“In a burgeoning trend in the wake of the Enron debacle, the U.S.’s largest banks, insurers and Wall Street firms are expected to announce as a group Tuesday that they will begin reporting stock options as expenses,” writes Michael Schroeder in today’s Wall Street Journal.

“The members of the Financial Services Forum, a group of chief executives from 21 of the nation’s largest financial companies, are joining other blue-chip companies that have announced the accounting change in a bid to prop up flagging public confidence in the markets and the economy. Most of the companies intend to include the new accounting in their 2003 annual results.”

“While several individual members of the forum have announced recently they would expense options, the companies collectively decided only in the past few weeks during several teleconferences to endorse the concept as an organization. ‘Here is a group standing together and saying they are willing to change in response to investor concerns,’ said Rick Lazio, the group’s president.”

“Companies have resisted the move in part because stock-option accounting is complicated, and there isn’t any consistent method for determining option value, which undermines the value to investors of such disclosures. Mr. Lazio said the group wants to draw attention to the issue in an attempt to get regulators and standard-setters to come up with a uniform system.”

“The participating companies are: Allstate Insurance Co., American Express Co., American International Group Inc., Bank One Corp., Bank of America Corp., Bank of New York, Citigroup Inc., FleetBoston Financial Corp., Goldman Sachs Group Inc., Household International Inc., J.P. Morgan Chase & Co., Merrill Lynch & Co., MetLife, Morgan Stanley, Prudential Financial Inc., State Street Corp. and Wachovia Corp.”

“General Electric Co., which is part of the group, has already announced that it has changed its accounting policy, but as of Monday hadn’t formally signed off on being included in the forum’s planned announcement.”

“These financial-services companies join other high-profile corporate names, including General Motors Corp. and Coca-Cola Co., in agreeing to count options as expenses in financial results. The decision to expense options isn’t expected to have a significant impact on these companies’ earnings.”