Supported Accounting Standards

Under FAS 123, companies that offer equity-based compensation plans must report the fair value of plan-related compensation in their financial disclosure statements. Stock Administration provides the tools and reports that you need to comply with these requirements.

The system supports two standards for reporting the value of equity-based compensation:

• FAS 123, which specifies that companies must report the fair value of stock options and stock purchases as of their grant dates.

• APB 25, under which companies can report the intrinsic value of equity-based compensation.

  Companies that comply with APB 25 must still make pro forma disclosures of net income and, if publicly traded, earnings-per-share, as though they had adopted FAS 123.

PeopleSoft Stock Administration uses the widely-accepted Black-Scholes option pricing model to calculate the fair value of stock options and stock purchases granted within the system. Black-Scholes uses six inputs in its valuation calculation. Four of these inputs are stored in the system or can be estimated by running reports that gather and calculate historical data.