FASB Begins Final Draft of Stock Options Expensing Rule

Despite opposition, the Financial Accounting Standards Board is moving ahead with a rule that would require companies to book stock options as a business expense.

The accounting rule-maker decided last week to begin the final draft of the rule, which was first proposed in March and sparked a deluge of response, the Wall Street Journal reported. Supporters, which include the Securities and Exchange Commission, say the rule would give a truer picture of the company’s finances. Opponents are mainly technology companies that use stock options as a form of compensation to attract top talent to start-ups.

Congress got into the act last month, when the House of Representatives voted 312 to 111 to limit expensing options to only the company's top five executives. The legislation forbids expensing for rank-and-file workers, and calls for economic impact studies by the Commerce and Labor departments.

The bill now goes to the Senate, where a resolution was passed to "protect the independence and integrity" of the FASB.

Employees with stock options are allowed to buy stock at a specified price sometime in the future. Companies normally issue them at the market price of their stock on the date of issue. Options are worth nothing unless the stock price rises above the price on the issue date.

The FASB also decided to move ahead on a rule that would change how companies account for certain types of bonds — a type of debt security that can be paid off in shares. Companies usually pay off bondholders in cash, but companies are allowed to issue new shares to bondholders in lieu of cash if the bond has a share-settlement option.

You may like these other stories...

Credit Suisse says pension assets at risk unless court delays sentencingJohn Letzing of the Wall Street Journal reported on Wednesday that Credit Suisse Group AG says its management of billions of dollars in assets for...
The prospect of International Financial Reporting Standards (IFRS) being fully adopted in the United States in the near future are growing less likely, as the Financial Accounting Standards Board (FASB) and the International...
House proposes $10.5B, eight-month highway billThe House Ways and Means Committee proposed a transportation funding bill on Tuesday that calls for a temporary extension of current transportation funding levels until May 31,...

Upcoming CPE Webinars

Jul 16
Hand off work to others with finesse and success. Kristen Rampe, CPA will share how to ensure delegated work is properly handled from start to finish in this content-rich one hour webinar.
Jul 17
This webcast will cover the preparation of the statement of cash flows and focus on accounting and disclosure policies for other important issues described below.
Jul 23
We can’t deny a great divide exists between the expectations and workplace needs of Baby Boomers and Millennials. To create thriving organizational performance, we need to shift the way in which we groom future leaders.
Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.