16-6 Stock Options 3

16-6 Stock Options 3 - Cisco Proposes New Way to Value...

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Cisco Proposes New Way to Value Employee Options Source: Wall Street Journal, 12 May 2005 Cisco Systems Inc., in a bid to reduce the impact of a looming accounting shift, has proposed a novel way to value employee stock options -- by offering to Wall Street financial instruments designed to mimic employee options. A Cisco spokesman confirmed that the big San Jose, Calif., maker of computer-networking equipment had recently proposed to the Securities and Exchange Commission creating a “market instrument” that would parallel employee options. The spokesman said Cisco is waiting to hear from the SEC. The goal of the plan is to create a market to deter- mine a value for options, an issue that has vexed ac- counting and securities regulators for more than a decade. The Financial Accounting Standards Board last year adopted a rule requiring publicly traded companies to begin recording the value of employee options as an expense in their financial statements. Most large companies won’t have to implement the
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