BROOKLINE, Mass., June 22 /PRNewswire/ -- myStockOptions.com has sent a
letter to the Financial Accounting Standards Board (FASB) urging it to
reconsider its proposed accounting charge for employee stock purchase plans
(ESPPs). FASB proposed the change in an Exposure Draft of March 31, 2004,
entitled Share-Based Payment. myStockOptions.com sent its letter in response
to FASB's call for comments on the topic.
myStockOptions.com fears that the proposed accounting charge would cause
companies to eliminate or reduce the purchase discount, reduce the amount of
stock employees can purchase, or even stop offering ESPPs. By deducting
after-tax money from employees' paychecks over a certain period to buy company
stock at a discount, ESPPs are a valuable and secure benefit for workers, who
can profit from them even in down markets.
ESPPs: Compensation Or Company Benefit?
FASB's proposal stems from its view that ESPPs are a form of outright
compensation, like stock options (which FASB has also targeted for an
accounting charge). myStockOptions.com believes that ESPPs are truly a
company benefit, not part of compensation, and should not get caught up in the
controversies surrounding stock options.
"FASB sees all ESPPs as a form of share option or share-based payment,
without attempting to recognize the real differences," says Bruce Brumberg,
Editor-in-Chief of myStockOptions.com. "Many ESPPs are true stock purchase
plans and are not compensatory or similar to stock-based payments."
Employees (And Companies) View ESPPs As Benefits
In its letter, myStockOptions.com contrasts ESPPs with shared-based
compensation and other discounted stock programs for investors that do not
take an accounting charge. myStockOptions.com also cites its own experience
with ESPP participants.
"Employees tell myStockOptions.com that they use these types of plans to
regularly save money from their paychecks and to buy company stock by
dollar-cost averaging their investment," says Mr. Brumberg. "These types of
plans lack any option-like features and are far from being viewed by employees
as compensation. Based on our experience at myStockOptions.com in interacting
directly with ESPP participants, we think they overwhelmingly view ESPPs as a
benefit."
Along with employees, companies themselves treat ESPPs more as a benefit
than a part of salary. "A substantial number of companies treat the
administration of ESPPs as the responsibility of the benefits department, not
part of compensation planning, design, or administration."
Suggesting Next Steps
Among other suggestions in the letter, myStockOptions.com asked FASB to
create a separate Statement of Financial Accounting Standards on ESPPs that
recognizes the differences between ESPPs and share-based payments and between
different types of ESPPs, and evaluates changes in valuation models for ESPPs.
About myStockOptions.com
myStockOptions.com is the premier provider of online educational content
and tools on stock options, restricted stock, and employee stock purchase
plans. Its content and tools are licensed to companies, major financial
institutions, and transfer agents. PC World ranks myStockOptions.com among
"the most useful sites ever" that "deliver top-notch information, support, and
services."
Contact:
Bruce Brumberg
617-734-1979
bruce@mystockoptions.com
SOURCE myStockOptions.com
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Related links:
http://www.myStockOptions.com
CONTACT:
Bruce Brumberg of myStockOptions.com,
+1-617-734-1979, bruce@mystockoptions.com
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