Publisher to Expense Stock Options

Washington Post Co. will follow the advice of billionaire investor Warren Buffett, its largest outside shareholder, by accounting for stock options as an operating expense, the company said Monday.

Coca-Cola Co., which like the Washington Post counts Buffett as its top investor and a director, said Sunday that it will begin expensing options.

Buffett has advocated including options as a cost on corporate income statements, to make financial reports clearer and more accurate.

“His arguments make complete sense to all of us,” Washington Post Chief Executive Donald Graham said. “As it happened, [Buffett] wasn’t in the meeting where it was discussed, but the members of the board have heard Warren’s views on this.”

Calls by investors for companies to expense options have been spurred by accounting scandals involving companies including Enron Corp. and WorldCom Inc.

U.S. rules now require only an estimate of option costs in footnotes to income statements.

Washington Post, publisher of its namesake newspaper and Newsweek magazine, made the accounting decision at a board meeting in May, Graham said. The company is consulting with its accountant, PricewaterhouseCoopers, on which option valuation method to use in calculating the expense, he said.

The Washington-based company’s 2000 net income of $136.5 million would have been reduced by $3.8 million, or 2.8%, had the company recognized options as an expense, according to the company’s annual report.

Shares of Washington Post fell $1 to $525 on Monday. Coca-Cola’s shares rose 95 cents to $52.