Increasingly, companies are turning to employee stock options to meet the challenge of aligning the interests of employees and shareholders. These stock options, however, create some difficult issues: Stock options represent a significant claim against companies that should be reflected in their valuations, but valuing employee stock options is very complex. Fortunately, in this Research Foundation of CFA Institute monograph, Mark Lang presents an excellent framework for valuing these claims by balancing the obligation of the company to fund outstanding options and future grants with the benefits arising from the incentive effects of options.