Effective planning strategies for the new stock option rules

✍ Scribed by Akresh, Murray S.; Hassan, Kevin P.

• Publisher: John Wiley and Sons
• Year: 1999
• Tongue: English
• Weight: 50 KB
• Volume: 10
• Category: Article
• ISSN: 1044-8136
• DOI: 10.1002/(sici)1097-0053(199922)10:4<27::aid-jcaf3>3.0.co;2-g

✦ Synopsis

issued an exposure draft (ED) of a proposed interpretation (FIN), Accounting for Certain Transactions Involving Stock Compensation-An Interpretation of APB Opinion No.25, related to certain accounting rules for stock-based compensation under Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees (APB 25). The proposed FIN would not change FASB Statement No. 123, Accounting for Stock-Based Compensation (FAS 123

), but the proposed new rules are significant and would result in compensation expense in several situations in which no expense is typically recorded under current practice, including option repricings, grants to outside directors, and plans that permit tax withholdings. Moreover, the proposal would be generally effective for grants, repricings, and other modifications after December 15, 1998. This article highlights the key proposed changes and their impact, and provides some observations on possible planning strategies that may be considered in light of the proposal.