The Coming Expensing of Employee Stock Options

An anonymous reader writes "This accounting change will reverberate loudly throughout geekdom. "Users of financial statements...expressed to the FASB their concerns that (the current handling of stock options) results in financial statements that do not faithfully represent the economic transactions affecting the issuer, namely, the receipt and consumption of employee services in exchange for equity instruments. Financial statements that do not faithfully represent those economic transactions can distort the issuer's reported financial condition and results of operations, which can lead to the inappropriate allocation of resources in the capital markets." Taken from FASB Statement of Financial Accounting Standards No. 123 (Dec 2004). A FAQ has been published as well." Yes; the data is from 12/16/04, but this will be a huge change in how tech companies work.

Comments

Stock options don't pay the mortgage

[Zed2K]

Options also don't put food on the table, pay for heat and electricity or put gas in my car to get to the job that issued the options instead of cash.

Until the day comes where I can go to the grocery store and pay with stock options instead of cash they will continue to be worthless.

Re:Stock Options are not a panacea...

[juuri]

Actually you can excersize some of them, take the loss and lower your tax due in the next year. This can be extremely helpful if you need to lose just enough to drop down a tax bracket. With a little planning you can end up making more net after such a change in your taxable income.