After four months, the Securities and Exchange Commission has already revisited its rule on disclosing executive compensation.In a statement issued Dec. 22, SEC Chairman Christopher Cox said that the new requirements will make it easier for companies to prepare statements and for investors to understand the cost of stock options.

As adopted in late July, the rule would have required companies to include the value of unvested stock options in executive pay disclosures beginning in 2007. The changes now require only the cost of vested options -- those an executive can currently exercise -- to be accounted for as an expense.

Investor advocates and the incoming chairman of the House Finance Services Committee, Rep. Barney Frank, D-Mass., have already spoken out against the change. But the SEC’s statement noted that how companies disclose stock option awards will now conform more closely to the Financial Accounting Standards Board rule, which requires recognition of the costs of equity awards over the period in which an employee works for the award. Stock options often vest three to five years after being granted.
The announcement comes as the SEC, the Department of Justice and the Internal Revenue Service continue investigations into the possible manipulation of stock options grants at more than 150 companies.

The SEC will solicit comment on the rule amendments for 30 days after publication in the Federal Register. The rule can be viewed at

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