1993 SNA Update Information - AEG recommendations for issue:
Employee stock options
|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.
|Number of AEG recommendations for selected issue:
| Corresponding meeting
| February 2004
|EMPLOYEE STOCK OPTIONS (ESOS)
The AEG approved the four main recommendations presented in the issue paper.
• The AEG was in favor of the first recommendation to show ESOs as compensation of employees.
• The majority of the AEG members favored spreading the value of ESOs between the grant and vesting dates if possible.
• All members of the AEG agreed that the ESOs should be valued at market price, or by using a suitable option pricing model.
• Some members of the AEG expressed reservations with regard to the recording of the ESOs in the financial accounts as financial derivatives. The AEG accepted in principle the fourth recommendation with the expectation that an instrument category will be introduced entitled “financial derivatives and employee stock options,” with the subcategories of (1) financial derivatives and (2) employee stock options.