This Research Report investigates the issue of Accounting for Stock-based Compensation. It looks at the issue from an Australian perspective in light of the developments in the USA where the issuing of an FASB Exposure Draft has caused considerable debate on the appropriateness of the implications including the recognition of a cost of share options issued and the expensing of that cost over the vesting period.
A survey of Australia's top 95 companies has found that approximately half of them issue share options to employees but that the motivation behind such issuance is divided equally between minimising agency costs and a form of remuneration. Additionally, it was found that there is little support for the expensing of the cost of share options as proposed by the FASB Exposure Draft.
In Australia, the PSASB and the AASB have signalled their intention to look into this issue in the future. The study highlights the fact that they must ensure there is sufficient public discussion and input so that an appropriate Standard can be developed.