The Bad Dream of Options Expensing Lingers

Published in The Financial Times

Remember the bad old days when we tricked ourselves into thinking stock options used to compensate executives did not need to be “expensed” on income statements? Thanks to the efforts of accounting standard setters, who resisted considerable pressure, we fixed that problem by forcing companies to recognise options grants at the time of grant and at a reasonable approx­imation to their fair value. The wheels of capitalism did not fall off, as critics had warned. Now the confusion over the issue seems like a bad dream.