The full interview with Robert Dyrbus will appear online tomorrow
In contrast to many of its counterparts, the FTSE100 company has charged the cost of issuing share options since the company demerged and listed on the stock exchange in 1996.
Robert Dyrbus, group finance director, told Accountancy Age: ‘We’ve never issued a share, we?ve always bought the shares on the market. We haven’t trumpeted it. But we must have been the first FTSE company to do it.’
After years of international debate and corporate resistance, the International Accounting Standards Board, headed by Sir David Tweedie, in February issued its rule on accounting for share-based payment, ensuring that related expenses are accounted for on the balance sheet.
From 2005 the new rule will affect the profits of many companies, particularly technology companies where the practice of issuing share options has been widely employed.
Dyrbus said he didn’t expect the new rule to significantly affect the company’s bottom line.
‘The impact of [accounting for share schemes] is not likely to be major,’ said Dyrbus.
The US standard setter, FASB – which tried to introduce such a rule in the 1990s but was met with stiff opposition from a powerful business lobby – published its own proposals on accounting for share options in March.
Anticipating the new rule, and bowing to growing investor pressure, many US companies, such as Coca Cola, have already begun to expense options on a voluntary basis.
Kimberley Crook, senior project manager at the IASB, who drew up the proposals for the accounting rule, said: ‘The initial instigator in the US was the fallout from Enron. After Enron, lots of US companies said they?d expense options. A lack of accounting rules had contributed to the overuse of stock options.’
But Imperial’s FD said changes to how derivatives are accounted for will be a challenge.
‘I think the major area is going to be what I call interest rate management, because with capital markets you tend to issue long-term debt and then you use derivatives to manage your interest rate risk. It’s that area that we’re thinking over the most,’ he said.
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