-billion Ontario Teachers' Pension Plan is one of Canada's largest financial institutions and a leading member of the Canadian Coalition for Good Governance. With a stellar track record of investment in Canada and worldwide, Teachers' has achieved an 11.7 percent average rate of return since its investment program began in 1990.

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For further information, please contact:

Ken McGuffin
Manager, Media Relations
Rotman School of Management
University of Toronto
105 St. George Street
Toronto, ON M5S 3E6
Voice: (416) 946-3818
Fax: (416) 978-1373
E-mail: mcguffin@rotman.utoronto.ca