Principal Issues: The parent company (USCo) grants employee stock options to the subsidiary's (Canco's) employees. Canco reimburses USCo an amount equal to the fair value of the option at the grant date. Would the reimbursement constitute a benefit paid by Canco to USCo, such that Part XIII applied to the payment?
Position: No, however, the method used to compute the fair value may be reviewed.
Reasons: It would not be unreasonable for USCo to recoup the portion of the stock option benefit that it has effectively provided to the employees on Canco's behalf.