Should Companies Expense Stock Options?

A reader writes : "The New York Times is running a story about proposed accounting changes to force companies to expense stock options. Is this a necessary and proper oversight measure to enforce financial discipline on companies that might otherwise have none? Or would this measure basically stop companies from offering fiduciary responsibility incentives to their employees? What do you think about this? What should the final decision be? And what measures should be taken to influence the decision-making process?"

Comments

Yes

[ckim]

Yes I think companies should. It prevents insider trading.

Inconsistency

[jkabbe]

The bigger proglem than expensing/not-expensing is the inconsistency that arises between how they treat options on their quarterly earning statements versus how they treat options when filing corporate income taxes.

Companies have said that they don't want to expense options until a standard method is decided upon but that hasn't stopped them from taking options as an expense on their taxes. What a bunch of liars.

At least some (all?) companies put the options in a footnote so you can easily determine "real" earnings if you're the expensing type.

Who cares

[doormat]

The greedy companies will just find other ways around to compensate w/o it showing up. CEOs, Presidents and Boards of Directors all enjoy a cozy "Boys Club" atmosphere and there isnt much that will change that attitude.