Accounting & Tax

Expense Options, Say HP Shareholders

A similar nonbinding proposal was defeated last year.
Stephen TaubMarch 19, 2004

Hewlett-Packard’s shareholders earlier this week approved a nonbinding shareholder proposal that the company expense the value of stock options. The proposal was advanced by the Massachusetts Laborers’ Pension Fund.

Many other technology companies, including Intel and Cisco Systems, have vociferously opposed this practice.

The Financial Accounting Standards Board will shortly recommend its plan for expensing options. Partly in response to critics of the traditional, Black-Scholes valuation model, FASB is expected to embrace a binomial model, to one degree or another.

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“The board will continue to carefully deliberate on this matter,” HP’s chairman and CEO, Carly Fiorina, reportedly said after the voting results were announced.

This is the second consecutive year that HP shareholders have proposed a resolution calling for the company to expense options. The proposal was defeated at last year’s meeting.