Ebb & Flow

More than a year after the expensing of stock options was officially required by FASB, the impact seems to have been minimal for most biotechnology companies. Although the change has made financial statements more difficult to read, the Street has taken the switch entirely in stride, while companies themselves are looking more closely at the composition of their compensation packages.

Prior to implementation at Dec. 15, 2005, there were concerns that stock option expensing would inaccurately portray the financial health of small and mid-sized biotechs, which are highly dependent on stock options to attract and retain top talent. But since the reporting rules have taken effect, most biotech and technology companies have chosen to simply report on both a GAAP and a non-GAAP or pro forma basis...