Two businesses added their names to the growing list of companies planning to expense employee stock options. Oil company Sunoco
Sunoco plans to begin expensing options in its fourth quarter, and the change will be retroactive to Jan. 1, 2002. The move by Sunoco is expected to decrease its fiscal 2002 net income by $5 million, or $0.07 a share. The company said had this policy been in place in the past, its 2001 and 2000 earnings would have been reduced by $3 million, or $0.03 a share. Its 1999 earnings would have been lowered by $6 million, or $0.07 a share.
H&R Block will begin expensing options in its next fiscal year. The company said it can't anticipate how the measure will impact its net income, as it's awaiting clarification from the Financial Accounting Standards Board (FASB) on which accounting method is most appropriate. The FASB has not yet issued its final judgment on the matter but is expected to before year's end.
H&R Block did say using one of the FASB's most common accounting methods for stock options, Statement 123, would have reduced basic earnings per share for 2002 by $0.19. This was noted in H&R Block's annual report. The company reported basic earnings per share for 2002 of $2.38.
Sunoco and H&R Block join Coca-Cola
It creates more transparency, and in a world of headlines screaming corporate scandal after corporate scandal, transparency is one of the greatest weapons available for open, honest businesses. Bravo to both companies.