Frequently asked questions about the Black-Scholes OPM | support.carta.com

How the Black-Scholes OPM is used in your valuation

Black Scholes Overview

The Federal Accounting Standards Board (FASB) requires that all companies must expense the value of the share based compensation issued to their employees in accordance to ASC 718 (formerly known as SFAS No. 123).

While ASC 718 does not express a preferred valuation method, the SEC suggests the valuation method should adhere to the following:

• Is applied in a manner consistent with the fair value measurement objective and the other requirements of ASC 718.

• Is based on established principles of financial economic theory and generally applied in that field.

• Reflects all substantive characteristics of the instrument.