The The Motley Fool discusses the best stock options model. Bill Mann argues that the perfect model doesn't exist. But the one we have now falls substantially short of adequate in its disclosure of information to shareholders about the impact of stock option grants on their investments. He address a few of the myths of expensing opponents, then he discusses an appropriate treatment of stock options.

All other forms of derivatives have an accounting treatment on the balance sheet, employee stock options have none. It would be far more instructive to know what the derivative liability would be in a mark-to-market entry on the liability ***account*** with corresponding credits. In this way, investors can see the contingent potential exposure to options that at present actually exists as a form of off-balance sheet financing. Companies extend to employees the opportunity to purchase shares at a price -- a form of liability for the company since it cannot renege on this obligation. All adjustments would trigger credits or debits from the income statement.