E&Y urges share option rethink
Ernst & Young has slammed proposals on changes to the accounting of share options by both the International Accounting Standards Board and its UK equivalent.
The Big Four firm said it had ‘serious reservations about both the principles and the practicalities of the proposals’ that will see share-based payments charged to the profit and loss account.
‘We have significant concerns about the subjectivity and reliability of employee share option values derived from traditional option pricing models such as Black-Scholes,’ said Ernst & Young in a statement.
It added that investors were only concerned with share options that resulted in the dilution of shareholder value and urged the standard setters to develop valuation methodologies and improved valuation guidance.