During every financial year, the company needs to take the value of the vested options during the year and account for this in the company books as employee compensation expense. Now, how do you value these options for the annual accounting? The answer is the valuation certificate. This is typically a share valuation certificate that can be obtained from a CA or Merchant Banker. Note however that some companies (though rare) also use an option valuation certificate (Black Scholes model) instead of share valuation certificate for the annual expenses (in P&L accounts).