• Take Stock Of Your Option Practices: SEC Chief Accountant Releases Important Guidelines on Stock Option Grants
  • November 2, 2006
  • Law Firm: Bingham McCutchen LLP - San Francisco Office
  • The nationwide scandal involving stock option grants has already ensnared more than 100 public companies. SEC Chief Accountant Conrad Hewitt recently released guidance regarding the proper accounting for various historical stock option granting practices.1 The September 19, 2006 letter (the "Guidance Letter") follows an earlier audit practice alert issued by the Public Company Accounting Oversight Board,2 and provides much needed clarification for companies and their auditors. Corporate executives should ensure that their company's historical accounting for stock options is in compliance with this new guidance, or should be prepared to justify, with appropriate supporting documentation, any deviations from the accounting treatment set forth in the Guidance Letter.