Accounting changes sink share option schemes
Share option schemes for executives have been battered by a combination of accounting changes and falling stock markets, according to a leading expert.
Carol Arrowsmith, a partner with Deloitte, who is advising Sainsbury on how best to pay its bosses, said the double whammy had created a ‘perfect storm’ that has sunk the use of share options by many companies.
They were incorporated in just one in five new plans last year, down from 60% three years ago, The Guardian reported.
It is thought new accounting changes requiring companies to book the cost of share options in their accounts are a key factor in the fall in popularity of share options.