More than six out of 10 (63%) WorldatWork members said the announcement by the software giant (See Microsoft Wants to Give Workers a Real Stock “Option” ) had no effect on their stock option philosophy. Even for those that did report some effect, its magnitude was varied, from a quarter that said it had a minor effect, to 9% reporting somewhat of an effect and a miniscule 2% that responded to a significant impact, according to the 2003 Stock Option Expensing Survey.
However, companies are still on pins-and-needles in
anticipation of a change to their stock option plans in the
face of mandated expensing
FASB Says Yes to Option Expensing
Thirty-six percent said they would switch to
restricted stock if they were forced to account for stock
options as an expense.
Other changes are also anticipated that include:
- scaling back option grants
- using more cash as a reward
- shifting to other long-term incentives.
Comparatively, only 13% of those canvassed said they would not alter their current stock option plans in if option expensing becomes mandatory.
Not surprisingly, the majority of compensation professionals (61%) – not eager to implement any new procedures – said stock options should not be expensed, compared with only 29% that said they should. Further, 11% would support expensing under certain circumstances, such as through a fair and accurate valuation method.
Some company shareholders decided not to wait, as 11% of those polled said they had shareholder proposals to begin expensing stock options. Of those, 42% ended up passing.