All stock-based compensation should be recognized as an expense by using a fair-value based method at grant date, AIC Ltd. says in a submission to the Accounting Standards Board.

AIC’s submission is in response to an December 2002 exposure draft from AcSB. The draft proposes amendments that would require all stock options to be reported on an ongoing basis at fair value. Under existing generally accepted accounting principles in Canada and the U.S., reporting companies can voluntarily disclose information in the footnotes about their stock options in the year the options are granted. They are permitted to do this rather than report the options’ continued impact on the corporation’s financial picture by listing them as expenses over the life of the options.

In supporting the AcSB amendments, Burlington, Ont.-based AIC said it seeks to invest for the long term in businesses that, among other characteristics, exhibit high standards of corporate governance and financial transparency.

“Since AIC is the trustee of the shares of the investee companies held in the AIC funds on behalf of unitholders, it is particularly concerned that the financial statements of public companies fairly represent their earnings and financial positions in all material respects, said Jonathan Wellum, chief investment officer of AIC.

“In furtherance of that objective, AIC, as a matter of corporate policy, asserts that all stock-based compensation should be recognized as an expense by using a fair value-based method at grant date.”

James Cole, senior vice president and portfolio manager, helped write AIC’s submission, copies of which are available by e-mail upon request (www.aic.com/www.upvest.com/www.aicprivateportfolio.com).

AIC is Canada’s largest privately held mutual fund company with assets under management exceeding $11 billion.