Accounting & Tax

Dell Shareholders Propose Option Measure

Company maintains that it should await the final rules from FASB before deciding to expense employee stock options.
Stephen TaubJune 1, 2004

Dell Inc. is the latest tech company to face a shareholder proposal urging it to expense the value of employee stock options.

The proposal was made by the AFL-CIO Reserve Fund. Dell’s annual meeting is scheduled for July 16.

Shareholders have already approved a similar nonbinding measure at companies including Apple Computer Inc., Hewlett-Packard Co., and Intel Corp.

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After Intel’s shareholder meeting last month, chief financial officer Andy Bryant maintained that the chip giant would continue to oppose this policy. “I will continue to advocate that we should not do expensing,” he told reporters, according to a wire service account.

Added Bryant, “I’ve said time and time again, it’s not an expense, it’s an equity transfer.”

If Intel had treated the cost of employee stock options as an expense, its net earnings would have been cut by 17 percent in the first quarter of this year, according to Reuters, citing the company.

Dell’s position is that it should await the final rules from the Financial Accounting Standards Board before it acts on the shareholder proposal. “Expensing stock options before the adoption of the final FASB standard would result in confusing disclosures to investors and would do little to enhance the transparency, understandability and comparability of financial reporting,” Dell stated in its proxy.