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Employee Stock Options Must be Treated as Expenses
currivan writes "In a move that's been in consideration for a long time, the Financial Accounting Standards Board (FASB) approved new rules requiring employee stock options to be treated as expenses for reporting purposes. One of the reasons so many tech companies have given options to IT/engineering workers is that until now, they haven't counted against profits in quarterly reports. If markets were truly efficient, this wouldn't make a difference, but in reality, the tech industry is strongly opposed to the rule, though it should please Warren Buffett."
What this is going to do is make companies not want to give out stock options to their employees.
There is no cost to the company to issue stock or even stock options (unless they decide not to issue more stock but buy on the open market). So this should be reported as a loss. Yes issuing more stock devalues the current stock, but there are a number of regulations out there to make sure everyone knows the company is going to issue more stock.
Now that they'll have to record a loss it will make the company look like it is doing poorly. Thus a big reason not to issue any more stock.
This is just an attempt by big government anti-free-market types to make it harder for the little guy to become rich and to perpetuate the old employee vs. employer fight. If all of the employees are owners this fight is less likely to happen and there is less of a need for these silly government and union bureaucracies.