Armed with a private, independent valuation analysis, the Council of Institutional Investors has lobbied the Securities and Exchange Commission to rescind its endorsement of a derivative instrument invented by Zions Bancorp to establish market values for stock option grants.
Jeffrey Mahoney, the CII’s deputy chief counsel, recently met with officials of the SEC’s Office of the Chief Accountant to present the findings of a study the Council commissioned to examine more closely whether Zion’s employee stock option appreciation rights (ESOARS) adequately tracks the underlying stock option to establish a reliable value. The analysis, conducted by Compensation Valuation Inc., concluded that the Zions derivative and auction process does not fulfill the conditions necessary to establish a reliable market value.
