New Surveys on Options Issues

A new study by Credit Suisse First Boston of the impact of stock options on profitability in banks shows that not showing the cost of options on income statements in 47 banks resulted in earnings being 4% higher than would have been the case if the present value of the options were accounted for using FASB-approved formulas.

Meanwhile, a Pearl Myers and Partners survey of mutual funds managers shows that 49% of the respondents say they often or always consider repricing policies in making investment decisions; 45% said they sometimes did. When the issue is only repricing for senior management, 64% said repricing was never justifiable, while only 43% said that repricing for non-management options was never justifiable.

Finally, a new William M. Mercer study found that 32 publicly traded Internet companies had an average of 15.7% of their total shares reserved for options and other stock-based compensation.