ICAEW in favour of share option disclosure
The English ICA agrees in principle that share options should be charged against income, but say this should not happen until international consensus is reached.
The ICAEW said UK companies should not be disadvantaged by an accounting requirement and said that at present share options should be disclosed on financial statements rather than charged.
Robert Hodgkinson, Chairman of the ICAEW’s Financial Reporting Committee, said:’The proposal to include a charge against income for the issue of share options (the most common form of share based payment) would be a significant change to present UK accounting practice.’
Hodgkinson said this practice should be adopted in ‘in other major countries and the International Accounting Standards Committee should therefore take a lead in addressing this topic’.
He added: ‘We agree that investors should have information about the costs involved, including the impact on income.’
The inclusion of a share option charge on the company’s profit and loss account would hit dot.coms particurlarly hard as they rely heavily on generous share options to reward employees.
Links
ASB paper on share-based payments