Stock option rules change

NEW YORK (AP) -- The nation's accounting rulemaker decided Thursday that companies will have to begin deducting the value of stock options from their profits next year, reining in a cheap way to compensate workers that had been abused by executives and clouded earnings.
The move was cheered by shareholder advocates but scorned by many companies who rely heavily on options to beef up compensation packages.
The Financial Accounting Standards Board's decision calls for public companies to start expensing options beginning with their first fiscal reporting period after June 15, 2005.
Private companies and companies that file as small business issuers are not required to comply until after Dec. 15, 2005.
FASB chairman Robert H. Herz said the new rules "provide investors and other users of financial statements with more complete and unbiased financial information."
Rules for accounting for stock options have pitted the technology industry, which relies on options to attract and retain employees, against some highly influential officials advocating expensing options, including Federal Reserve Chairman Alan Greenspan, Securities and Exchange Commission Chairman William Donaldson, billionaire investor Warren Buffett and the Big Four accounting firms.
Stock options are perks given to employees that allow them to buy shares of their company's stock in the future at a set price.