Zions Bancorporation Completes Successful ESOARS Auction

On May 8, Zions Bancorporation successfully completed its auction of Employee Stock Option Appreciation Rights Securities (ESOARS). ESOARS are traded securities meant to track the value of employee stock options the bank has issued. Employees had received options at a strike price of $83.25. The lowest price paid for the ESOARS was $12.06 per unit. Twenty-one of the 43 bidders had their bids accepted. The ESOARS auction is being used to establish an accounting value for employee stock options the company has issued. Investors were asked to bid on a security whose value will track the actual value the options deliver to employees over time. The clearing price indicates a lower value for employee options than alternative option valuation methods would likely have yielded. Zions argues this method is more accurate because it uses the market to test how much buyers would be willing to pay for securities that have the same rights and terms as the options the employees are receiving.