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Chapter 8 — Employee Stock Purchase Plans

8.9 Look-Back Plans

8.9 Look-Back Plans

The guidance in this section applies to common types of ESPPs that have look-back features. The examples in the guidance illustrate how entities value ESPPs with look-back features and separate the award into components to estimate the fair-value-based measure (see Sections 8.9.1 through 8.9.5). For example, an ESPP that allows employees to purchase stock at a discount from the lesser of the market price on the enrollment date or the purchase date would be valued as two components: (1) a restricted stock award equal in value to the purchase discount and (2) an at-the-money stock option equal to the discounted purchase price.