Itron to Call Stock-Based Compensation Expense an 'Expense'

We’re pretty sure this is not the bombshell Itron (ITRI) investors were speculating on, but we like it anyway. Itron has announced it will no longer exclude stock-based compensation from non-GAAP earnings:

For 2007, we believe the exclusion of non-cash stock-based compensation expense is no longer necessary to provide comparable financial measures as both 2007 and 2006 periods reflect stock-based compensation expense under SFAS 123[R]. In addition, we are no longer excluding non-cash stock-based compensation expense from our executive compensation plans.

Itron joins a number of companies who did things right: they gave us the non-GAAP earnings during the transition year to make for better year/year comparisons to 2005, when accounting rules did not require options to be expensed. Then they stopped doing it, because there are no more problems with comparisons. At this point, we think investors will look askance at any company that continues to insist on excluding this form of compensation from “expenses.”

Disclosure: Author owns call options on Itron.