Decision on SAYE scheme fate put off until New Year

The Accounting Standards Board has granted a stay of execution to employee SAYE schemes following an outcry from FTSE-100 companies who want them to receive special accounting treatment.

A decision on the fate of SAYE schemes was originally tabled for last week at a meeting of the ASB’s Urgent Issues Task Force, but will now be delayed until the New Year. Two-thirds of replies to the UITF’s proposals for a clampdown on employee share scheme accounting methods called for SAYE schemes to be exempted from the measures.

Last week Accountancy Age revealed how FTSE-100 companies, who feared the proposed change would jeopardise SAYE staff incentive schemes, were preparing to revolt. The UITF proposals mean some companies would have to charge millions of pounds worth of employee share option discounts to the profit and loss account or remove the discounts.

UITF technical director Andrew Lennard said: ‘Most respondents wanted SAYE schemes to be left out of the proposals, but at the moment we haven’t got a good enough accounting reason to exempt them.

‘SAYE schemes, as with other employee share schemes, are a right to buy shares and not to pay the full cost. So it’s difficult to see why it should not be booked in the same way as the other schemes,’ Lennard added.

The UITF has extended the proposals’ consultation period in an attempt to find a good accounting reason for exempting SAYEs from the proposals.

Lennard said: ‘We don’t want to act precipitously in this matter.’

But other experts agreed that finding a legitimate accounting reason for excluding SAYE schemes could prove a challenge.

KPMG senior technical partner John Kellas commented: ‘I’m glad they’re putting it off. It was not the prime target of the original proposals.

It’s sensible to sit back and consider the matter after such an adverse reaction, but I have to say there is no obvious reason at the moment why these schemes should be treated differently.’

Sue Woodward, group accountant at Marks & Spencer, which last week described the inclusion of SAYE schemes as a ‘shock’, said: ‘We’re very pleased with the postponing of the decision. In terms of coming up with an accounting reason for excluding SAYE schemes, the only way is to make a special case to exempt them on the grounds that they act as incentives for employee share ownership.’