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(a) NONCOMPENSATORY AND COMPENSATORY PLANS The APB Opinion No 25 provides that a plan must have the following four characteristics in order to be considered as noncompensatory: 1 Substantially all full-time employees meeting limited employment quali cations may participate (employees owning a speci ed percentage of the outstanding stock and executives may be excluded) 2 Stock is offered to eligible employees equally on the basis of a uniform percentage of salary or wages (the plan may limit the number of shares of stock that an employee may purchase through the plan) 3 The time permitted for exercise of an option or purchase right is limited to a reasonable period 4 The discount from the market price of the stock is no greater than would be reasonable in an offer of stock to stockholders or others Because Opinion No 25 refers to a plan that quali es under Section 423 of the US Internal Revenue Code as a noncompensatory plan, which permits discounts of up to 15 percent, such a plan has the characteristic required under item 4 Further, for a stock option with an exercise price xed at the date of grant, a discount of the exercise price of no more than 15 percent from the stock price on that date is reasonable for application of item 4 Section 423 of the US Internal Revenue Code permits a quali ed employee stock purchase plan to contain a look-back option A look-back option, for example, is a provision in an employee stock purchase plan that establishes the purchase price as the lesser of the stock s market price at the grant date or its market price at the exercise (purchase) date Because Opinion No 25 states that a plan that quali es under Section 423 is noncompensatory, a plan with a look-back option quali es as noncompensatory under Opinion No 25 A compensatory plan is any plan that does not have all four characteristics of a noncompensatory plan It should be recognized, however, that awards granted under compensatory plans do.

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Hormonal Therapy after Menopause contraindications can be determined at the time of writing (November 2005) [14,37,40,41] Phyoestrogens may slow the rate of bone loss, but fracture risk reduction has not been demonstrated [14,19,37] Alpha-adrenergic agonists, such as clonidine, are moderately effective in relieving hot ushes High doses of progestogens (5 10 mg norethisterone acetate (NETA), 20 40 mg MPA or megestrol acetate/day) effectively reduce hot ushes Longterm safety on the breast has not been demonstrated [14,19] Neuroactive drugs, eg selective serotonin receptor inhibitors (SSRIs), are able to relieve vasomotor symptoms with moderate ef cacy and may be tried for short periods when HT is contraindicated or not desired [42] Recent reports, including a RCT in 420 breast cancer patients [43], suggest that gabapentin, an antiseizure medication, reduces hot ushes Bisphosphonates can be used to treat osteoporosis, especially in older postmenopausal women with a history of osteoporotic fracture [14,19,37] Selective estrogen receptor modulators (SERMs), such as raloxifene, are licensed for the prevention and treatment of spinal osteoporosis in postmenopausal women They have not been shown to reduce hip fracture risk In early postmenopausal women, SERMs are not able to reduce the vasomotor symptoms and may make them worse [14,44] Preliminary evidence suggests that they may reduce breast cancer risk

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39 9

not necessarily result in recognition of compensation expense by the employer An employer recognizes compensation expense with respect to awards granted pursuant to a compensatory plan only if the application of the measurement principle results in the determination of compensation cost (b) MEASUREMENT OF COMPENSATION: GENERAL PRINCIPLE Paragraph 10 of APB Opinion No 25 sets forth the following measurement principle for the measurement of compensation cost related to stock option, purchase, and award plans:

merous bene cial effects, if prescribed soon after the menopause, when the window of opportunity potentiates its bene cial impact on likely healthy organs and tissue HT involves some additional risks of venous thromboembolic disease, stroke, and breast cancer after long-term therapy The incidence of these risks is evaluated as rare or very rare, according to CIOMS criteria The need to continue with treatment and the indications for HT should be reviewed regularly when used in the long term Constant updating is required in the rapidly evolving eld of menopausal management

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Measurement Principle Compensation for services that a corporation receives as consideration for stock issued through employee stock option, purchase, and award plans should be measured by the quoted market price of the stock at the measurement date less the amount, if any, that the employee is required to pay If a quoted market price is unavailable, the best estimate of the market value of the stock should be used to measure compensation The measurement date for determining compensation cost in stock option, purchase, and award plans is the rst date on which are known both (1) the number of shares that an individual employee is entitled to receive, and (2) the option or purchase price, if any

When both of the factors speci ed in paragraph 10 of APB Opinion No 25 are known at the grant or award date (ie, a xed award), total compensation cost for an award is measured at the grant date However, when either or both of these factors are not known at the grant or award date (ie, a variable award), an employer should estimate total compensation cost each period from the date of grant or award to the measurement date based on the quoted market price of the employer s capital stock at the end of each period This latter point is clari ed in FASB Interpretation No 28, which de nes the compensation related to variable plan awards as:

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