The Financial Accounting Standards Board proposed in March that options expensing will become mandatory starting next year. However, many companies and their auditors have since asked for more time, arguing the complexity of the proposed standard -- mainly related to how to value an employee option -- would overstretch their already heavy workload as a result of new regulatory requirements.

The delay request has won support from Donald Nicolaisen, the Securities and Exchange Commission's chief accountant, who recently noted that companies and auditors are already busy putting in place new financial control systems under the Sarbanes-Oxley Act. The FASB writes accounting rules under the authority of the SEC.

At a meeting Wednesday, the seven-member board decided that the expensing rule will take effect with financial statements beginning after June 15, 2005, for publicly traded companies -- or the third quarter of next year for those on a calendar year. To facilitate comparability from quarter to quarter, the FASB also agreed that companies will be allowed -- but not required -- to restate their profits for the first two quarters of 2005 to reflect options expense.

By putting off the expensing requirement for six months, FASB Chairman Robert Herz said at the meeting, the board aims to strike a balance between the concerns of companies and auditors and the needs of investors who want to see the expense recognized "as soon as possible."

Some observers see the postponement decision as a compromise the FASB has to make as the SEC, along with some other policy makers, has been trying to persuade Congress not to intrude in the independent, private-sector accounting standard-setting process.

The House of Representatives, responding to lobbying by technology companies, already has passed a bill that would limit expensing of stock options only to options granted to a company's top five officers. Still, the measure faces big hurdles in the Senate.

Also at Wednesday's meeting, the FASB rejected an options-valuation approach recently suggested by a group of tech companies led by Cisco Systems Inc., Genentech Inc. and Qualcomm Inc.

The board reaffirmed its previous decision that the options-valuation formulas, including the widely used Black-Scholes model and the more sophisticated "binomial" method, are the best tools available to value employee options.

The plan preferred by Cisco, Genentech and Qualcomm would tweak the assumptions used in Black-Scholes, such as estimates of a stock's volatility and those of how long employees would hold on to their options. Such a plan would result in a 70 percent smaller hit to earnings than under Black-Scholes.

The battle over how to account for stock options has raged for years, primarily pitting corporations - notably the tech names - against accounting rule-makers. Opponents of expensing argue there is no reliable way to value employee options, and expensing them would distort companies' financial results and hurt their ability to attract talent. Supporters say stock options are a real cost to a company's shareholders and should be recognized on income statements.

Companies now can choose to simply disclose the value of options in financial footnotes or to charge it directly against earnings. More than 500 companies have volunteered to expense options, according to Bear Stearns.