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1993 SNA Update Information - Country comments for issue:
Employee stock options

Issue description
Issue description in [English] | [French] | [Russian] | [Spanish]
Employee stock options are a common tool used by companies to motivate their employees. Given that the 1993 SNA does not provide guidance on their treatment, the question is whether stock options should be considered as compensation of employees and therefore as a cost to employers. Doing so would permit further harmonization with international business accounting standards.
Country comments
Number of country comments for selected issue:47
  Date postedSourceComment
 10/10/2006SwedenAgreement with proposal
 28/09/2006New ZealandWe agree with the recommendations made by the AEG.
 15/09/2006United KingdomWe agree with all the recommendations made by the AEG.
 15/09/2006LatviaAfter deep discussions and expert consultations we basically support the 1993 SNA Update Issues.
 31/07/2006IsraelWe agree with the recommendations of the AEG. We would also like to have explicit recommendations for the registration of all the transactions in connection with employee stock options in all accounts.
 27/07/2006EgyptWe agree to consider these motivations as compensation of employees.
 25/07/2006Central Bank of Costa RicaWe support the AEG recommendations, although in Costa Rica as yet there are not evidences of the use of this mechanism as compensation of employees.   Therefore we agree that ESO’s should be classified as compensation of employees and that the value of ESO’s should be spread between grant and vesting dates, because it reflects the idea that they are earned over a period of time. We also support the proposal to record them under a category which specifies financial derivatives and ESO’s.
 24/07/2006NepalWe agree that ESO should be treated as compensation of employees. It should be recorded when the transaction takes place. However, business accounts needs to be standardized internationally to get the data on ESO.
 29/11/2005LithuaniaWe agree with the recommendations by considering ESO as a compensation of employees. And it should be recorded or valued at the time of transfering the ownership from employer to employee.
 19/05/2005Bank of IndonesiaBI has the same opinion with the concept of treating ESOs as compensation of employees, however this information is not available as public data.
 09/05/2005Central Bank of IranWe agree with the recommendation made by the AEG to consider ESOs as compensation of employees. In our view recording ESOs in the financial account as a separate category is not practical, due to the lack of appropriate data.
 06/05/2005VietnamWe agree with recommendation of the AEG :
Employee stock options should be considered as compensation of employers as a cost to employers are suitable with recording basis of the value of remuneration in cash or in kind of employees.
It is possible to collect information from special survey and administrative records.
 16/11/2004Central Bank of ChileEn Chile no hay mayor experiencias sobre ESOs. Recien el 2000 surgieron algunos casos, cuando se reglamentaron con la Ley de OPAS (Oferta Publica de Adquisicion de acciones). Estos casos (alrededor de 4 empresas) no tuvieron impacto macroeconómico como para incidir en la elaboración de las cuentas nacionales de los ultimos anos. Sin embargo, se espera un fuerte incremento en el uso de esta modalidad de remuneración. Por lo menos hay 5 grandes empresas que pretenden aplicarla en el corto p1azo.
De tal forma la respuesta a la pregunta es conceptual sin experiencia empirica al respecto. En ese marco, se acepta la propuesta del grupo de expertas que las ESOs constituyen un salario en especie teniendo coma contracuenta un derivado financiero. Asi tambien se prefiere contabilizar al vencimiento de la opción al precio de ejercicio (vesting price) de la opcion, mejor que una distribución entre el periodo de otorgamiento y extinción de la opción. Respecto a la valaración se prefiere el precio de mercado mejor que un precio calculado a base de un modelo de opción. Estas preferencias, a nuestro entender, son mas consistentes con las reglas de SCN tanto en la no inclusión de activos y pasivos contingentes, como en la preferencia por valores de mercado.
A modo de ilustración en el caso de Chile, la ley de OPAS determina que las ESOs solo pueden ser validas para sociedades anónimas que transan sus acciones en la Bolsa, de modo que esas acciones siempre tendran un precio de mercado como referencia. Por otra parte tambien define que solo pueden otorgarse en acciones de primera ernisión, con un tope del 10% de un aumento de capital, mas las acciones sobre las que no se ha ejercido la opción. En la experiencia de Chile tambien se ha detectado que algunas empresas multinacionales utilizan este mecanismo con movimientos financieros a nivel intenacional lo que dificulta la regulacion local.
 03/11/2004Bank of Tanzania/National Bureau of StatisticsWe concur with the AEG recommendations that ESOs should be recorded as compensation of employees, although limitations in data sources may prevent us from spreading the value of ESOs between the grant and vesting dates. Efforts will be devoted in our forthcoming economic surveys to incorporate the suggested improvements.
 18/10/2004National Bank of TajikistanThe National Bank of Tajikistan agrees with the recommendations of the AEG.
 13/10/2004Reserve Bank of AustraliaWe support the AEG recommendations.
 13/10/2004European Central BankThe ECB supports the provisional AEG decisions on this issue, i.e. (i) Show employer stock options as compensation of employees, (ii) spread the value of the employer stock options between the grant and vesting dates if possible; (iii) value employer stock options at market price, or by using a suitable option pricing model; (iv) record employer stock options under a new category "financial derivatives and employee stock options". Regarding the latter point, we think however that the main instrument category should be sufficiently general, e.g. referring to "financial derivatives", even though the inclusion of a sub-category for “employee stock options" would make sense.
 13/10/2004AustriaStatistics Austria supports the proposed treatment of ESOs as part of compensation of employees and the recommendation for the valuation. However, the separate identification of ESOs is at the time being not feasible according to the Austrian business accounting standards
 12/10/2004Bank of FranceAprès étude de ces questions par les services concernés, j`ai le plaisir de vous faire savoir que la Banque de France approuve les recommandations du Groupe consultatif concernant les programmes d`options d`achat pour les employés (3), qui conduisent notamment à leur inclusion dans la rémunération des salariés. J`observe par ailleurs que les solutions proposées sont compatibles avec les normes comptables IFRS, qui devraient s`imposer dans les comptes consolidés des entreprises cotées à partir du 1er janvier 2005, et rendre disponible, au moins partiellement, l`information nécessaire à l`évaluation des stock option dans les comptes nationaux. Celle-ci fait actuellement défaut dans les comptes des entreprises françaises.
 12/10/2004Bank of PortugalRegarding the item “Employee stock options” we agree with the recommendations made by AEG, although there might be some difficulties to ensure their practical implementation due to the lack of appropriate data.
 12/10/2004Bank of ColombiaEstamos de acuerdo con las recomendaciones del grupo AEG. En la ampliación del estudio de los ESO`s y su registro, para que sean considerados en las cuentas de compensación de los empleados y empleadores.
 06/10/2004National Bank of MoldovaWe agree with the proposed recommendations made by the AEG to consider employee stock options as compensation of employees. We are in favor of valuing it at market prices if possible or by using a suitable option pricing model. It could be introduced in the financial accounts as a sub-category entitled “financial derivatives and employee stock option”.
 05/10/2004Bank of KoreaWe are in agreement with the recommendation of Advisory Export Group(AEG). Employee stock options(ESOs) have been treated as an expense related to cost of employment remuneration in accordance with Korean GAAP(Generally Accepted Accounting Standards).
We also agree that ESOs should be valued at market prices in conformity with the general principles in the SNA 1993 and that they be recorded in financial accounts as "Financial derivatives".
 04/10/2004South African Reserve BankWe agree with the recommendations of the AEG.
 30/09/2004Central Bank of MadagascarA Madagascar, les ESO ne sont pas à l`heure actuelle très développés pour que la mise en œuvre des recommandations ait une forte influence sur les comptes nationaux. Mais dans tous les cas, étant donné que cette révision offre l`avantage d`une meilleure traçabilité, d`une uniformisation de la méthodologie et donc d`une meilleure comparaison internationale des informations statistiques, Madagascar est favorable au nouveau traitement recommandé.
 30/09/2004Bank of LatviaLatvia is in agreement with the recommendations of the AEG and we do not have any particular comment at this stage.
 30/09/2004Bank of JapanThe AEG Recommendations concerning the treatment of Employee Stock Options has logical problems in terms of the consistency between financial accounts and income and outlay accounts of the SNA (see attached for details).
The treatment of Employee Stock Options in the 1993SNA rev.1 requires further logical and practical examination.
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 30/09/2004Central Bank of The NetherlandsWe agree whole-heartedly with the AEG recommendation to include employee stock options (ESOs) in compensation of employees. However, as there are strict conditions on the ability to lay claim to ESOs, we prefer to view them as contingent before the vesting date. Therefore, we think ESOs should be recorded at vesting date, after which the company and the employee incur a financial liability and asset respectively. This asset, in essence a call option written by the company, is by no means different from a normal option contract and should therefore be recorded as a financial derivative. The introduction of a new subcategory for employee stock options is not necessary in our view.
 30/09/2004Bank of GuyanaEmployee stock options are remuneration in kind to an employee in return for work done. Therefore, it should be considered as compensation of employees.
 30/09/2004Lesotho - Central BankComment: 1993 SNA should be revised to include employee stock options as part of employee income.
 20/09/2004IndiaAs the Employee Stock Options (ESOs) are necessarily offered to employees, the resulting benefits accruing to the employees should naturally be treated as compensation of employees. The value of benefits accruing to the employees by exercising the ESOs, should be spread between the grant date and the vesting date in view of the notional attachment to the service rendered by the employees during that period. The ESOs should be valued at market prices on the date of exercising the option instead of on the vesting date since the actual transaction takes place only on the date of exercise.
Regarding the treatment of ESOs in the Financial Accounts, we agree with the proposed recording. However, in view of the nature of the ESOs, we suggest to examine further whether the value of ESOs should be `Other Accounts Payable/ Receivable`.
 24/08/2004United KingdomWe endorse the AEG recommendations to show ESOs as compensation of employees, and that this value be spread between the grant and vesting dates to reflect the principle that they are earned over a period of time. We also agree, that the valuation of ESOs be done at market prices in line with the general principle in the SNA 1993 on valuation and, that they be recorded in the financial account as “financial derivatives and employee stock options” with the two sub-categories: “financial derivates” and, “stock options”.
 13/08/2004MalaysiaWe agree with the recommendation of the AEG although, in Malaysia available information does not allow for distributing the value across grant date to vesting date period.
 12/08/2004Finland m1(c)fi3;
 12/08/2004AustraliaAustralia strongly supports the AEG recommendations.
 11/08/2004Germany m1(c)de3;
 11/08/2004CanadaCanada agrees with the AEG recommendation. Employee Stock options should be part of employee remuneration valued ideally at vesting date. Canadian business accounting standards were changed as of January 1, 2004 to include all stock payments including options as an expense related to cost of employee remuneration.
 11/08/2004Slovak RepublicSlovakia is in favour of all the four AEG recommendations presented in the issue paper: • to show ESOs as compensation of employees. • spreading the value of ESOs between the grant and vesting dates if possible. •the ESOs should be valued at market price, or by using a suitable option pricing model. •to the recording of the ESOs in the financial accounts as financial derivatives.
 11/08/2004BotswanaIn particular this practice is happening to some extent but it is very crucial that the AEG do not only stop to this but consider also a fact-finding to assess how many countries are using this approach or have used it before. This will enrich country comparisons, other wise it is possible that countries are not comparing the like. It is our understanding that since this has been a consultation effort it would also have helped if those involved indicated why this practice is dwindling in its demand (i.e why are employees reluctant to accept it?). It may happen that employees prefer another approach. These are some of the lessons and information that is quite important particularly wherever a system is under revision. It is critical to understand realities for some the economies particularly the developing ones. Most business set-ups with the exception of the multi-international companies and or and public enterprises, the level of operations for many and which employee the a sizeable number is small; productivity for instances fluctuate considerably from labour to labour coupled with higher attrition rates in many sectors depending on profits. Profits in such undertaking in many instances is not certain from one year to the other because of competition and failure to realise economies of scale. It requires one to understand how such mechanism can provide good and consistent measures of ESO if at all it is in place; and whether comparison from country to country will be consistent and attainable? How does ESO evolve or treated in situations of serious liquidation of an undertaking?
 11/08/2004South AfricaWe are in agreement with the AEG recommendation of February 2004. As yet we do not have statistics on employee stock options, but will start with the collection of related information in the forthcoming round of economic surveys.
 11/08/2004USAThe United States strongly supports the initiatives to improve the accounting for employee stock options. There have been important changes in the economic environment in this area, and improving the national accounting treatment is important to the national accounts and its users.
 11/08/2004NorwayWe agree that ESOs should be recorded as compensation of employees. Valuation at market prices and spreading the value between grant and vesting dates is preferable conceptually, but given the data currently available in Norway, the Strike-Share price at exercise date would be easier in practice.
 11/08/2004DenmarkStatistics Denmark can support the principles proposed by AEG, although limitations in data sources prevent us from spreading the value across the grant to vesting date period. However, as ESOs differ in some important aspects from other forms of compensation, we would prefer to give them a separate subcategory under compensation of employees.
 11/08/2004JordanEmployee Stock Options (ESOs): The Treatment of ESOs would not have an impact on national accounts of Jordan because companies in Jordan do not use it as motivations for their employees. Nevertheless, we agree with the proposed recommendations made by the AEG to consider ESOs as compensation of employees and spreading its value between the grant and vesting dates. We are in favor of valuing it at market prices if possible or by using a suitable option pricing model. It could be recorded in the financial accounts as a subcategory under a new instrument category to be introduced in the new revision entitled “financial derivatives and employee stock option”.
 11/08/2004The NetherlandsWe agree with the issues paper and the AEG-recommendations.
 11/08/2004New Zealand• ESOs classified as compensation of employees: Agree. • Value ESOs at market prices or by a suitable option pricing model. The recommendation, as worded, is not specific re the timing of the valuation. The issue paper suggests valuation at vesting date and it is presumed that this is what is being recommended. Valuation at vesting date is supported – however, whether this can be practically implemented is another matter. In New Zealand, the Financial Reporting Standards Board has issued an exposure draft (ED93) on Share-based Payments. This is a direct copy of the IASB`s ED2 (referred to in the issues paper) and stipulates valuation at grant date. This new accounting standard will be introduced in New Zealand by 2006 or 2007, and as business financial accounts provide the source data for the national accounts (either directly or via statistical survey), how feasible it will be to replace the ESO valuation / treatment in financial accounts with the proposed national accounts treatment has yet to be tested. • Spread the ESO valuation across the grant and vesting date period. Agreed in principle, although this implies backward revisions (not only for national accounts but for related employment statistics, if consistency between the national accounts and other statistics is to be maintained). Unless the ESOs become significant, recording at vesting date is likely to be adopted. • Record ESOs in the financial accounts as a type of financial derivative. Agreed.
 11/08/2004Macao, SAR ChinaWe are pleased to express our agreement with the proposal.
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