Published by:
Harvard Business Publishing
Length: 8 pages
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Abstract
Since last June, the Financial Accounting Standards Board has been accepting comments on its proposal to require companies to recognize as expenses all stock-based awards, including stock options. The proposal has been on the FASB''s agenda since 1984, long before executive compensation became a hot topic. The board will begin holding public hearings on the matter in the first quarter of 1994. The proposal has sparked a heated debate. Many investors argue that the new rules would give them a better understanding of a company''s financial status. But many in management are opposed, especially entrepreneurs. Curtail the use of options by requiring fledgling enterprises to record them as expenses, and the number of successful start-ups will dwindle, many predict. In this issue''s Perspectives section, seven experts consider the merits of the FASB''s proposal.
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Abstract
Since last June, the Financial Accounting Standards Board has been accepting comments on its proposal to require companies to recognize as expenses all stock-based awards, including stock options. The proposal has been on the FASB''s agenda since 1984, long before executive compensation became a hot topic. The board will begin holding public hearings on the matter in the first quarter of 1994. The proposal has sparked a heated debate. Many investors argue that the new rules would give them a better understanding of a company''s financial status. But many in management are opposed, especially entrepreneurs. Curtail the use of options by requiring fledgling enterprises to record them as expenses, and the number of successful start-ups will dwindle, many predict. In this issue''s Perspectives section, seven experts consider the merits of the FASB''s proposal.