FALL 2010PUBLIC & LARGE PRIVATE COMPANY EDITIONUnlocking the Complexity ofPerformance Units with TotalShareholder Return Requirements■ 34International Cost of Equity: The Science Behind the Art ■ 20A Proposed Accounting “Game Changer” with Respect to Leases ■ 42Separation Anxiety: Fair Value Implications of Issuing Debt and PreferredStock with Conversion Features and Other Options 47 ■
“…Companies are now introduced to unanticipated “tax paying” issues…” – Q&A, Page 133 Dear Clients and Friends: At SRR we work closely with public and large private companies to address a wide range of complex financial issues. Please take a look at the Table of Contents on page 2 to browse the full collection of recent articles from our firm. I have indentified a few pieces below that may be of particular interest to you. If you have any questions or comments, please contact me. Sincerely, Mr. Jay B. Wachowicz, CFA firstname.lastname@example.org ■ 248.432.1288 FEATURED ARTICLES34 Unlocking the Complexity of 42 A Proposed Accounting “Game Changer” Performance Units with Total with Respect to Leases Shareholder Return Requirements This article discusses the joint effort between U.S. Commonly employed ﬁnancial instruments such standard setters and their respective international as stock options and restricted stock awards have counterparts to dramatically alter the accounting advantages and disadvantages as contemplated by requirements associated with lease accounting. equity investors and employees. One of the more recent Given the magnitude of real property from an expense developments in this regard relates to the introduction structure standpoint, this article highlights various of performance units with total shareholder return issues associated with this asset class speciﬁcally. requirements. This article addresses the methodologies utilized to value performance units, as well as the 47 Separation Anxiety: Fair Value Implications associated value drivers. of Issuing Debt and Preferred Stock with Conversion Features and Other Options20 International Cost of Equity: Many early-stage or credit-starved ﬁrms often turn The Science Behind the Art to convertible bonds or similar instruments to entice As companies continue to expand operations to investors while limiting the near-term cash ﬂow burden locations throughout the world (including certain of interest payments. While convertibles can provide emerging markets), the measurement of country risk the issuer much needed capital and operational has become a key element of a valuation. This article ﬂexibility, they can also create accounting and valuation discusses the various methodologies used to estimate challenges at issuance, as well as in subsequent an appropriate cost of equity for foreign countries. reporting periods.
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63 Alternative Techniques in 101 Court Once Again Addresses Valuing Real Estate Portfolios Insufficient Support for Damages 83 Jeffrey G. Pelegrin, Award in a Patent Case Christopher P. Casey, and John R. Bone, Erich W. Kirr, Joseph L. Torzewski and Allen Burt68 In Re Sunbelt Beverage Corp. Shareholder Litigation: 05 83 Auditing Self-Reporting A Delaware Fair Value Agreements Case Analysis John R. Bone and Timothy F. Cummins Jason T. Wright71 When the Chain Breaks… Assessing Damages in Cases 86 Building a Best in Class 105 Applying the Structured Involving Disruptions to Complex Corporate Compliance Program Settlement Concept to Divorces Supply Chains Glenn C. Sheets James M. Godbout, Glenn C. Sheets and Daniel T. Carroll – AVITAS Jacob M. Reed Financial, and John M. 90 McCulloch – AVITAS Financial74 Guest Article: Fraud Risk Management in the Banking Industry 109 Guest Article: Reviewing Estate Andrea J. Steinkamp – Guest Plans in Connection with Divorce Contributor and Tina B. Solis – Joan K. Crain – BNY Mellon Ungaretti & Harris, LLP 90 Managing Occupational Wealth Management Fraud Risks 113 The Taxing Side of Divorce Michael N. Kahaian and Mary V. Ade 79 Jason T. Wright 116 Guest Article: Family Office 94 Proactive Planning for Challenges and Solutions E-Discovery Challenges for Sustainability Scott T. Wrobel and Michael P. Benetta Park Jenson – Hindelang – Honigman Miller Bessemer Trust Company, N.A.79 Making E-Discovery Work for Schwartz and Cohn LLP You in International Arbitration 121 Reasonable Compensation: A David N. Paris and 99 “Fundamentally Unsupported by Key Issue in Marital Dissolution Tomoko Tatara the Facts”: Eighth Circuit Affirms Justin L. Cherfoli and Dismissal of Financial Expert Christopher P. Casey Neil Steinkamp 125 In Case You Were Wondering… Mary V. Ade 128 A Preliminary Look at SRR’s Restricted Stock StudyWe welcome any comments, suggestions, or questions. Please refer to the end of each article for the individual Aaron M. Stumpf andauthor contact information. Robert L. MartinezThe SRR Journal is intended for general information purposes only and is not intended to provide, and should notbe used in lieu of, financial, accounting, legal or other professional advice. The publisher assumes no liability forreaders’ use of the information herein and readers are encouraged to seek professional assistance with regard tospecific matters. All opinions expressed in these articles are those of the authors and do not necessarily reflect theviews of Stout Risius Ross, Inc. or Stout Risius Ross Advisors, LLC.The SRR Journal is also available online at www.srr.com.SRR is a trade name for Stout Risius Ross, Inc. and Stout Risius Ross Advisors, LLC,a FINRA registered broker-dealer and SIPC member firm.