As you might know, FASB tentatively concluded that stock-based compensation should be recognized as an expense in income statements and the amounts should be recorded at their fair value measured as of the date of the granting of the awards. This is a significant change in the accounting treatment of stock options. Draft rules should be released later this year with a final standard that is expected by 2004.

The decision is clearly a reaction to the clamor for more transparency in financial statements and mirrors what a number of Fortune 500 companies have already voluntarily decided to do.

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