Securities and Exchange Commission

confirmed plans to cut most companies some slack on when they have to start expensing stock options.

Under a rule announced Thursday, the largest public companies won't have to start including option costs in their income statement until the beginning of their first fiscal year after June 15. Smaller companies have even longer: They don't have to start expensing options until the beginning of their first fiscal year after Dec. 15.

Previously, accounting rules issued by the Financial Standards Accounting Board would have required all public companies to start expensing options with their first quarter after June 15. For large companies whose fiscal year coincides with the calendar year, the rule change effectively means that they won't have to start expensing options until the first quarter of 2006 instead of the third quarter this year.

Implementing the standard in the middle of the fiscal year -- which many companies would have had to do under the old standard -- would have unnecessarily complicated companies' financial reports, Donald Nicolaisen, the SEC's chief accountant, said in a statement. Additionally, some companies said their accounting staffs were already burdened with trying to meet Sarbanes-Oxley requirements and asked for more time to comply with the expensing standard, Nicolaisen said.

"Implementing the new standard at the beginning of a fiscal year allows companies to change their accounting systems in a more orderly fashion, and should allow auditors to conduct more consistent audit and review procedures. Companies that choose to

expense options earlier than required are encouraged to do so."

The SEC's move marks the second time regulators have pushed off the date that companies have to start deducting options costs from their earnings. Last October, before the FASB had even finalized its expensing rule, it

delayed the implementation of it by six months. Previously, the accounting authority was going to require companies to start expensing options in their first quarters after Dec. 15 of last year.

The move also marks one of the first times, if not the first time, that the SEC has chosen to override the FASB on the date a new accounting rule goes into effect.

The delay is the latest twist in the long-running battle over expensing options. Under current accounting rules, companies can choose whether to recognize options costs on their income statements or merely estimate them in a footnote to their financial reports. Many companies, particularly in the technology industry, have chosen to go the footnote route, in the process typically eliminating millions of dollars in expenses from their reported earnings.

Shareholder advocates have fought for years to force companies to recognize options costs, charging that companies often abuse their options programs and that such abuse led to the scandals at Enron, Worldcom and other companies earlier this decade.

But technology companies in particular have fought against expensing, saying that having to show options costs on their books would lead them to cut back on their options grants, hurting their ability to attract new talent and compete in the marketplace.