Why would a company want to electronically communicate with optionees?
What types of electronic systems do most companies already use for option plans?
What types of companies should consider electronically communicating with optionees?
What are examples of companies electronically communicating with optionees?
What delivery obligations does a company have as a result of its stock option plan?
What are obstacles to companies implementing electronic communication?

B. Electronic Signatures for Option-Related Documents

Why are some option-related documents required to be signed?
What is an "electronic signature"?
When are "e-signatures" legally enforceable to establish a binding contract?
What steps can a company take to reduce the risk of an unenforceable e-signature?

C. Stock Option Award Agreements and Other Option Documents

Is a company required to have stock option award agreements?
Should a company have stock option award agreements?
What is an "electronic award agreement"?
Should a company use electronic award agreements rather than paper?
What is a "negative response" award agreement?
Which jurisdiction's laws govern the enforceability of a signature?
Should companies have optionees encrypt their electronic signatures?
Should a company retain and archive award agreements?
Can companies permit optionees to electronically submit a notice of exercise or designate beneficiaries?

D. Electronic Signature Authorization Agreements

What is an "electronic signature authorization agreement"?
Can an electronic signature authorization agreement be retroactively applied?
Can an electronic signature authorization form supersede laws that require manual signatures?

E. Registration and Delivery of Option Prospectuses

When are options required to be registered with the SEC?
When must a company register the common stock that underlies the options it has granted?
Why must companies deliver a prospectus to optionees regarding the underlying common stock?
What is in an option prospectus?
Will the SEC allow a company to electronically deliver a prospectus?
How can a company electronically deliver an option prospectus?
Can a company electronically deliver to optionees that do not have electronic medium access?
Can companies use multimedia in their option prospectus?

F. Use of Captive Brokers to Facilitate Electronic Administration

What is a "captive broker"?
Why would a company use a "captive broker"?
How is the captive broker arrangement managed?
How can captive brokers facilitate compliance with blackout periods?

G. Electronic Recordkeeping

How can companies assist optionees to keep track of their option terms?
How does the European privacy directive impact how a company electronically collects data about optionees located outside the U.S.?

H. Electronic Education of Optionees

How can companies assist optionees to understand how their options work?
Which Web sites can help educate optionees about their options?
What are the risks when companies assist optionees to understand how their options work?

A. Understanding Electronic Plan Distribution and Communication

Why would a company want to electronically communicate with optionees?

Plan administration can create a mountain of paperwork. Electronic communication can streamline the process of collecting information from optionees - as well as delivering information to them.

This should save time and money. Electronic communication also can enhance the reliability of plan records - since there is less paper to lose.

What types of electronic systems do most companies already use for option plans?

Electronic recordkeeping systems.

Most companies use database software to maintain easily accessible records of the terms of their option grants. Several vendors offer off-the-shelf software for this purpose, including E*Trade's Equity Edge and CMS Express Options for Windows.

Electronic communication is much more complex than electronic recordkeeping. It involves electronically collecting information for the database over the network - as well as using the database to effect electronic communications. Vendors normally cannot easily offer off-the-shelf systems for electronic communication - since a company's unique network requires a customized system.

What types of companies should consider electronically communicating with optionees?

For electronic communication to be cost-effective, a company probably should have at least several thousand optionees and adequate in-house technical support.

The pioneers of electronic communication relied on their in-house programming ability to develop and maintain their own systems - and have adequate funds in their plan administration budgets to integrate their networks, intranets and optionee databases.

Any company can relatively inexpensively implement an electronic recordkeeping system - since there are numerous off-the-shelf products. See more @ electronic recordkeeping systems.

What are examples of companies electronically communicating with optionees?

Adobe Corp. is virtually paperless. From its human resources intranet, Adobe employees can access all option and employee stock purchase plan documents and forms (and these documents also are available from a company library from its captive broker). Optionees receive grant agreements via e-mail who then return them with their digital signatures (every Adobe employee has digital signature training). Adobe has integrated its stock option administration software with its e-mail program - so that it can easily batch process the grant agreements. Note that optionees can request a paper copy of a plan document at any time - although they rarely do.

Peoplesoft has an electronic signature authorization form (which has survived litigated attacks) that employees must manually sign when they are hired. Based on this authorization, employees access their option grant agreements and enroll in an employee stock purchase plan via an intranet. The intranet also has all plan documents and forms.

Source: Additional examples of what the pioneers are doing are in "Electronic Delivery of Stock Plan Documents - What Companies are Doing," The Corporate Executive (Sept.-Oct. 1999).

What delivery obligations does a company have as a result of its stock option plan?

The answer to this question depends on the terms of the stock option plan - as well as the requirements of federal securities and tax laws. ERISA does not apply since stock option plans are not pension or welfare benefit plans.

Documents that companies deliver include:

Option prospectus (which normally includes a copy of the stock option plan itself) - a company is required to deliver a prospectus before an employee exercises any options (but it's wise to deliver them when an employee first becomes an optionee) - as well as to deliver any material amendments to the plan - see more @ option prospectus delivery.
Grant or award agreement - each time options are awarded, most companies voluntarily deliver these agreements to reflect the terms of the options.
Regular account balance statement - many companies voluntarily provide this statement on a cycle that corresponds to when it grants options (e.g. if there are annual grants, they provide annual statements).

What are obstacles to companies implementing electronic communication?

From a practical perspective, technological and budgetary considerations are the primary obstacles. See more @ what types of companies should consider electronic communication with optionees.

From a legal perspective, the uncertain legal status of electronic signatures may deter companies from eliminating paper records and communication - since stock plan administration is replete with documents that require signatures, such as award agreements and notices of exercise. This status should be cleared up as e-signature federal legislation is further interpreted and understood. See more @ e-signatures.

B. Electronic Signatures for Option-Related Documents

Why are some option-related documents required to be signed?

Thousands of laws require signatures for agreements to be binding, including the common law "Statute of Frauds" (which is codified in nearly every jurisdiction).

Most companies require that optionees sign some option-related documents - but some companies do not require any signatures at all. See more @ examples of companies electronically communicating with employees.

What is an "electronic signature"?

Due to its relatively recent origins, there is much confusion over what is an "electronic signature." Companies should check the definition of the term in applicable jurisdictions.

Unfortunately, the definition of "electronic signature" can vary widely in each law - sometimes even within the same jurisdiction! The definition of "electronic signature" can range from a simple "any type of symbol created electronically" to a complex formula that requires the use of specific technology (e.g., public key cryptography for digital signatures).

The federal E-Sign Act preempts most state laws requiring manual signatures. State laws may only modify E-Sign's requirements if they adopt a version of the Uniform Electronic Transactions Act (and other limited circumstances). As state legislatures adopt a version of the UETA, the E-Sign Act no longer preempts those state laws and differences between state laws will exist.

Source: On June 30, 2000, President Clinton signed the Electronic Signatures in Global and National Commerce Act (S. 761) into law as described in a E-Law Alert on Baker & McKenzie's Web site at www.bmck.com/ecommerce/E-SIGN_Act.htm.

When are "e-signatures" legally enforceable to establish a binding contract?

E-signatures can be legally enforceable and establish a binding contract - if a document is executed in a jurisdiction with laws that specifically create that effect.

Today, e-signature legislation is pending or already adopted in almost every jurisdiction - on a state, federal and international level. Unfortunately, lawmakers are not using uniform legislative approaches; bills range from minimalist to highly regulatory models.

The federal E-Sign Act preempts most state laws requiring manual signatures on an interim basis - until a state adopts a version of the Uniform Electronic Transactions Act. As state legislatures adopt a version of the UETA, the E-Sign Act no longer preempts those state laws and differences between laws will exist.

As of Winter 2002, about 20 states had adopted a version of UETA, with 9 state bills pending. One state (Colorado) has rejected a UETA bill.

The E-Sign Act does not address which state law governs a contract (so contracts should still have governing law provisions) - it also does not address where the contract was "formed" for purposes of personal jurisdiction (which is difficult to determine with an electronic signature process).

Source: McBride, Baker & Coles' Web site has a summary of e-signature legislation at www.mbc.com/ecommerce.html (note that the site is not always up-to-date, but it does identify when it was last updated). UETA was drafted by the National Conference of Commissioners on Uniform State Laws. Baker & McKenzie has a list of which states have proposed or adopted a version of UETA at www.bmck.com/ecommerce/uetacomp.htm

What steps can a company take to reduce the risk of an unenforceable e-signature?

Some companies ask employees to execute an electronic signature authorization agreement - which is a contractual agreement between the parties to recognize the validity of an electronic signature in the contexts set forth in the agreement (i.e. all option-related documents). See more @ electronic signature authorization agreements.

Another possible solution is to include a choice of law provision in a stock option plan - so that e-signature validity is determined in a friendly e-signature state. However, this provision may not stand up in court if neither the employee or the company has any connection with the state selected.

C. Stock Option Award Agreements and Other Option Documents

Is a company required to have stock option award agreements?

No - unless award agreements are required by the terms of a stock option plan.

No law requires that companies use award agreements - but many do. According to a 1998 survey, 15% of the responding companies did not use award agreements. Award agreements also are known as grant agreements.

Source: The survey is the 1998 NASPP/PriceWaterhouseCoopers Stock Plan Design and Administration Survey.

Should a company have stock option award agreements?

It depends on the company's level of comfort with litigation risk.

An award agreement serves as a contract with an optionee. Even though an optionee receives an award subject to the plan's terms, it may prove more advantageous to a company in a courtroom if the optionee has more clearly acknowledged the plan's terms - particularly any vesting requirements or forfeiture provisions (which are the most litigated provisions).

What is an "electronic award agreement"?

These award agreements allow an optionee to use an e-signature for execution. These agreements are normally e-mailed to optionees or reside on a Web site or intranet for an optionee.

Should a company use electronic award agreements rather than paper?

It depends on the company's level of comfort with the risk of whether electronic signatures are valid. This risk is reduced by the adoption of federal e-signature legislation in 1998. See more @ electronic signatures.

Some companies may be willing to bear the risk to counter the overwhelming volume of paperwork generated by paper-based award agreements. In addition, a surprising number of optionees are slow to sign and return paper-based award agreements - even when they know they will not receive their awards until they sign!

Electronic communication can improve this process by streamlining award agreement distribution and collection - and by facilitating reminders to optionees to electronically sign and return the agreements.

What is a "negative response" award agreement?

It provides an optionee with a specific period of time to object to a term in an option grant - otherwise, the optionee is deemed to accept the option's terms.

Negative response award agreements allow companies to avoid the administrative headache of collecting the award agreements. These agreements do not require optionee signatures to be considered valid by the company - but there is a risk that a court will not consider them to be binding contracts without a signature. However, a company can argue that the stock option plan itself is enough to govern the optionee.

Which jurisdiction's laws govern the enforceability of a signature?

It's not completely settled - but it's likely the law of the state in which an optionee signed the document.

In the paper world, it may be difficult to prove where a document was signed - but it's much easier to pinpoint where an e-signature was executed, since there likely will be an electronic trail of evidence.

Should companies have optionees encrypt their electronic signatures?

It depends on a company's comfort with risk - but the risk that someone will pretend to be an optionee to accept or deny the terms of an award agreement is probably not that great, particularly if a system is properly designed.

However, a company may want to encrypt optionee communications - particularly confidential matters (e.g. how many options have been awarded to an optionee).

Should a company retain and archive award agreements?

Yes - since the primary purpose of using them is for protection in the event of litigation.

However, just as there are no legal requirements to have award agreements at all - there are no retention requirements. See more @ whether companies are required to use award agreements.

Can companies permit optionees to electronically submit a notice of exercise or designate beneficiaries?

Yes - assuming that the company's stock option plan does not require that these notices must be submitted on paper. No law impacts how or if these notices should be used or retained.

However, companies probably face an insurmountable obstacle if the plan requires a third-party signature on a notice (such as a spouse, beneficiary or witness) - it's extremely difficult to establish a reliable and secure process to collect electronic signatures from individuals who do not have access to the company's network.

D. Electronic Signature Authorization Agreements

What is an "electronic signature authorization agreement"?

A contractual arrangement between an employee and its employer that states that the employee's e-signature is valid for certain purposes. Typically, these purposes relate to the employment relationship, including matters pertaining to stock plan administration.

Companies should require optionees to manually sign these agreements - so that there is at least one manual signature to bolster an argument that the company has the ability to enforce e-signatures. Although there still is some uncertainty, this may be unnecessary now - since federal e-signature legislation makes it likely that e-signatures are enforceable. See more @ the E-Sign Act.

Can an electronic signature authorization agreement be retroactively applied?

Perhaps - it depends on whether the applicable state law interprets "signature" to include actions that indicate an optionee intended to retroactively adopt an e-signature.

If the law does allow retroactive application, the agreement should state that it covers e-signatures provided by an optionee prior to its manual signature on the electronic signature authorization agreement.

Source: For example, the UCC has provisions that allow retroactive adoption - these provisions define a "signature" as a symbol intended to represent or adopt a statement.

Can an electronic signature authorization form supersede laws that require manual signatures?

It depends on the law and how it's interpreted.

Some laws likely will be interpreted as requiring a manual signature under every circumstance - particularly if the law is closely enforced by an administrative agency (e.g.. ERISA). Although there still is some uncertainty, it may be unnecessary now to worry about this issue - since federal e-signature legislation makes it likely that e-signatures are enforceable in most contexts. See more @ the E-Sign Act.

E. Registration and Delivery of Option Prospectuses

When are options required to be registered with the SEC?

Not often. Option grants do not have to be registered if they are a pure award - since this is not considered a "sale" that must be registered under the federal securities laws.

However, if the optionee is providing any consideration in exchange for the options, such as services in addition to what the optionee already is providing as an employee - this may be a "sale" that would require the options to be registered before the grant.

Note that the common stock underlying the options must always be registered - even if the options themselves don't have to be. See more @ registration of underlying common stock.

When must a company register the common stock that underlies the options it has granted?

Before any optionee exercises options granted under the plan - and an optionee is required to receive a prospectus before exercising an option.

Note that the prospectus relates to an optionee's investment decision to exercise an option, not the grant itself (unless there is some consideration given for the grant). See more @ when are options required to be registered.

Since most plans allow optionees to exercise options under circumstances that could occur sooner than expected (e.g. death), most companies register the underlying common stock as soon as possible after they grant options - and not wait until the first vesting period approaches.

Source: Telephone Interpretation No. 61 under "G. Securities Act Forms" sets forth the SEC staff's position requiring employee stock options to be registered before they are exercised, regardless of when they become exercisable. This position is more liberal than for options that are freely transferable (i.e., they must be registered before they become exercisable), primarily due to the SEC's recognition that the employer/employee relationship provides employees with some level of protection that a non-employee stockholder does not have.

Why must companies deliver a prospectus to optionees regarding the underlying common stock?

Because optionees make an investment decision as to whether to exercise their options - so an "offer" is made by the company of the underlying common stock when it grants an option. The prospectus should be delivered before an optionee exercises an option - so it's wise to deliver the prospectus when an employee first becomes an optionee. See more @ what are the delivery obligations under a stock option plan.

Section 5(b) of the Securities Act of 1933 prohibits the sale of a security - unless the seller delivers a prospectus before or at the same time of the sale. See more @ registering stock underlying an option.

In addition, Rule 428(b)(1)(i) of Regulation C also requires a company to deliver a prospectus to optionees.

What is in an option prospectus?

It consists of any single - or combination of - documents that a company believes has the appropriate content to satisfy the requirements in Form S-8.

A typical option prospectus consists of:

the option plan,
the award agreement, and
a cover letter (which includes content that satisfies any requirements in Item 1 of Form S-8 that is not met by the other documents delivered).

A company must label each document - or selected sections within a document - designating them as part of the prospectus. Since the prospectus is not filed with the SEC, the rule requires companies to retain a copy of the option prospectus for five years.

Source: The requirements for an option prospectus are in Rule 428 of Regulation C.

Will the SEC allow a company to electronically deliver a prospectus?

Yes - under the right circumstances. The SEC has issued electronic delivery guidance for documents required to be delivered to stockholders, including optionees.

The SEC's guidance enables companies to deliver documents electronically more easily to employee-stockholders than other types of stockholders. The guidance presumes that employees with access to an electronic medium (e.g., the Web, an intranet, or e-mail) will accept electronic delivery - so long as they are expected to routinely check that medium or have electronic communications regularly printed out and delivered to them. See more @ electronic delivery to employees.

Non-employee stockholders (or employees who do not fall within the presumption) must first consent before a company can meet its delivery obligations through electronic delivery. See more @ consents to electonic delivery.

All stockholders - including employee-stockholders - must always be given the option of requesting a paper copy.

If a company decides to use an electronic signature authorization agreement, it may want to include a provision for optionees to consent to electronic delivery - this would resolve any uncertainty as to whether the company can rely on the employee-stockholder presumption in the SEC's guidance.

Source: The SEC's electronic delivery guidance is in Release 33-7233 (October 6, 1995), Release 33-7288 (May 9, 1996) and Release 33-7586 (May 4, 2000). Example 1 in Release 33-7288 (May 9, 1996) illustrates the SEC's position that companies can presume that employees consent to electronic delivery in certain circumstances.

How can a company electronically deliver an option prospectus?

For optionees that have access to e-mail, the simplest way to deliver an option prospectus is to send e-mails to optionees with an embedded link to a prospectus that is posted on a Web site or an intranet. If some optionees don't have electronic access - they should be provided with paper copies.

Note that unlike prospectuses for other types of public offerings, an option prospectus is not filed with SEC - so a link to a company's Form S-8 on the SEC's Web site is not helpful. See more @ ability to link to documents to satisfy delivery obligations.

Source: Example 8 of Release 33-7233 (October 6, 1995) illustrates how a company can use e-mail to deliver a SEC document if an investor consents.

Can a company electronically deliver to optionees that do not have access to an electronic medium?

No. It will have to provide paper documents to them.

Companies also have to deliver paper documents to optionees who may not be reasonably expected to access the electronic media that the companies offer. See more @ electronic delivery to employees.

Some companies have overcome the lack of electronic medium access by installing kiosks in a central work area to provide employees with access to an intranet and e-mail.

Can companies use multimedia in their option prospectus?

Yes - the SEC allows companies to use multimedia in their SEC documents.

For filing purposes, a company must file a script of the multimedia content with the SEC in its registration statement - and must retain documents that contain the multimedia itself for a period of five years (unless the multimedia consists of the types of graphs that EDGAR can handle). See more @ filing multimedia documents with the SEC.

Not all optionees must receive the multimedia version of a prospectus. In other words, employers can have multiple versions of an option prospectus (including a paper version and a multimedia version with different content) - so long as each version meets the regulatory disclosure requirements and the multimedia version discloses that a different version exists. See more @ using different versions of a SEC document.

Source: The SEC illustrated how multimedia can be used in a prospectus in Example 13 in Release 33-7233 (October 6, 1995). The SEC illustrated how multiple versions of a prospectus can be used in Example 7 in Release 33-7288 (May 9, 1996).

F. Use of Captive Brokers to Facilitate Electronic Administration

What is a "captive broker"?

A broker selected by a company through whom optionees must make transactions involving their options. In other words, optionees must exclusively exercise options and trade the underlying stock through the captive broker.

Some companies offer optionees a choice of several captive brokers - any of whom may be full-service, discount or e-brokers.

Why would a company use a "captive broker"?

Primarily for administrative convenience - it's easier for a stock plan administrator to interact with one or two brokers, rather than twenty.

Optionees must open their own retail accounts with the captive broker before conducting any transactions with their options - even if they already have a regular trading account with that broker. Then, optionees can access the captive broker's password-protected Web site (in which each company has its own dedicated Web page) - which typically contains educational information as well as recordkeeping information (such as the terms of each option granted).

How is the captive broker arrangement managed?

In most cases, a company and its captive broker execute a service agreement that sets forth the obligations of the parties.

Although typically not spelled out in the service agreement, companies may be able to obtain a commission discount for optionees who trade through the captive broker.

How can captive brokers facilitate compliance with blackout periods?

With one phone call to its captive broker, a stock plan administrator or in-house counsel can cut off employees who may possess material non-public information from exercising options.

Of course, companies may need to take additional action to warn these employees not to trade securities outside of their captive broker accounts.

It's not uncommon for a company to ask its captive broker to permanently block Section 16 insiders from exercising or trading - until the broker has express authorization from in-house counsel or the stock plan administrator for a particular transaction.

G. Electronic Recordkeeping

How can companies assist optionees to keep track of their option terms?

By enabling optionees to keep track of the key terms of their option awards (e.g., vesting and expiration dates) through intranets, interactive voice response systems or a captive broker's password-protected Web page.

Some of these systems allow real-time electronic transaction recordkeeping, including tracking disqualifying dispositions of incentive stock options for tax purposes.

How does the European privacy directive impact how a company electronically collects data about optionees located outside the U.S.?

It can have a big impact. Transfers of personal data about an employee located in Europe to an employer's headquarters in the U.S. may violate the European privacy directive (or more specifically, the laws in certain European countries that have been enacted to comply with the directive) - even if the transfer occurred through the employer's internal network.

In the 1995 directive, the European Union defined a general right of privacy which member nations must abide by in their legislation, rules and regulations - as well as their industry codes and professional rules.

The directive allows data transfers relating to European citizens of a member nation to another country only if the other country provides for an adequate level of protection for the data - and the U.S. has not provided the level of protection necessary to comply with the European privacy directive.

This approach to regulating data privacy differs markedly from the U.S. government's approach - so it has been controversial in the U.S.

Source: The European Privacy Directive is on The Privacy Page Web site at www.privacy.org/pi/intl_orgs/ec/eudp.html.

H. Electronic Education of Optionees

How can companies assist optionees to understand how their options work?

Options are more valuable for optionees if they understand how they work - and electronic communication can be a key component of this education, particularly if it uses multimedia.

Techniques to encourage employees to educate themselves about their options include:

brochures on an intranet that generally explain how options work,
access to online financial services and investment and research tools, and
interactive games and quizzes.

Which Web sites can help educate optionees about their options?

Numerous Web sites that provide general option-related information are available, including:

MyStockOptions (www.mystockoptions.com) is one of the most useful Web sites for optionees. Not only does it contain a host of resources to educate employees about how options work; it also allows optionees to maintain records of their own options. Visitors must register to access most of the MyStockOptions content, but registration is free. The site includes numerous articles written by journalists, professors, lawyers and other professionals and hundreds of option-related "FAQs." The site also allows interactive communication in its "Discussion Forum" as well as in its "Ask Our Experts" section (in which anyone can e-mail a query).
In "My Records," optionees can keep track of their own options in an encrypted environment, including grant date, exercise price and vesting schedule. Based on this data, optionees can then use "Calculators" and "Modeling Tools" to determine what their options may be worth over time. MyStockOptions allows its site to be private labeled or co-branded by financial service, brokerage, and consulting firms. Companies can also customize the site with various features, ranging from including their logos to posting of their stock plan documents.
OptionWealth (www.optionwealth.com) has developed some interesting and powerful tools for optionees - it has a suite of four tools that previously had been available only to senior management. OWL Tracker is a portfolio management tool that provides countdowns and alerts for important dates. OWL Forecaster uses sophisticated Crystal Ball technology to assist optionees to make projections and build strategies. This technology not only allows simulation, but helps optionees understand error limits. The OWL Strategy Room allows optionees to consider various tax situations in deciding what to do with their options. OWL Optimizer is a more complete financial planning tool, allowing optionees to evaluate their alternatives, taking into account their own financial situation, to optimize their net worth. Anyone can access these tools by paying an annual fee. Some companies pay the fee for all of their optionees.
My Critical Capital (www.mycriticalcapital.com) provides free analytical tools from the perspective of what an optionees' needs are. The site focuses on helping optionees make decisions using what the founders call the "Critical Capital Strategy." The Critical Capital Calculator uses bar graphs for optionees to easily see what their Critical Capital needs are, while comparing those needs to an employee's total assets (including vested options). The Critical Capital Planner allows optionees to formulate projections of how to achieve their capital raising needs through option exercises (i.e. how many options they may need to exercise to accomplish a specific goal). The site also has financial advice content - including strategies based on an optionee's financial life cycle.
One of the oldest stock option Web sites is Stock-Options.com (www.stock-options.com) sponsored by a broker and financial planner, Krieger, Ruderman & Co. This site, which has had several thousand visitors over three years, is a useful and simple Web site with an options worth calculator and a rating system that assists optionees to determine whether to exercise their options at a certain point in time. To access these items, a visitor must register with the site, which is free. However, any visitor can access the site's Discussion Forum, even without registering as a member.
The National Center for Employee Ownership (www.nceo.org) is a non-profit organization with a rich Web site filled with columns, publications, and interactive training tools. These materials focus primarily on ESOPs, but the site does have a "For Stock Options Only" Web page with an index of stock option publications, surveys and articles that can be ordered online as well as free teaser articles.
MyInternetOptions.com (www.myinternetoptions.com) offers services to determine the value of an option. Some services are free, such as basic calculations involving options that expire within 12 months and an Excel sheet calculator. There also is a free weekly newsletter. More sophisticated services require a fee (e.g., $99 to value one option). These services use a high-end calculator and involve the professional advice of a broker.
StockOptionsCentral (www.stockoptionscentral.com) has earnings calculators and information on taxation of options. It is one of three Web sites hosted by Financial Cyber Sites.com (which is operated by a semi-retired financial advisor).

What are the risks when companies assist optionees to understand how their options work?

Too much employer assistance can raise investment advisor or unregistered securities issues.

It's important that companies find a balance between facilitating education and encouraging investing. Companies should be particularly careful not to advise employees to buy or sell the employer's securities (or when to do so).

For example, if a brochure is drafted so that it touts the company's securities - it may be deemed an offer of the company's securities that was not accompanied or preceded by a prospectus filed with the SEC. See more @ problems with electronic communications becoming "offers."

In addition to "scrubbing" educational content to ensure that it does not market the company's securities, companies should use disclaimers on their intranet and e-mails to inform optionees that any information provided is for educational purposes only. See more @ how to use disclaimers.