The Securities and Exchange Commission (SEC) has again delayed the
implementation of rules requiring the expensing of stock options. Sen. John Ensign (R-Nev.) thinks that's a good idea but doesn't go far enough.
He wants to eliminate the whole notion.
Senator Joe Lieberman: News Release::
Senator Joe Liebermans Record of High-Tech Leadership Defended the role of stock options in helping the economy expand, by opposing
http://lieberman.senate.gov/newsroom/release.cfm?id=207618HOME |
BW Online | December 1, 2003 | Options Grow Onerous::
employees eligible to receive awards, cut back on the options granted, or both. The economic harm of stock-option expensing cannot be overstated, Intel CEO
http://www.businessweek.com/magazine/content/03_48/b3860034.htmHOME |
"I will continue to explore legislative options in an effort to preserve broad-based employee stock options," Ensign said in a statement.
Stock options are a popular form of compensation for tech-industry
employees, but in the ugly backwash of accounting scandals at Enron and
WorldCom, the Financial Accounting Standards Board (FASB) passed new rules
requiring stock options to be counted against profits.
With SEC Chairman William Donaldson, Federal Reserve Chairman Alan Greenspan
and billionaire investor Warren Buffett all endorsing the idea, the Silicon
Valley quickly found itself isolated in its opposition to the new rules.
The SEC first set a Dec. 15, 2004, deadline to put the new rules into
effect, but delayed that by six months, setting a new June 1 deadline. Late
Thursday afternoon, the SEC moved the date again to Jan. 1.
"Feedback from public companies, accounting firms and others indicated that
implementing [the rules] in a period other than the first quarter of a
fiscal year potentially could make compliance more complicated," Donald T. Nicolaisen, the SEC's chief accountant, said in a statement.
Congress, however, may ultimately decide the fate of the FASB rules.
Last July, the U.S. House of Representatives approved the
Stock Option Accounting Reform Act, mandating the expensing of stock options
granted to the CEO and the next four most highly compensated officers of a
company.
The House exempted expensing the stock options for all other employees. The
Senate did nothing to stop the FASB rules and the Stock Option Accounting
Reform Act died.
Ensign, chairman of the Senate Subcommittee on Technology, Innovation and Competitiveness, hopes to stir his colleagues from their
apparent indifference to the technology's pleas.
"At a time when we should be encouraging investment and economic
stimulation, these FASB rules will instead create confusion and will slow
economic growth," he said. "The ability of individual investors to
accurately monitor the economic health of companies has been significantly
hampered, and small businesses will be particularly impacted."
Rick White, president of the International Employee Stock Options Coalition
(IESOC), issued a statement calling the FASB delay a "welcome and positive
development and reflects the concern that all stakeholders in the financial
reporting process have raised with the implementation date adopted by the
FASB."
According to IESOC, 79 percent of all U.S. workers owning stock options earn
less than $75,000 annually and 57 percent of all U.S. workers owning stock
options earn less than $50,000 annually.
"Stock options are a vital tool that helps U.S. companies attract and retain
bright workers, and discouraging their use will not aid the American economy
against challenges from Europe, China and India," White said.
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