Options: Cutting Through The Thicket

摘要

First, the good news. With investors railing against overly generous employee stock-option programs, some 270 companies―many of them well-known―have promised to include the cost of options in their bottom lines. Every week, more companies are coming aboard. The bad news? Corporations may choose from among any of four methods to calculate these costs, undermining "the comparability and usefulness of financial statements in the near future," says David Bianco, valuations and accounting analyst at UBS Warburg. Accounting's rulemaking body, the Financial Accounting Standards Board (FASB), has promised to clear up the confusion next year, when it plans to issue yet another accounting standard. FASB has vowed to require companies to put the cost of options on the income statement―right now, it's required only in the footnotes―despite opposition from many of the high-tech companies that have awarded generous options packages in the past.