Another Look at FASB Interpretation 44

BY FRANK C. MINTER

A comment in “FASB Offers More Guidance on Stock Options” ( JofA, July00, page 18) suggests that the inability to reprice options could cause a company to lose all its employees if the value of its stock declines and is not likely to go up in the near future.

I have been involved with financial reporting issues on behalf of the Institute of Management Accountants for over 15 years and we, like most everyone else, were opposed to the FASB conclusions on recognition and measurement of stock compensation. However, as the board worked to clear up the many interpretive questions resulting from the continued use of APB Opinion no. 25, we participated in that due process as well.

I have never objected to the concept that repricing of options makes a fixed plan become a variable plan. That simply makes sense. Rather than reprice, all any company has to do is simply issue new options and leave the “underwater” ones on the table. I realize sometimes that requires the action of stockholders to approve additional shares, but if the action is appropriate, there should be no problem with stockholders.

Frank C. Minter, CPA
Birmingham

SPONSORED REPORT

Cybersecurity threats proliferating for midsize and smaller businesses

This report details how SMBs can properly protect private information from breaches, design and implement a cybersecurity policy, and create safeguards for training and education.

CHECKLIST

Being responsive to clients

CPAs and their firms have daily pressures and hectic schedules, but being responsive is crucial to client satisfaction. Leaders in the profession offer advice for CPA firms that want to be responsive to clients.

QUIZ

Test yourself on these often confused words

The spelling checker on your word processing program can do only so much to flag problems. Your best insurance is to learn the troublesome words that trip up writers and use them correctly by the standards of formal, written English.