But the FASB controversy refuses to die. In early July, FASB's board will meet at its headquarters in Norwalk, Conn., to review proposed new rules governing how businesses must report stock options in their financial statements. Final regulations are expected by mid-August. The results would be seen in corporate reports by mid-1997. To understand the esoteric details of the FASB fracas, it first helps to appreciate the big picture.
Stock options are an increasingly important form of compensation for corporate managers.
FASB, a rule-making group supported by the accounting profession, nonetheless put forward a proposal in 1993 that would have required companies to set a value on all stock options granted to employees, then deduct that amount from their earnings. The move prompted a firestorm of opposition, including a FASB meeting in San Jose last year that drew several thousand protesting workers. FASB backed down in December under pressure from Congress and the Securities and Exchange Commission. Although it happens very rarely, the SEC has the right to over-rule FASB decisions and Congress can in theory compel the SEC to act. But FASB didn't surrender completely.