Zions last year used the Black-Scholes value of $15.02 for accounting purposes, Hill said. This year’s auction of ESOARS pegged to options with an $83.25 strike price resulted in a final auction value of $12.06. Hill indicated that this was significantly lower than the current Black-Scholes value, which he declined to divulge.
If you assume that the Black-Scholes formula would have resulted in a similar price today (this is a really bad assumption), they reduced their charge by $3/share or about 20%. If they offered a million shares they saved about $3M, I think.
It’s still not entirely clear where all the cash goes here. Expensing the ISOs is a non-cash expense, but I’m sure these securities are not cashless. If I get some time I’m going to poke around in those offering documents some more….