House debates stock option bill

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The 10k is for the investors

'If the options are expensed, it will make it harder to value a company based on its income, because this "expense" is irrelevant to the bottom line.'

The accounts are for the investors and the effect of options costs are not irrelevent to those investors. You are asking them to buy a stock where the management knows the estimated cost of the options already issued, but the poor stock buyer doesn't.

Isn't it for the shareholders to decide if they want that number for clearer accounts?

Isn't it also the FASB's job to enforce accounting practices it considers correct?

Here for example is an article about Intel's shareholders asking Intel to expense:

http://www.fool.com/news/take/2004/take040520.htm

'Fool' are quite damning:

"amid an initiative requesting that the firm expense its stock options on the income statement. The advisory referendum....passed with 54% of the vote. Intel officers were not pleased...

"Barrett has continued with the same, puddle-deep arguments that Intel has been rolling out since the '90s, trying to scare investors, lawmakers, and the public with an endless stream of misrepresentations about the "danger" of expensing options. In addition to the usual spurious threats of impaired job growth, last month he upped the rhetoric to invoke the threat of Red China and, even scarier -- pull the blankets over your head, kids -- the trial lawyers!

"...Options have real costs. Barrett wants to keep those costs buried in the footnotes rather than accounted for on the income statement, where it matters. Is that because Intel distributed nearly $1 billion worth of options last year, or is it that Barrett himself collected $14 million in options? I leave it to you to decide if this behavior qualifies as weasel-like."

Posted by: Nigel Johnstone   Posted on: 07/20/04 You are currently: a Guest | Members login | Terms of Use

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