NEWS RELEASE 10/04/02
FASB Issues Exposure Draft on Accounting for Stock Options,
Amends Transition and Disclosure Provisions
Norwalk, CT, October 4, 2002—The FASB has issued an
Exposure Draft, Accounting for Stock-Based
Compensation—Transition and Disclosure, that would amend FASB
Statement No. 123, Accounting for Stock-Based Compensation.
The purpose of the proposed amendment is twofold:
- To enable companies that choose to adopt the preferable fair
value based method to report the full effect of employee stock
options in their financial statements immediately upon adoption.
- To make available to investors better and more frequent
disclosure about the cost of employee stock options.
The proposed changes would provide three methods of transition
for companies that voluntarily adopt the fair value method of
recording expenses relating to employee stock options. In addition,
the FASB proposes clearer and more prominent disclosures about the
cost of stock-based employee compensation and an increase in the
frequency of those disclosures to include publication in quarterly
financial statements. Currently, companies are not required to
present stock option disclosures in interim financial
statements.
The FASB plans to issue the amendment to Statement 123 by the end
of this year and its provisions would be effective immediately upon
issuance. The proposed disclosures to be provided in annual
financial statements would be required for fiscal years ending after
December 15, 2002. The proposed disclosures to be provided in
interim financial information would be required as of the first
interim period beginning after December 15, 2002, with earlier
application encouraged.
A copy of the Exposure Draft is available on the FASB’s website
at www.fasb.org. The comment period concludes on November 4,
2002.
About the Financial Accounting Standards Board
Since 1973, the Financial Accounting Standards Board has been the
designated organization in the private sector for establishing
standards of financial accounting and reporting. Those standards
govern the preparation of financial reports and are officially
recognized as authoritative by the Securities and Exchange
Commission and the American Institute of Certified Public
Accountants. Such standards are essential to the efficient
functioning of the economy because investors, creditors, auditors
and others rely on credible, transparent and comparable financial
information. For more information about the FASB, visit our website
at www.fasb.org.
The Financial Accounting Standards Board
Serving the investing public through transparent information
resulting from high-quality financial reporting standards developed
in an independent, private-sector, open due process.
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