Loophole May Ease Pain Of Expensing Options
New accounting rules soon may force U.S. companies to start treating employee stock-option compensation as an expense. But that doesn't necessarily mean the new expenses will be all that big, thanks to what critics say is a loophole in the Financial Accounting Standards Board's latest proposal.
A maneuver disclosed this month by Acxiom Corp. shows that by acting now -- before the new rules take effect -- companies can easily depress future option-related expenses by vesting employees with the right to immediately exercise large numbers of previously granted options.
It isn't clear how many other companies already have done this or plan to do so. The technique could be attractive to just about any company that has relied on options to pay its employees and whose stock price has fallen significantly since the stock market's 2000 peak. The vast majority of U.S. companies elect not to expense stock options, which grant employees the right to buy stock at a fixed price during a specified period. Barring congressional intervention, the FASB's proposal is set to take effect next summer.
"It's definitely a loophole," says Todd Fernandez , an analyst at Glass Lewis & Co. in San Francisco, who last week published a research report spotlighting Acxiom's move. "I would be surprised if more companies didn't do this." Playing off complexities in both the current and proposed accounting rules, the tactic is aimed mainly at "underwater," or "out-of-the-money," options, meaning options with exercise prices greater than the employer's stock price.
Here is what Acxiom did: In July the Little Rock, Ark., data-services company vested its employees with the right to immediately exercise all previously granted underwater stock options. Since the decision, Acxiom's stock has risen to $25.79 on the Nasdaq Stock Market from $22.33. That means some, though not all, of those 2.1 million newly vested options are now in the money, while others have exercise prices as high as $62.
The move allowed Acxiom to shift future expenses onto this year's financial statements, where stock-option expenses still can be relegated to mere footnote disclosures and excluded from net income. The reason the technique works is that the FASB proposal calls for expenses to be recognized when an option vests, rather than when it is exercised. Often, an option grant's vesting period will stretch over several years. (The expense's size is based on the option's estimated value on its grant date.)
Acxiom's treasurer, Bob Bloom, readily acknowledges that the company's primary reason for accelerating the vesting dates was to "reduce the impact of the upcoming FASB pronouncement." The decision was approved by the compensation committee of Acxiom's board of directors. While the move was driven largely by accounting considerations, Mr. Bloom says he doesn't see anything wrong with that.
"To take a hit on the income statement for all these underwater options, we don't feel is appropriate," Mr. Bloom says. "And so to alleviate some of that expense, we've taken these actions."
Acxiom was careful to limit the maneuver to underwater options. Companies that accelerate vesting dates for in-the-money options often must record expenses that count against net income, to reflect the difference between the exercise price and the stock price.
Acxiom showed $15.7 million of stock-option expenses in the footnotes to its latest quarterly report. That was nearly five times what it showed for the year-earlier quarter. Had Acxiom counted options as an expense, its net income for the three months ended Sept. 30 would have been $2.8 million instead of $18.5 million.
Mr. Fernandez, the Glass Lewis analyst, says Acxiom's move to accelerate the vesting dates for options that were almost in the money "sends the wrong signal and isn't in the best interest of transparency and earnings quality."
Amkor Technology Inc., a semiconductor-assembly company based in West Chester, Pa., recently disclosed that its compensation committee had voted to accelerate the vesting dates for all unvested options issued before July. Virtually all of them were well underwater. Amkor's third-quarter footnotes showed $47.3 million in option expenses, up from $7.9 million a year earlier. Excluding those costs, the company reported a $22.3 million third-quarter loss.
An Amkor spokesman, Jeffrey Luth, says the move wasn't intended to reduce future expenses under the proposed FASB standard, but rather to "make sure we could motivate and hang on to our employees." Most of the options have exercise prices in the $10-$11 range, well above Amkor's $5.67 stock price on the Nasdaq Stock Market yesterday; the stock is down 91% from its March 2000 peak.
Ted Buyniski, a compensation adviser in Boston for a unit of Mellon Financial Corp., says uncertainty over whether the FASB might disallow the tactic had prompted many companies to hold off on using it. Last month, however, in a 4-3 decision, the FASB rejected its staff's recommendation to eliminate the maneuver's accounting benefits.
FASB Chairman Bob Herz disagrees that the technique amounts to a loophole in the board's proposal. The real loophole, he says, is that companies have been allowed to exclude option expenses from their earnings for so many years. "Whenever you make a change, there are always transition issues," he says. "To me, the big-picture thing is, let's get the accounting right going forward."
Mr. Buyniski says many companies still are waiting to see the FASB's final standard before making any decisions, to avoid getting "caught in a lurch if FASB changes direction at the last minute."
Speeding up vesting dates for underwater options also comes with downsides, he says. By accelerating the vesting dates for options that are just barely underwater, he says, employers reduce their ability to keep employees from leaving their jobs. Companies also risk upsetting their investors if they don't put the decisions up for shareholder votes.
新会计准则有关股票期权的规定存在漏洞
新的会计准则可能很快会迫使美国公司将给予员工的股票期权计作费用。但这并不一定意味著这笔新发生的费用会非常巨大，这要感谢批评人士指出的财务会计标准委员会(FASB)最新建议稿中的一个漏洞。
Acxiom Corp.本月披露的一项行动显示，如果企业现在就采取行动，赶在新的会计准则生效前允许员工立即大量执行以往获得的股票期权，那么它们就能轻松降低未来与期权有关的费用。
尚不清楚其他有多少公司已经这样做或计划这样做了。任何在向员工支付报酬方面一直依赖股票期权的公司，以及那些在股市于2000年见顶后股价已经大幅下跌的公司，都会对这种做法感兴趣。绝大多数美国公司都选择不将股票期权计作费用。股票期权是企业授予员工的一种在特定时间段以某一个固定价格买进公司股票的权利。除非国会出面干预，否则FASB将股票期权计作费用的这项拟议案将于明年夏季生效。
Glass Lewis & Co.驻旧金山的分析师托德?费尔南德斯(Todd Fernandez)说，“无疑存在漏洞。”他在上周发表的一份研究报告中重点谈论了Acxiom的上述举动。他说，如果其他公司不这么做那才令人奇怪呢。Acxiom公司使用的这一策略主要针对价外期权，即期权的执行价高于公司目前股价的期权，美国目前实施的和将要实施的会计准则尽管设计周密，但还是被它□了空子。
Acxiom这家数据服务公司今年7月准许其员工可以立即执行公司以前授予他们的全部价外期权。自那以来，在那斯达克市场上Acxiom的股价已经从22.33美元上涨至25.79美元。这意味著，在这批总计210万份新近获准执行的股票期权中已有一部分变成了价内期权，当然并非所有的股票期权都变成了价内期权，有些期权的执行价高达62美元。
此举使得Acxiom可以将未来的费用转移至今年的财务报表中，而美国企业今年还不必将股票期权作为费用从净利润中扣除，只需在财务报告的注脚中披露即可。这一技术之所以可行，是因为根据FASB的建议，将股票期权计作费用的时间是期权被允许执行的时间，而非期权实际被执行的时间。一笔期权被允许执行的时间往往会跨越好几年。（费用的高低是根据期权在授予日的估计值计算出来的。）
Acxiom的司库鲍勃?布鲁姆(Bob Bloom)承认，该公司之所以允许员工提前执行期权，主要就是为了减轻FASB新会计准则的影响。这项决定得到了该公司董事会薪酬委员会的批准。布鲁姆说，虽然此举主要是出于会计方面的考虑，但他并不认为这样做有何不妥。
布鲁姆说，Acxiom认为把执行价外期权的全部重担都压到公司的收益报告中是不合适的，因此，为了部分减轻这一费用负担，公司采取了这一行动。
Acxiom谨慎地将此项行动的对象限定在价外期权上。而那些允许提前执行价内期权的公司则必须从净利润中扣除相关的费用，以此反映期权执行价和股票现价之间的差额。
Acxiom在其最新季度报告的注脚中披露，其与股票期权有关的费用为1,570万美元，将近上年同期的5倍。如果Acxiom在截至9月30日的这一季度中正式将股票期权计作费用，那么该公司这一季度的净利润就是280万美元，而不是现在公布的1,850万美元。
Glass Lewis的分析师费尔南德斯说，Acxiom允许提前执行那些几乎可以算作价内期权的期权是在发出错误信号，这对该公司的透明度不利，也无助于提高其收益质量。
半导体封装公司Amkor Technology Inc.最近披露说，该公司的薪酬委员会最近投票决定，所有7月份之前授予的而尚未批准执行的股票期权都被允许提前执行。这些期权的执行价实际上都大大高于该公司股票的现价。Amkor在第三财政季度收益报告的注脚中披露，公司与股票期权有关的费用为4,730万美元，高于上年同期的790万美元。即使不包括这一费用，该公司第三季度也出现了2,230万美元的亏损。
Amkor的发言人杰弗里?卢思(Jeffrey Luth)说，该公司此举并不是要赶在FASB的新会计标准实施前预先降低公司未来的费用，只是为了确保能调动员工的积极性。这些期权的执行价大多在10-11美元之间，大大高于该公司目前的股价，该股昨日在那斯达克市场的收盘价为5.67美元；Amkor的股价目前已较2000年3月时的高点下跌了91%。
梅隆金融(Mellon Financial Corp.)旗下一家子公司的薪酬顾问泰德?拜尼斯基(Ted Buyniski)说，由于不能确知FASB是否会禁止这一做法，许多公司选择了暂不实施这一策略。但FASB上个月以4比3的表决结果否决了一项拒绝承认这一做法所带来会计收益的建议。
FASB的主席鲍勃?赫兹(Bob Herz)不同意这一做法是□了FASB新建议的漏洞。在他看来，真正的漏洞是美国企业这么多年来一直被允许不将股票期权计作费用。他说，“无论你何时改变政策，总会有一个过渡问题，对我来说，重要的是将会计准则引向正轨。”
拜尼斯基说，许多公司在FASB最终的会计标准公布前仍然持等著看的态度，以免FASB在最后时刻改变主意打自己一个措手不及。
他说，允许提前执行股票期权也会造成不利影响。如果允许提前执行那些执行价与股票现价几乎相等的股票期权，那么顾主留住员工的能力将会下降。而如果企业没有将这类决定交付股东表决，它们还有可能冒犯投资者。
