Stock options continue in the news with an advisory board urging FASB to consider a different valuation model, and Microsoft coming out with an announcement that will significantly impact employees and recruits.

FASB Urged to Explore New Stock Option Valuation Model

As it struggles to define the best methods of stock option expensing for corporate America, the Financial Accounting Standards Board is turning to its own ad-hoc advisory board for advice and input.

The options valuation group that is advising FASB held its first meeting on July 8. At the heart of their discussion was exploring methods to estimate the cost of stock options, which has been the most contentious point in the debate between supporters and opponents of stock option expensing thus far.

"The group was encouraging using FASB to use a more robust method than the Black-Scholes model," said Paula Todd, a principal and executive compensation consultant with Towers Perrin and a member of the advisory panel.

Opponents of stock option expensing argue that there is no accurate method of valuing the expense, which would lead to widespread discrepancies in approaches across various industries. Technology companies have been in the forefront of using stock options as an incentive for employees.

Microsoft Announces an End to Stock Option Grants

In related news, Microsoft - the very definition of a company using stock options to incentivize employees - announced on Tuesday that it will no longer offer stock options as part of its incentive plan. Instead, Microsoft will give employees actual company shares - not the right to purchase those shares - as part of its hiring process and for annual reviews.

Outright stock rewards that Microsoft is shifting to have traditionally been reserved for executives only. But Microsoft has announced that the new program will be available to over 50,000 employees this September.

It is unknown whether other technology companies or other corporations will follow Microsoft's lead in making this change on ways to incentivize employees.