New York (April 2, 2004) -- The long-standing controversy over the expensing of stock options reached a feverish pitch this week, as critics and supporters rallied following the unveiling of the Financial Accounting Standards Board's exposure draft, which would require public companies to expense the stock options and other forms of share-based payments they award employees.
Proponents say options should be treated like other forms of compensation -- as an expense -- and say doing so will give investors more transparent information. Currently, companies aren't required to expense options and only need to note them in the footnotes to their financial statements. But critics maintain that expensing options will lead to lower profits, stifle innovation, and make it harder for companies to recruit and retain employees. And they contend that the methods for valuing options aren't accurate.
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