Intel assumes expensing will be required. Barrett said four weeks ago the US accounting standard setter, the Financial Accounting Standards Board, is fixed on making the change.
"Clearly, FASB has ruled and they want to implement it," Intel spokesman Bill Calder said. "You have to assume that will proceed."
Options give a holder the right to buy stock at a set price in a set period. Options gained favor in the 1990s because companies didn't have to account for them as a cost, unlike shares awarded based on performance.
Options also provided tax benefits by letting companies deduct from corporate income taxes the exercise of stock options by workers.
Even without the expensing requirement, companies are looking at new ways to reward workers because many options awarded in the 1990s can't be exercised profitably after US shares dropped the past three years.
Intel is considering attaching time and performance conditions to grants of stock or options, the company's SEC filing said. The chipmaker also is evaluating whether more cash pay should be tied to performance and may hand out indexed options, which carry an exercise price linked to a market index.
The company said at a shareholder meeting last month that it won't make any changes for now. It is continuing to look at compensation and hasn't decided what changes will be warranted if it's required to deduct the cost of options, Calder said.
"The companies I have spoken to have been diligent and have already modeled out the precise size of grants for after the change," said Matt Ward, chief executive of Westward Pay Strategies Inc, who declined to specify which clients consulted him. "Any companies with more than US$1 billion in revenue, I've got to figure they had someone internally modeling, if not used their consultants to do that."
Semiconductor maker LSI Logic Corp said in a filing that it's asking shareholders to approve a plan allowing the company to change compensation "if and when option expensing is required."
LSI didn't return calls for comment.
In lieu of options, Dell executives will be entitled to cash bonuses of as much as US$6.9 million each in fiscal 2007, assuming performance goals are met. Spokesman T.R. Reid said the company is giving fewer options to workers because the labor market is less competitive than it was in the late 1990s.
Amazon.com Inc, the world's biggest Internet retailer, replaced options with restricted stock as its "primary vehicle for employee stock-based awards," the company said in a filing.
Companies won't abandon stock options wholesale, consultants say. Options have become ingrained in the computer industry and so will remain as a "cultural vestige," Turner said.
"Right now, 60 to 65 percent of all employees in high tech have options," Turner said.
"That might fall below 50 percent, but not much lower than that," Turner said.
Microsoft, the world's biggest software maker, wants to continue awarding stock to employees and hasn't decided what it will do if expensing is required, chief financial officer John Connors said in an interview. He said he expects options to remain at many companies.
"An equity-based program that is broad-based for all employees makes a great deal of sense," Connors said.
"You'll probably see companies in the tech sector continue to have an option program that's important," Conners said.
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