ICI Supports Changes to Procedures for Accounting for Stock Options

Washington, DC, February 4, 2003 - The Institute supports changes to accounting standards that would require companies to recognize the fair value of stock options granted to employees as an expense in their financial statements, in a recent comment letter. The Institute also supports the Financial Accounting Standards Board's (FASB) methodology for recognizing option forfeitures as opposed to the methodology used in the International Accounting Standards Board (IASB) proposal.

The Institute urged FASB to reconsider its accounting for stock-based compensation as soon as practicable. The Institute continues to believe that accounting standards should require issuers to treat the fair value of stock options granted to employees to be recognized as expense in the income statement, and ensure uniformity in how stock options are valued for this purpose.