Tech Execs Find 123(R) Challenging

Technology companies might be more likely than those in other industries to offer stock option and employee stock purchase plans to attract and retain employees, but as a result, they are also spending more time and money on financial reporting, according to a Grant Thornton survey of 104 technology executives.

More than three-quarters of respondents said they are outsourcing option valuation as a result of the increased complexity and scrutiny associated with FASB Statement no. 123(R) implementation. A majority of executives reported that reconciling the tax benefit for awards that were partially or fully vested upon adoption of the standard, as well as the grant-by-grant reconciliation of the option exercise tax benefit, was challenging or burdensome.

Almost 60% said they have increased the involvement of their compensation committee in designing compensation programs.

For more information on FASB Statement no. 123(R) implementation, see “ Options and the Deferred Tax Bite,” March 06, page 71; “A Road Map for Share-Based Compensation,” April 07, page 50; and “Avoiding FASB 123(R) Pitfalls,” May 07, page 74.

Source: Insights for Technology Business Leaders: Stock-Based Compensation Practices in Transition, Grant Thornton LLP, www.grantthornton.com .