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07/24/2002

iStar Financial Begins Expensing All Stock Options

NEW YORK, Jul 24, 2002 /PRNewswire-FirstCall via COMTEX/ -- iStar Financial Inc. (NYSE: SFI) announced today it will begin expensing the cost of all employee stock options the Company grants, beginning with options granted on or after January 1, 2002. All future employee stock option grants will be expensed over the stock option vesting period based upon their fair value on the grant date. Generally accepted accounting principles only require companies to disclose estimated option costs in footnotes to financial statements.

The Company already deducts from adjusted earnings and net income the expense associated with restricted share grants. As a result, the Company expects no material impact to adjusted earnings or net income from the adoption of the new accounting methodology for future option grants.

To ensure clear disclosure for investors, the Company has always itemized these expenses under a separate line item on its income statement captioned "General and administrative - Stock-based compensation." The incremental expense associated with future option grants will also be included in this line item.

"Like restricted shares, new stock option grants are a form of employee compensation and it is appropriate that these expenses be reflected in our financial results," said Spencer B. Haber, iStar Financial's president and chief financial officer. "Our management's determination to change to the preferred method of accounting for these options ensures that our earnings will continue to clearly reflect the economic reality of our business."

For its annual stock-based incentive grant in January 2002, the Company granted restricted shares with three-year vesting provisions in lieu of stock options, and, as noted above, already expenses the value of those restricted shares through its income statement. For 2001, the last year in which a material number of stock options was granted to employees, the dilutive impact on reported 2001 adjusted earnings and net income for options granted that year would have been less than $(0.01) per share in each case.

iStar Financial is the largest publicly traded finance company focused exclusively on the commercial real estate industry. The Company provides structured financing to private and corporate owners of real estate nationwide, including senior and junior mortgage debt, corporate mezzanine and subordinated capital, and corporate net lease financing. The Company, which is taxed as a real estate investment trust, seeks to deliver superior risk-adjusted returns on equity to shareholders by providing innovative and value-added financing solutions to its customers. Additional information on iStar Financial is available on the Company's Web site at http://www.istarfinancial.com.

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               http://tbutton.prnewswire.com/prn/11690X25385313
SOURCE iStar Financial Inc.

CONTACT:          Spencer B. Haber, President and Chief Financial Officer,
                  +1-212-930-9400, Andrew C. Richardson, Senior Vice President, Capital Markets,
                  +1-212-930-9400, or Erin C. Hart, Associate, Investor Relations,
                  +1-212-930-9400, all of iStar Financial Inc.

URL:              http://www.istarfinancial.com
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