Options: Old Question, New Answer  By Timothy Luehrman After
lengthy deliberation, the Financial Accounting Standards Board
(FASB), the industry's standard-setting group, is expected to
issue an exposure draft by the end of March for a proposed new
standard governing the treatment of stock options issued to
employees as compensation. We at Standard & Poor's Corporate
Value Consulting expect that this will require companies to
record an expense reflecting the fair value of such options at
the time they're granted. The draft solicits public comment on
FASB's recommendations before the new standards are finally
issued.  While the expensing aspect of the board's pending
decision has been discussed at length, less attention has been
paid to an equally noteworthy potential outcome: FASB will
recommend that companies jettison the venerable Black-Scholes
model for determining the fair value of employee options. And
the new method the FASB may recommend could have a profound
impact on the valuations themselves.  RISK