"Despite the few U.S. companies that have announced in the last few days that they would voluntarily begin expensing employee stock options, most companies would prefer the status quo" said Patricia Doran Walters, senior vice president of the association. "And it is critical that there be an agreed upon standard for when and how to measure these costs, otherwise comparability across companies is lost."

 

AIMR reiterated its position that employee stock options are a form of compensation that should be recognized as an expense on the income statement, and have argued from the beginning of the debate that the FASB should require U.S. public companies to do so, following the lead of the International Accounting Standards Board, which last week forwarded a proposed rule requiring companies to treat employee stock options as expenses.

 

In the mid-1990s, FASB chose only to recommend that companies recognize stock option expenses on the income statement, while requiring disclosure of the value of outstanding options in the footnotes to the financial statements.

 

In an international poll conducted by AIMR in September 2001 at the request of the IASB, 88 percent of financial analysts and portfolio managers surveyed said they consider share-based or stock option plans to be compensation to the parties receiving the benefits, and 83 percent said the accounting method for employee stock options should require recognition of an expense in the income statement.  

 

AIMR is a non-profit professional association of 58,000 securities analysts, fund managers and other investment professionals in 112 countries.