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Tuesday March 29, 07:12
SEC to grant more freedom to valuing options
(by Natali Novak)

SEC to grant more freedom to valuing options

Securities and Exchange Commission officials are about to give companies more freedom in measuring the value of employee stock options in financial reports, according to people familiar with matter.

The bulletin from the SEC’s office of the chief accountant has been widely expected since companies prepare to realize new Financial Accounting Standards Board rules requiring them to classify stock options as an expense.

Many corporations, especially Silicon Valley technology businesses that use options to attract and retain employees, have tried to repeal the rules. The House last year managed to pass a bill blocking the rules, but efforts to pass the measure in the Senate so far have not succeeded.

The SEC’s guidance will emphasize that the new FASB standard abolished a one-size-fits-all approach to valuing options, said Jonathan Weil. The bulletin is also expected to offer examples of shortcuts that companies can use in some cases to facilitate the procedure of new rules implementation, which many companies have subjected to criticism for being too complicated.

One of the bulletin’s main ideas, according to people familiar with the document, is that companies won’t feel uneasy thinking they have acted unreasonably just because they used different methods to evaluate their employees’ options than other companies in similar situations, or just because they came to different conclusions, according to the Wall Street Journal. Nevertheless, the discretion given to companies does have some limits.

An SEC spokesman refused to comment.

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