Expense Options--But Give Startups A Break

from the one-way-to-do-it dept

Business Week has an opinion piece that says one way to deal with the ongoing debate over expensing options is to make public companies expense options, but set up different rules for private companies. Some think this is a terrible idea, since it sets up a two-tier system. If it works one way for public companies, they say, it should work the same for private companies. Of course, there are some major differences, starting with the fact that, in private companies, there is no real market setting the option price. Furthermore, the argument in the article suggests that startups would be hurt unfairly if they needed to expense options. It would cause them to have much lower profits, since they still need to use options to lure top talent - but would harm them because it would make the companies appear less stable and less credible to potential customers. Of course, I'd still like to think that most people can understand the change in accounting rules doesn't actually change anyone's cash position in the slightest - and thus, can adjust on their own mental scale to measure what it all means.