What expected volatility was used in the Black-Scholes-Merton option-pricing model for Caption By Hyatt in 2023?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
------------------------------------------------| | Outstanding at December 31, 2023 | 3,883,347 | $ 67.20 | 5.68 | | Granted | 223,410 | 156.97 | | | Exercised | (864,715) | 55.19 | | | Forfeited or expired | — | — | | | Outstanding at December 31, 2024 | 3,242,042 | $ 76.59 | 5.68 | | Exercisabl
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, the fair value of stock appreciation rights (SARs) was estimated using the Black-Scholes-Merton option-pricing model. The weighted-average grant date fair values for awards granted in 2024, 2023, and 2022 were $68.77, $48.54, and $37.56, respectively. The FDD does not provide the expected volatility used in the Black-Scholes-Merton option-pricing model.
Since the expected volatility is not disclosed, it is difficult for a prospective Caption By Hyatt franchisee to fully understand the assumptions used in determining the fair value of SARs. Stock options and SARs are often used as executive compensation, and their valuation can significantly impact the company's financial statements.
A potential Caption By Hyatt franchisee should consider asking the franchisor for the specific expected volatility used in the Black-Scholes-Merton model for 2023, as well as the other assumptions used, such as the risk-free interest rate, dividend yield, and expected term. Understanding these inputs will allow for a more complete assessment of the financial statements and the value of any stock-based compensation.