Yahoo!

(YHOO)

shareholders like their financial statements just the way they are, thank you very much.

Shareholders in the highflying Net media outfit Friday narrowly rejected a nonbinding proposal urging the company to treat employee stock options as an expense,

Reuters

reported. The news comes on the heels of a

flap this week over options expensing at Silicon Valley giant

Intel

(INTC) - Get Report

.

Yahoo!'s shareholder vote comes just a month after the Sunnyvale, Calif., company outlined the options-rich pay packages its top execs are due to collect this year. Yahoo! said in a

mid-April filing with the

Securities and Exchange Commission

that CEO Terry Semel had collected a 2.9-million-share option grant whose value has rocketed along with the price of Yahoo! shares.

Friday's vote and last month's filing spotlight the significant impact that expensing options will have on Yahoo!'s bottom line, should the Financial Accounting Standards Board get its way in mandating how companies treat stock options grants. The FASB is expected to issue final rules in the fourth quarter.

A preliminary count at Yahoo's annual meeting indicated that 53% of holders voted against the nonbinding proposal and 45% voted for it,

Reuters

reported.

On Friday, Yahoo! shares rose 48 cents, to $28.51.

Yahoo's board had opposed the proposal in a proxy statement mailed to shareholders.

Reuters

said the options-expensing bid was backed by the United Brotherhood of Carpenters and Joiners of America, which owns 10,200 Yahoo! shares. The company has more than a billion shares outstanding.

Supporters argue that expensing options paints a clearer picture of companies' bottom lines. Opponents, including Intel and Yahoo! and a number of other high-profile tech companies, contend that the lack of a uniform method for computing the fair value of options renders the exercise moot.

For its part, Yahoo! says in its proxy statement, "The board of directors believes that the more significant issue of stock option compensation is the actual number of options granted by the company rather than the accounting treatment related to such grants, and the company has given a great deal of weight to this matter in formulating its equity compensation policies."

Critics of lavish executive pay have taken aim at stock options in recent years, saying big option grants motivate executives to focus on pushing the stock up now at the expense of the long term. Whether or not that has been the case with Yahoo!, the move to expense stock options would have had a major effect on the company's net income in recent years, judging from Yahoo!'s 2003 annual report.

Had Yahoo! used what is known as the fair value method, the company's reported 2003 net income of $237.9 million, or 37 cents per share, would have fallen to $34.8 million, or 5 cents a share. Yahoo!'s 2002 net income of $42.8 million, or 7 cents per share, would have swung to a loss of $440.1 million, or 74 cents a share.