Last chance for share options
Opponents of plans to force the expensing of stock options in company accounts should find out next week whether their arguments have held any sway with the International Accounting Standards Board.
Link: FASB attacked over share options standard
Rome is the backdrop for what is considered crunch-time for share-based payments, with the IASB convening in the city to discuss the matter, along with other issues, such as financial instruments. A meeting of the Standards Advisory Council will also be held.
However, those hoping for exemptions from stock option expensing, such as lobby groups Proshare and the International Employee Stock Options Coalition, may be disappointed to see that the subject has only been given a small amount of time at the meetings.
A two-and-a-half-hour session has been scheduled for the afternoon of 16 June and another two-hour slot, with the SAC, is set for after lunch on Thursday.
Under the new standard, if current proposals are passed unchanged, a company would have to register in its accounts any payments made to employees in the form of shares, in much the same way as other payments are registered. This would significantly affect the bottom line of many companies.
Detractors say that such accounting would force many companies to cease share schemes, therefore reducing employee benefits.
Although most have given up on the standard being altered for executive share options, some are still hopeful that company-wide schemes for all employees may be made exempt. However, the IASB has stated that it finds it difficult to distinguish between the two types of scheme for accounting purposes.
‘There is a feeling that the accounts should reflect the large amount of shares going out to board members as payment,’ said Diane Hay, Proshare chief executive.
‘But there is a very strong argument that broad-based employee share schemes should not be treated in the same way.’
Hay admitted that the Rome meeting was probably the last chance to get any firm concessions from the IASB on share-based payments, but should this fail there was still a route open for the group to lobby through the European Union.
Next week, Proshare will publish a report into how the new standard would affect 500 global companies.