FASB adds stock options to rule-making agenda

U.S. accounting rulemakers on Wednesday agreed to add the subject of stock options to their agenda, a move that could result in requiring companies to expense stock options, an issue that has divided corporate America during a scandal-inspired reform movement.

The specific direction of the Financial Accounting Standards Board remained unclear, however, although it said it would seek “convergence” with the International Accounting Standards Board. The IASB, based in London, already has proposed requiring companies to expense stock options.

Norwalk, Connecticut-based FASB made the decision after asking for feedback on a proposal to expense stock options issued by its European counterpart.

Under current U.S. accounting rules, companies have the option of treating stock options as an expense or simply disclosing them in the footnotes of their annual report.

Few companies choose to expense stock options as that would crimp earnings, but a small number have switched to expensing options after a spate of accounting scandals last year left investors clamoring for more conservative accounting.

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