New accounting proposals for share schemes

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New accounting proposals for share schemes

The Accounting Standards Board (ASB) has announced controversial new plans to change the way employee share schemes are treated in profit and loss accounts.

Under the current arrangements, equity is used as a form of remuneration that does not hit profits. At present, the value of an option is deducted from profits only if it is "in the money" when granted — put simply, if the option price is below the price at which the company's shares are trading.

Sir David Tweedie, chair of the ASB, wants companies to treat the cost of shares and options given to staff as an operating expense in P&L accounts.

Want to know more?

Visit the Accounting Standards Board's web site . . . www.asb.org.uk/publications/publication111.html

Jump to the Financial Times web site for a collection of articles on this controversial plan:

• Intelligible options 20 July 2000
  

• Radical accounting plan threatens companies' share option plans 20 July 2000
  

• Clear options: leader 20 July 2000
  

• Companies given no choice on revealing share options 21 July 2000.

   

www.ft.com