Abstract
Numerous studies have investigated the effect that the new expensing rules will have on existing balance sheets, but a closer analysis demonstrates that companies will have an opportunity to rethink their existing approach to accounting and, ultimately, equity compensation. In addition to accounting for stock options, companies also have to expense their employee stock purchase plans. New rules from the NYSE and the NASDAQ will also influence equity compensation plans, calling for shareholder approval of all employee stock ownership plans. Specialists in benefits and compensation must understand the scope of changes that will arrive in 2005. Perhaps broad-based equity compensation plans will be the answer. As recent studies linking broad-based equity pay to performance show, they might just be a welcomed alternative.
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