Share-Based Payment > Best Practice Series									ESO Valuation Disclosure - Dow 30 for FY2013						www.fintools.com
				Expected	Contractual	Expected	Vesting	ESO Fair	Exercise	Forfeiture	Valuation	Granted	Interest	Dividend
Symbol	Company Name	HQ	Auditor	Volatility	Term (y)	Term (y)	Period (y)	Value ($)	Multiple	Rate	Model	(millions)	Rate	Yield	Comments
MMM	3M Co	MN	PwC	20.00%	10	6.3	3	13.46			Black-Scholes	6.220	1.20%	2.70%	Exp Vola - avg of recent 1 year vola; Exp Term based on weighted avg of hist grants
AXP	American Express Co	NY	PwC	39.00%	10	6.3	4	21.11			B-S-M	0.463	1.30%	1.40%	Exp Vola based on hist and Implied vola; Exp Term based on hist data and expectations
T	AT&T Inc	TX	E&Y	-	-	-	-	-			-	-	-	-	No ESOs granted in 2013
BA	Boeing Co/The	IL	Deloitte	29.00%	10	6.0	3	15.85			Black-Scholes	6.699	1.00%	2.60%	Exp Vola based on hist and implied vola
CAT	Caterpillar Inc	IL	PwC	30.60%	10	8.0	3	28.34			Lattice-Based	4.276	1.88%	2.10%	Exp Vola based on hist and current implied vola from trade options on our stock
CVX	Chevron Corp	CA	PwC	31.30%	10	6.0	3	24.48			Black-Scholes	13.190	1.20%	3.30%	Exp Vola based on hist vola; Exp Term based on hist exer and post-vest cancellation
CSCO	Cisco Systems Inc	CA	PwC	-	-	-	-	-			-	-	-	-	No ESOs granted in 2013 but Employee Stock Purchease Plan awards were granted
KO	Coca-Cola Co/The	GA	E&Y	17.00%	10	5.0	4	3.73			B-S-M	56.000	0.90%	2.80%	Exp Vola based on hist and implied vola; Exp Term based on hist exer behavior
DD	EI du Pont de Nemours & Co	DE	PwC	34.86%	7	5.3	3	10.40			Black-Scholes	5.758	1.00%	3.60%	Exp Vola based on blended historical and implied vola
XOM	Exxon Mobil Corp	TX	PwC	-	-	-	-	-			-	-	-	-	No ESOs granted since 2003
GE	General Electric Co	CT	KPMG	28.00%	10	7.5	5	4.52			Black-Scholes	62.762	2.50%	4.00%	Exp Vola based on hist and implied vola; Exp Term based on hist exer behavior
GS	Goldman Sachs Group Inc/The	NY	PwC	-	-	-	-	-			-	-	-	-	No ESOs granted since 2010
HD	Home Depot Inc/The	GA	KPMG	26.30%	10	5.0	4	13.10			Black-Scholes	1.704	0.80%	2.20%	Grants both Incentive and Non-Qualified Stock Options
INTC	Intel Corp	CA	E&Y	25.00%	7	5.2	4	3.11			Black-Scholes	20.100	0.80%	3.90%	Exp Vola based on implied vola; Exp Term based on hist option exercise data
IBM	International Business Machines	NY	PwC	-	-	-	-	-			-	-	-	-	ESOs not granted for the past 3 yrs, o/s ESOs valuated with BS, 4-year vesting
JNJ	Johnson & Johnson	NJ	PwC	14.04%	10	6.0	4	4.88			Black-Scholes	29.010	1.01%	3.40%	Exp Vola 4-yr daily hist vola, 5-week avg implied vola of 2-yr opts; Exp Term hist exp
JPM	JPMorgan Chase & Co	NY	PwC	28.00%	10	6.6	5	9.58			Black-Scholes	46.171	1.18%	2.66%	Exp Vola based on implied vola; Dividend (forward-looking)
MCD	McDonald's Corp	IL	E&Y	20.60%	10	6.1	4	11.09			Closed-Form	3.700	1.20%	3.50%	Exp Vola based on hist vola; Expected Term based on historical trends
MRK	Merck & Co Inc	NJ	PwC	25.00%	10	7.0	3	6.21			Black-Scholes	5.703	1.20%	4.20%	Exp Vola based on hist and implied vola; Exp Term based on hist and fore exer behavior
MSFT	Microsoft Corp	WA	Deloitte	-	-	-	-	-			-	2.000	-	-	Grants Options primarily in conjuction with business acquisitions, stock awards granted
NKE	NIKE Inc	OR	PwC	35.00%	10	5.3	4	12.71			Black-Scholes	14.600	0.60%	1.50%	Exp Vola based on implied vola;Exp Term based on hist and expected future patterns
PFE	Pfizer Inc	NY	KPMG	19.68%	10	6.5	3	3.13			B-S-M	45.013	1.16%	3.45%	Exp Vola based on Blended hist and implied vola
PG	Procter & Gamble Co/The	OH	Deloitte	15.00%	10	8.9	3	8.19			Binomial Lattice	24.820	1.80%	2.90%	Exp Vola based on Blended hist and implied vola
TRV	Travelers Cos Inc/The	NY	KPMG	28.80%	10	6.0	3	17.09			Black-Scholes	1.863	1.14%	2.26%	Exp Vola range 28.7-28.8%; Int Rate range 1.11-1.14%;
UTX	United Technologies Corp	CT	PwC	27.00%	10	7.6	3	19.91			Binomial Lattice	0.309	1.90%	2.60%	Exp Vola based hist and implied vola-26-27%; Exp Term-7.3-7.6 years; Int Rate-0.1-1.9%
UNH	UnitedHealth Group Inc	MN	Deloitte	43.00%	-	5.3	-	19.00		5.00%	Binomial	8.000	1.60%	1.60%	Exp based on hist and Implied vola
VZ	Verizon Communications Inc	NY	E&Y	-	-	-	-	-			-	-	-	-	No ESOs granted since 2004
V	Visa Inc	CA	KPMG	29.30%	10	6.1	3	39.03			Black-Scholes	0.579	0.80%	0.90%	Exp Term based on peer companies, Exp Vola based on hist and implied vola
WMT	Wal-Mart Stores Inc	AR	E&Y	15.20%	10	3.3	5	15.27			B-S-M	3.688	0.40%	2.50%	Exp Vola based on hist vola; Exp Term based on hist exercise and expiration activity
DIS	Walt Disney Co/The	CA	PwC	26.00%	10	-	4	12.38	1.41	2.70%	Binomial	8.000	1.80%	1.60%	Exp Vola based on Blended hist and implied vola
	Average Calculations			26.42%	9.727	6.147	3.636					15.4428	1.23%	2.68%
	Minimum			14.04%	7.000	3.300	3.000					0.3090	0.40%	0.90%
	Maximum			43.00%	10.000	8.900	5.000					62.7620	2.50%	4.20%
Key
B-S-M:  Black-Scholes-Merton		Closed-Form: Model or formula similar to B-S-M					Hist Vola: Historical Volatility			ESOs: Employee Stock Options
SOEF:  Sub Optimal Exercise Factor		Exp Vola: Expected Volatilty					Exp Term: Expected Term
Source: Company 10-K Reports and DEF 14As for FY2013
Prepared by: Jinyi Wang, Yingwen Chen and Chunhui Hao
Date: October 31, 2014
© Montgomery Investment Technology, Inc.