Volume 13, No. 5


2003 Options & Pensions: An Early Survey  There are two seemingly eternal issues in financial reporting. One: how does low-brow reporting of options compensation distort performance results? Two: how does pension accounting distort performance results? These questions haunt investors and analysts each year at annual report season, when the disclosures about the two accounting vexations are most plentiful. A look at the top 150 companies in the S&P 500 yields some intriguing answers. Those 150 companies - less than a third of the total 500 - comprise over 70% of the entire group's total market capitalization. All of them have some form of stock compensation and 120 of them have defined benefit pension plans - so it's a fairly representative group of the larger whole. The early findings? The popularity of options compensation has waned as you might have expected - but restricted stock is gaining in popularity. More compensation in all forms is what counts, apparently, and not just the form of more compensation. As for pensions, assets rebounded handily in 2003, thanks to a bull market and hefty contributions - but pension obligations continued to grow unabated.

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