FASB Votes to Require Options Expensing; ESOPs, ESPP Issues to Be Covered as Well

On April 22, FASB voted unanimously to require companies to expense options and other equity compensation. Now FASB must figure out just how this expensing will occur. FASB said it hopes to have a standard available for comment early next year and for the requirement to be effective by the end of next year. While much of the attention on this issue has focused on options and employee stock purchase plans, the project actually covers all forms of equity compensation. FASB has said it will look separately at how ESOPs should be accounted for as part of the process. Unlike options, ESOP costs are currently charged to compensation, but the project could result in changes in how that is done.