Under a FASB staff recommendation endorsed by the panel , the footnote reporting of the income and earnings-per-share effect of stock options would have to be carried out in the first interim period starting after December 15, 2002, according to a report by Washington legal publisher BNA.
That means that most companies would have to make such disclosures for the quarter ending March 31, 2003. The latest language represents a shift from earlier FASB direction, which would have called for the disclosures in the first quarter or interim period of the first fiscal year after December 15, 2002.
Too Much Time?
FASB chairman Robert Herz said companies with non-calendar-year financial schedules would have been able to enjoy a long period of time before being required to make the stock options disclosures.
According to the BNA story, the disclosures are to be made as if the fair value method for stock compensation had been used to account for all such awards since the effective date of the board’s stock options rules, FASB Statement No. 123, Accounting for Stock-Based Compensation.
The standard, which prescribes such reporting only on an annual basis, became effective for option awards made in 1995.
BNA reported that FASB plans to issue in the early fall a limited-scope proposal on stock options accounting. The proposal will include planned rules for companies that shift to expensing stock-based compensation rather than simply disclosing it. The proposal is to have a 30-day comment period and be finalized by the year’s end, according to the board’s plans.
On a related issue on stock options accounting, FASB reconfirmed an earlier decision to offer three options by which companies electing to expense stock-based compensation would make the transition to that accounting.
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