Treatment of Employee Stock Options in the U.S. National Economic Accounts

U.S. companies increasingly use the granting of employee stock options as part of an overall compensation package. What was originally an executive perk is now often provided to all employees. This growth has added significance to several questions on the treatment and valuation of these stock options. What are employee stock options? How are wages and salaries and profits measured? How are these options currently treated in national economic accounts of the United States? What are the major conceptual measurement and timing issues? What are the major practical measurement and timing issues? Could a mismeasurement of these options be a source of the swing in the U.S. statistical discrepancy for the most recent years? This paper will focus on answering these questions.