Mercury News: “Accounting rule makers handed down long-awaited final guidelines Thursday that will force companies to deduct the value of billions of dollars of employee stock options from reported profits starting in mid-2005.”

Here’s some old discussion of what this means.

The old Silicon Valley hands are unhappy with the general concept of expensing stock options, and one reason they often give for this is the difficulty of figuring out the value of stock options. But anybody in the investment industry, and indeed, anyone with a rudimentary understanding of financial accounting knows that accounting for the value of an illiquid asset is always a problem yet something you always have to do anyway, and just because the value of stock options changes over time or because it is not possible to fix exactly does not mean it shouldn’t be accounted for consistently.

About the author.

In 2000 I co-founded Fog Creek Software, where we created lots of cool things like the FogBugz bug tracker, Trello, and Glitch. I also worked with Jeff Atwood to create Stack Overflow and served as CEO of Stack Overflow from 2010-2019. Today I serve as the chairman of the board for Stack Overflow, Glitch, and HASH.