WASHINGTON — The Securities and Exchange Commission has approved a market-based method for valuing employee stock options, which could make the popular perks worth less and reduce the expense to companies.

Financial services company Zions Bancorp said Monday the SEC's chief accountant had given final approval to its auction system for calculating market values of stock options.

Salt Lake City-based Zions said it intends to market its system to other public companies.

Under accounting rules that took effect last year, public companies must count the value of stock options they award executives and employees against profits. Stock options allow employees to buy shares of their company's stock in the future at a set "strike" price.

High-tech companies, especially startups that might be short on cash and profits, opposed the mandate because they traditionally used stock options that might be worth more in the future to reward employees.

Several companies, notably networking equipment maker Cisco Systems Inc. and Zions, had urged the SEC to allow market-based methods for valuing options, as

opposed to the widely used theoretical mathematical models.

"For the first time, companies have a market-based alternative to employee stock-option valuation models," James Livingston, a Zions vice president, said in a statement. "When sophisticated and informed investors compete for a properly designed instrument in a fair and open auction, the market-clearing price represents a fair market value."

SEC spokesmen didn't immediately return telephone calls seeking comment. The development was reported in Monday's editions of The Wall Street Journal.

The Zions system creates "tracking securities," called employee stock-option appreciation rights securities, that emulate options awarded executives and employees. The company first sold the securities based on its options to sophisticated investors in a June 2006 auction, providing a market value based on bids received. The value was about half that derived from the most commonly used model, known as Black-Scholes.

The SEC gave preliminary clearance to Zions last January but attached some conditions to its approval, including a requirement that auctions be held on or near the date on which options to be valued are granted.

Zions held another auction in May, which put a value of $12.06 on each option — 14 percent below that derived from the Black-Scholes method, the company said in July when it reported second-quarter earnings.

Zions used the $12.06 value to calculate options expenses for its second and third quarters.

Apart from the accounting issues, corporate America was roiled last year by a scandal over suspected manipulation of the timing of option grants to make them more valuable to top executives at numerous companies.

More than 100 public companies are under investigation by the SEC and federal prosecutors as a result, and 10 executives have been criminally charged in connection with stock-option backdating schemes. Several companies have paid millions to the SEC to settle civil charges of stock-option backdating.

If the stock rises before the options are exercised, the executive or employee can buy the stock at the predetermined, lower price, then sell it at the higher, current price — and pocket the difference. In backdating, options are issued retroactively to coincide with low points in a company's share price so recipients can sell their shares at higher market prices.

Shares of Zions rose 3 cents to close at $61.36 Monday.