A bulletin issued by the staff of the SEC's chief accountant informs companies that, to a reasonable extent, they could use different methods to value employees' options from those used by other businesses in similar situations.

The SEC bulletin will serve as guidance for companies, but will not amount to a regulation.

The new rules by the Financial Accounting Standards Board call for publicly traded companies to record employee stock options as an expense beginning with their first fiscal reporting period after June 15, a mandate that could dramatically reduce the reported earnings of many big companies.

Consistent with the FASB rules, "the SEC staff believes companies can choose from a number of models to estimate the fair value of stock options," a fact sheet released with the bulletin says. "The staff will not object to reasonable fair-value estimates made in good faith ..., even if subsequent events indicate other estimates would have been more accurate."

The bulletin said it "is very clear that the amounts presented in financial statements for stock option expenses are estimates involving considerable judgment."

The FASB rules raised a firestorm of protest and lobbying when the rule-setting board proposed them in March 2004, especially from Silicon Valley's high-tech industry where stock options for employees created legions of millionaires in the dot-com era. The perks for employees allow them to buy shares of their company's stock in the future at a set price. If the stock rises before the options are exercised, the employee can buy the stock at the predetermined, lower price, then sell it at the higher, current price - and pocket the difference.

Rick White, president of the International Employee Stock Options Coalition, a group representing companies opposed to the new rules, said Tuesday, "While we continue to believe that FASB's mandatory expensing standard is fundamentally flawed, it appears at first blush that the SEC is trying to address some of the problems with the standard."

White said the group believes that the June 15 deadline "remains unworkable."

In July the House voted 312-111, across party lines, to override FASB's mandate. The legislation was backed by House leaders of both parties but stalled in the Senate, where Banking Committee Chairman Richard Shelby, R-Ala., opposed it.

Shelby said in a statement Tuesday that the SEC guidelines "will help ensure that the public receives fair, accurate and objective financial information in a timely manner."

SEC Chairman William Donaldson has advocated mandatory expensing of stock options as has Federal Reserve Chairman Alan Greenspan, billionaire investor Warren Buffett and the Big Four accounting firms.

Opponents have argued that counting options against the bottom line will complicate financial statements, discourage startup companies and hurt the economy by stifling future innovation.

-- Marcy Gordon