Abstract

In 2004, the Financial Accounting Standards Board (FASB) will, most likely, announce that companies should expense stock options. In this article, an assumption is made that FASB will make this announcement. Between now and then, however, companies have a golden opportunity to reexamine the future of, and alternatives to, their equity distribution instruments. Companies have the choice of altering their existing stock option plans, or they can implement new types of plans to best meet its corporate objectives. For example, a company may choose to modify their existing plans, or a company may elect to adopt new types of plans, such as stock appreciation rights, employee stock purchase plans, restricted stock or performance-based shares. This is an excellent time for companies to reconsider their compensation plans, and just as each business is unique, so are these compensation alternatives. This article provides a snapshot into the controversy and directs companies to consider the available alternatives.

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