IBM Resists Expensing Options

IBM's shareholders want the company to expense stock options, but IBM resisted the move--for the time being. At a shareholders meeting in Providence, R.I., last week, investors voted 54% in favor of expensing options, a move that would make it easier to see how options affect earnings. The vote was nonbinding.

IBM CEO Sam Palmisano said IBM would expense options when the Financial Accounting Standards Board requires it. The board, which sets U.S. accounting standards, proposed in March that all forms of stock-based compensation, including options, count as an expense on companies' income statements.

Tech companies have used options as a recruitment and employee-retention tool. Treating them as expenses would cost companies millions of dollars. IBM would have earned 15% less last year with options expensed.