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For additional ISS information about the new options valuation product announced in the press release below, see:

Institutional Shareholder Services (ISS), February 6, 2007 press release

Press Release Source: Institutional Shareholder Services

Institutional Shareholder Services Launches Options Expensing Alert
Tuesday February 6, 9:30 am ET

Investors Can Now Evaluate the Quality of Companies' Option Valuation Disclosures

ROCKVILLE, Md., Feb. 6 /PRNewswire/ -- Institutional Shareholder Services (ISS), the world's leading provider of corporate governance and proxy voting services, today announced the launch of its Options Expensing Alert, a comprehensive, impartial source of stock option expensing data and analysis. With companies now required to account for stock option grants as an expense under FAS 123R, investors face a critical need for a consistent method to evaluate the accuracy of companies' option valuation methods. ISS' Options Expensing Alert helps investors identify aggressive and conservative valuation practices and assess the impact of companies' expensing assumptions on the quality of their disclosed earnings.

The alert provides institutional investors with key grant information and assumptions for companies' stock option expense disclosures under FAS 123R, as well as a recalibrated option expense based on a uniform methodology. The model used in ISS' recalibration methodology is the Hull-White lattice pricing model, which explicitly accounts for employee behavior in exercising their options, and was pointed out by the Financial Accounting Standards Board (FASB) as the preferred model for options valuation in FAS 123R.

Using the Hull-White model, together with uniform volatility assumptions derived from the RiskMetrics Group's open-source risk methodology, allows ISS to provide investors with accurate and consistent values for employee stock option grants. The coverage universe for ISS' Options Expensing Alert includes the entire S&P 500 as companies make their new disclosures under FAS 123R.

"FAS 123R has improved disclosure around stock option expensing; however, investors must still closely review the options pricing model assumptions for companies with a significant option expense," said Patrick McGurn, ISS' Executive Vice President and Special Counsel. "Companies on average are disclosing option expenses that are 29 percent lower than calculated by our methodology. But, more importantly for investors, there is a lot of variation out there. We're seeing ISS-adjusted values that range from 84 percent higher than reported, to 7 percent lower than reported."

To learn more about ISS' Options Expensing Alert, including a white paper outlining preliminary findings and an overview of ISS' valuation methodology, please visit:

About Institutional Shareholder Services

ISS, the world's leading provider of corporate governance and proxy voting solutions, is a subsidiary of RiskMetrics Group. Founded in 1985, ISS provides proxy research, voting services and corporate governance advisory services to financial institutions and corporations worldwide. Together, ISS and RiskMetrics Group help investors manage across multiple classes of interrelated risk. ISS is headquartered in Rockville, Maryland with offices in Washington DC, Amsterdam, Brussels, Chicago, London, Manila, Melbourne, New York, Paris, Tokyo and Toronto. For more information on ISS, visit


Source: Institutional Shareholder Services





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