In my entire working life, I’ve never been granted a stock option. Now, endless debates could ensue as to whether this is a good or bad thing, but I’m afraid I don’t draw a large enough salary for it to matter either way. And to be honest, I’m not certain my life has suffered because of it.

But, as I’ve discovered, there are plenty of people who hold options in rather high esteem. And, over the past 10 years or so, to paraphrase an old Saturday Night Live character, “options been berry berry good to them.”

In the boom days of the mid-1990s, and even today, you rarely see an executive compensation package in print without stock options, which usually are followed by a healthy number of zeros. In fact, the number of stock options granted to those in the top echelon more closely resembles the mileage accrued by a 1963 Studebaker than anything mere mortals could relate to.

Now that the dust has settled somewhat over the recent exposure draft from the Financial Accounting Standards Board proposing the treatment of options as an expense, some in the profession and even the Fourth Estate have offered their version of what might have happened to the U.S. economy had not severe political pressure forced FASB to retreat from the options expense fight a decade ago.

Could the dot-com crash have been softened had most high-tech companies with zero profits and, literally, a googol of stock options been forced to expense them?


Would fledgling investors and countless now-broke day traders, many of whom dismissed their financial planners for having the temerity to return a paltry 15 percent on their money, have been saved from their own greedy ignorance?


Despite today’s calls for improved financial education and transparency, did the direct beneficiaries of the options craze and, subsequently, the investors really want to see the effect expensing options had on the balance sheet?

Probably not.

But that was then and this is now.

Ten years after its initial options proposal was repelled, FASB has proposed that all forms of share-based payments to employees, including stock options, be treated as an expense in the company’s income statement. The expense would be measured at fair value at the grant date.

Predictably, the pro-option cadre, which includes many politicians from tech-heavy states such as California, and stock option lobby groups are offering a bizarre alternative, the Stock Option Accounting Reform Act, a bill that would require expensing for the top five executives at public companies, but would not require options for employees below that level to be counted as a cost against earnings.

That measure, which anyone intelligent enough to successfully apply for a library card can see is a not-so-veiled attempt to dilute the FASB proposal, currently has more than 40 sponsors, including House minority leader Rep. Nancy Pelosi of California.

Imagine my surprise.

Now, much brighter minds than myself can debate whether Black-Scholes or the binomial method of valuation is more accurate, but for better or worse, options expensing in some way, shape or form will be with us for a while.

And for some investors, the lessons of the Internet bubble would be painful to learn twice.

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