Keeping Track: expensing stock options
Accounting method impacts some firms dramatically
Last week, Coca-Cola, Bank One, and the Washington Post Co. decided to count stock options as an expense. The move came as Congress debates whether all businesses should be required to do so.
Expensing options lowers company revenues, depending on how many options are held by executives. As shown below, high-tech corporations would see earnings reports tumble dramatically if the options were accounted for this way.