Magazine

Table: Rethinking Options


Should the way companies account for stock options be changed? Here's how the debate in Washington is shaping up:

ESTIMATING OPTIONS' COST IN A FOOTNOTE

The status quo now, proponents such as Senator Joseph I. Lieberman think this gives investors needed information without unduly penalizing earnings. But opponents say it allows companies to hide options' true cost.

EXPENSING OPTIONS WHEN GRANTED

Under a bill sponsored by Senator John McCain, companies would deduct the estimated future expense of options from earnings as soon as they are issued. But critics say such costs can't be accurately estimated.

EXPENSING OPTIONS WHEN CASHED IN

Treasury Secretary Paul H. O'Neill backs requiring companies to expense the cost when options are exercised. That would more accurately measure options' true cost, but companies fear it will force them to take big hits to earnings.


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