Avoid share options charge, says PwC

Adding fuel to an already blazing fire, Peter Holgate, senior technical partner at PwC, today warned global standard setters against treating share options as a charge.

The firm supports the move to disclose information on the fair value of options in company accounts. But Holgate said broader debate is vital before standard setters take the radical step of making companies book the charge against profits.

Holgate said: ‘This is a very sensitive issue. Large amounts are involved.

‘There is a current need for a wide-ranging debate about the reporting of performance. Users of accounts, for instance, focus increasingly on cash-based earnings, and it is unclear how they would react to charges in respect of share schemes.’

Holgate added that fair value should be calculated at grant date and not at the vesting date.

PwC comments come in response to a re-issued consultation paper put out by the Joint Working Group on how to treat share options. The trend has grown exponentially over the last few years, particularly among cash-strapped new economy companies. The practice has been increasingly used as a way of attracting talented staff, but also to pay suppliers and consultants.


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