Tech Companies Still Like Stock Options

July 25, 2005 ( - In spite of the new stock option expensing rule of the Financial Accounting Standards Board (FASB), 89% of public technology companies say they will continue to offer stock options to employees.

John Radford, senior vice president of Aon Consulting’s Radford Surveys group said in a company news release, “The rumored death of stock option compensation in the tech industry was greatly exaggerated.”

The 11% of companies who reported they would be eliminating future stock option grants said they plan to offer restricted stock or settled stock appreciation rights instead. Offerings of restricted stock has increased from 40% prior to the FASB’s new rule (FAS123) to 77% after FAS123, according to the news release.

A recent Deloitte survey of companies from all sectors found 75% of companies plan to reduce or had already reduced the number of stock options granted (See Stock Options Cut in Response to FAS123 ). Ninety two percent chose some type of restricted stock vehicle as an alternative to stock option grants.

Also affected by FAS123 are Employee Stock Purchase Plans (ESPPs). The survey showed that more than two thirds of those companies who have made a decision about FAS123’s affect on their ESPP have decided to keep their plans the same.

AON’s news release can be read here . This survey and others can be found at .