National Accounts >> Towards 1993 SNA Rev.1 >> 1993 SNA Update Information >> 1993 SNA Update Issues/Clarifications >> Issue 3 >> Country Comments
 

Expert comments for issue:
Employee stock options

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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.

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Number of expert comments posted below:1 

Date
posted		SourceComment
2004-08-11Fadhil Mahdi (ESCWA)1. We, as national accountants, agree with the recommendation of the Advisory Expert Group (AEG), on National Accounts at UNSD, by considering all ESOs as compensation of employees (wages and salaries in kind) as long as the corporate entity is using them as financial instrument to motivate employees in work, irrespective of whether these ESOs will be settled in new or re-purchased shares. 2. As for pricing or evaluating this item, we see the ESOs should be valued at market prices at the time of transferring ownership from employer to employee. 3. With regards to recording the ESOs in the financial accounts as financial derivatives, which is the view of the AEG, we think that this view is very convenient and we confirm that it should be entitled under this category as a separate item having its own name.