The Association for Investment Management and Research commended the International Accounting Standards Board for releasing an “exposure draft” today of a proposed accounting rule requiring that employee stock options be treated as expenses on corporate financial statements.

AIMR senior vice president Patricia Walters, said, “In putting this exposure draft forward, IASB quite simply is doing the right thing for investors. It is showing its global leadership and commitment to put the best interests of investors above the self-interest of corporations.”

Walters said investment professionals have always known that executive stock options were compensation that should be expensed on the income statement.

“It doesn’t matter how a company pays its employees – in cash, stock, candy bars or housecleaning services, for that matter,” Walters said, “that compensation should be measured and recorded. Executives don’t work for free, and anything they accept in lieu of cash has a value.”

AIMR surveyed its financial-analyst and portfolio-manager members around the world last year and found that more than 80 percent of respondents use information about the value of stock options to reduce corporate earnings in their valuations models.

“The average investor — or the news media, for that matter — doesn’t have the time or expertise to search the financial statements high and low and recalculate a company’s income statement to figure out how much it really earned,” Walters said. “If the recent scandals have taught us anything, it is that markets demand transparency, not hidden expenses and liabilities that distort earnings and dress-up the balance sheet.”

http://www.newswire.ca/releases/November2002/07/c9225.html