The Securities and Exchange Commission is changing newly adopted rules governing the disclosure of executive and director compensation.
In a statement released Dec. 22, the agency said it is altering the requirements for disclosing the value of stock option awards and giving firms more flexibility in how they report those expenses.
The SEC said the new rules should more closely conform with the reporting of stock option awards under standards in the Financial Accounting Standards Board's rule FAS 123. That rule requires recognition of the costs of stock option awards over the period in which an employee is required to provide service in exchange for the award.
Using this same approach when disclosing executive compensation will give investors a better idea of the compensation earned by an executive or director during a particular reporting period, the SEC explained in its announcement.