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ARTICLE · 05 JANUARY 2005

FASB Finalizes Statement on Stock Option and ESPP Expensing

Goodwin Procter LLP
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As described in our May 2004 Client Alert entitled "FASB Issues Proposal on Stock Option and ESPP Expensing," stock option expensing is on its way. Not only will this affect stock option and other equity award practices, but most employee stock purchase plans, or ESPPs, that contain a discount or a so-called look-back feature (<I>e.g.</I>, a purchase price equal to 85% of the lower of the starting or ending stock price) will also be affected. It is important that companies that grant stock optio

United StatesTax

By Marian A. Tse, Scott A. Webster and Lynda T. Galligan

Originally published December 28, 2004

As described in our May 2004 Client Alert entitled "FASB Issues Proposal on Stock Option and ESPP Expensing," stock option expensing is on its way (please click on 'Next Page' link at bottom of page to view this Alert). Not only will this affect stock option and other equity award practices, but most employee stock purchase plans, or ESPPs, that contain a discount or a so-called look-back feature (e.g., a purchase price equal to 85% of the lower of the starting or ending stock price) will also be affected. It is important that companies that grant stock options or other equity awards, and companies that have ESPPs, consider the implications of the recently finalized accounting rules before they become effective.

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