IBM Shareholders Vote to Expense Stock Options

IBM Corp. shareholders voted Tuesday to require the company to treat stock options as a business expense, but the effect of the vote is muted because financial regulators are on the verge of imposing the same rule.

The options proposal, which is nonbinding, was put forward by a large union pension fund and won the support of holders of 54% of IBM’s shares. Seven other resolutions sponsored by investors failed in votes at IBM’s annual meeting, including measures to reexamine executive pay and change the company’s employee retirement plans.

When the vote on the options proposal was announced, Chairman and Chief Executive Sam Palmisano responded that IBM would expense options when the Financial Accounting Standards Board officially required it.

FASB has proposed that publicly held companies begin treating all stock-based compensation as an expense. That is a response to widespread complaints that options were doled out excessively in recent years by companies that didn’t fully disclose their cost to shareholders.

IBM shares rose 68 cents to $91.11 on the New York Stock Exchange.