The reason: derivatives must be marked to market, generally each quarter. While the accounting for employee stock option grants wouldn't change under such an approach, companies would have to reassess any tracking instrument used in valuing those options. That might require frequent auctions, or reverting to options-pricing models, defeating the purpose of using Esoars-type products. Another downside is that as a liability, any increase in the value of the tracking securities would be treated as an expense, reducing earnings.

"I don't see it as deal killer, I see it as a deal complicator," said Hill. He predicted that some companies wouldn't object to using Esoars, even if they must be accounted for as a liability but acknowledged others might decide that "it's just more headache than it's worth."

Zions vice president James Livingston declined to comment on whether Zions is accounting for Esoars as an equity or liability, as did a spokesman for its outside auditor, Ernst & Young LLP.

SEC officials aren't jumping in, said Hill. "For them, it's a FASB question." SEC spokesman John Nester declined to comment.

FASB's emerging issues task force agenda committee may consider whether to add discussion of Esoars-type instruments to a task force meeting on Sept. 11. Task force chairman, Russell Golden, declined to comment on the matter.

FASB created the task force to resolve pressing issues quickly, but its process isn't super-speedy. It typically votes on adopting a consensus view, and then it seeks public comment before finalizing it and sending it to the FASB for ratification. Thus, even if the task force takes up the matter in September, the earliest it could finish would be at its November meeting; any delays might defer a ruling until 2008.

Although the task force has weighed in previously on tracking securities, it has not directly addressed products linked to the value of employee stock options rather than to company stock. A key hurdle: tracking securities that are solely indexed to a stock qualify for equity treatment, and yet Esoars are dually indexed, depending on the value of the stock and whether employees exercise their options.

Another potential wrinkle: while employee stock options and tracking securities generally get accounted for as equity instruments, such treatment may not apply if payments are made in cash. Zions has said Esoars holders may be paid in stock, cash or some combination, which might raise questions about whether the securities qualify for treatment as equity instruments.