Tech Firms to Reveal More About Options
Intel Corp., Cisco Systems Inc. and 30 other companies that have resisted treating stock options as an expense will disclose some option information in quarterly Securities and Exchange Commission filings.
Most of the companies will begin reporting how many options have been acquired or exercised by executives, and the portion of options that go to executives and employees, in their next 10Q filings, trade groups TechNet and the American Electronics Assn. said Thursday. U.S. companies currently must include the details in two annual filings -- their 10K report and proxy statement.
Technology companies are devising alternatives aimed at staving off treating options as a cost, which they contend would slash profit and hurt recruiting. Some investors and lawmakers say companies should be required to expense options, and accounting rule makers plan to decide within a year whether to mandate the switch.
Intel proposed to TechNet earlier this year that computer firms create a quarterly “equity impact sheet” that would reveal the number of options grants, the timetable for exercise and the potential effect on earnings.
“If they think that this is any more than a supplement to expensing, they’re kidding themselves,” said Patrick McGurn, director of corporate programs at Institutional Shareholders Services. “Everybody but the tech community can see the writing on the wall -- stock option expensing is going to be mandatory in 12 to 24 months.”