Study: Lots of Options Issuing Firms Beyond Techies

October 15, 2004 ( - While technology companies have long been thought of as the center of the stock-option universe, companies far from Silicon Valley apparently heavily rely on them as well in their compensation programs.

A Forbes Magazine report said that the Center for Financial Research & Analysis, an accounting watchdog group, found 282 industrial companies were heavy into options, according to their quarterly reports.

According to three-year aggregate data from Jack Ciesielski, publisher of the Analyst’s Accounting Observer, heavy options users ranged from building materials company SPX , which had options equaling 42% of its net income or $536 million to ITT Industries, a fluid-control equipment concerns at 9% or just over $1 billion. 

The finding is part of the ongoing debate over the notion of options expensing with new rules mandating such expensing on the horizon. Changing over counting the options’ value as compensation cost won’t be a struggle with every company apparently, however.  Ciesielski told Forbes that that 109 S&P 500 companies have already started using the new rule, up from 93 in 2002.

US accounting rulemakers recently bowed to intense pressure and postponed the options effective data from its original January 1, 2005 to June 15. (See   Pressure on FASB Produces Options Expensing Delay ).