Regulators Drop Stock-Option Rules Change

U.S. accounting regulators dropped a plan that would have forced companies to deduct from earnings the value of stock options given to outside directors. The Financial Accounting Standards Board proposed the change earlier this year because it saw the directors as independent contractors who were being paid for their services. Corporations argued that outside directors, elected by shareholders, act more like employees. Changing the rules would have made it harder for companies to award stock options, making it more difficult to attract and retain directors, they argued. The FASB proposal was part of a package of initiatives, scheduled to be released by year-end, that could eventually require companies that re-price employee stock options to subtract any increase in value from earnings. Options are a growing part of the compensation packages offered by U.S. corporations, especially high-tech companies that use options to attract technical talent.