B&D shareholders favor stock options change

52.1% vote to have them booked as expense

April 30, 2003|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

A shareholder proposal calling for Black & Decker Corp. to report stock options as an expense narrowly passed at the company's annual meeting yesterday.

According to preliminary results, the proposal - which was opposed by the board of directors - won 52.1 percent of shareholders' votes.

In a statement yesterday, the world's largest toolmaker said its board will consider the policy change once the Financial Accounting Standards Board completes its review of stock-based compensation and clarifies how stock options should be valued.

The Financial Accounting Standards Board, the private-sector panel that sets U.S. accounting rules, said last month it hopes to draft new stock options regulations that could take effect in 2004.

Stock-option accounting has become a hot-button issue after corporate accounting scandals caused greater scrutiny of how companies record income, revenue and expenses. Companies typically reward options as part of the compensation packages offered to executives and employees.

Barbara Lucas, a Black & Decker spokeswoman, said yesterday that the company had opposed the proposal because the accounting board has yet to make formal recommendations.

"Until it's agreed upon what it should be, nobody wants to get ahead of it," she said.

Last year, Nolan D. Archibald, Black & Decker's chairman and chief executive officer, received 225,000 stock options, in addition to total compensation of $4.33 million. He also exercised 360,000 options awarded in previous years for an additional gain of $9.5 million.

Under current accounting rules, companies can choose to not recognize options as an expense in their annual statements. But they would have to disclose the value of the options in the statement's footnotes.

Critics have argued against mandatory stock-option expensing, saying that dollar-figures attached to stock options are not reliable enough. And some have said that comparing companies that issue stock options against those that do not would become much more difficult.

Some companies have begun or plan to begin expensing stock options. But most are waiting for the accounting board to issue guidance and rules that would apply to everyone.

The proposal's approval essentially means that Black & Decker's shareholders have recommended that the board "study the issue more closely," said Ed Durkin, director of corporate affairs for the United Brotherhood of Carpenters union, which submitted the shareholder proposal.

The union controls 356,000 shares of Black & Decker as part of its pension funds, Durkin said. NCR Corp., Apple Computer Inc., Capital One Financial Corp. and other major companies recently have adopted similar resolutions, he said.

"We submitted this resolution to about 100 companies," Durkin said at the annual meeting yesterday at the Sheraton Baltimore North hotel. "What these votes are saying to the market, to business and political leaders, is you better get to this issue" of stock option expensing, Durkin said yesterday after the meeting.

Shareholders yesterday also approved the nomination of Kim B. Clark, faculty dean at the Harvard Business School, as a director on the company's board.

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