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News and Press Releases |
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HEADLINE:
U.S. Senators Offer Option Expensing For Top Execs
By: Susan Cornwall - Retuers
Forbes.com. November 19, 2003
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EXCERPT: A bipartisan group of senators announced Wednesday another effort to derail mandatory expensing of all stock options, saying only options to top executives should be expensed on a company's books. Sponsors said their bill requiring the top five executives at a company to expense their stock options was a compromise aimed at convincing the Financial Accounting Standards Board to back down from making companies list all options as expenses. Sponsor Sen. Mike Enzi, a Wyoming Republican, denied he was trying to curb FASB's independence, but said he felt the board was simply not listening to protests from lawmakers, business people and others that requiring expensing of broad-based options programs could hurt U.S. companies and the economy. "Independence, like freedom, has to be earned," Enzi said of FASB, adding that if the rule-making board listens to the senators, "they may not have to worry about this bill." In 1994, under pressure from the U.S. Senate, FASB backed away from requiring expensing of options -- the right to buy or sell stock for a set price at a future date. During recent corporate scandals, many critics blamed stock options for inflating corporate earnings by tempting executives to pump up stock prices by any means. But opponents of expensing say stock option programs encourage risk-taking and innovation because they give employees a stake in the company they work for. Enzi, chairman of the Senate Banking Committee's Securities and Investment Subcommittee, announced the new bill together with Senate Democratic Whip Harry Reid of Nevada, and other co-sponsors: Republicans George Allen of Virginia and John Ensign of Nevada, and Democrat Barbara Boxer of California. "We're going to do everything we can to move this legislation as early as we can next year," Reid said. FASB has said it hopes to issue a proposed rule on expensing stock options -- the right to buy or sell stock for a set price at a future date -- in the first quarter of 2004. Numerous lawmakers in both the House and Senate introduced bills earlier this year to delay stock options expensing by requiring studies of it, but these measures have failed to get out of committee in either chamber. Meanwhile many public companies have adopted expensing in the past year. The latest bill also calls for a study but Boxer said requiring that the chief executive officer and the next four most highly compensated officers expense their stock options was intended as a compromise with people who back expensing as a corporate governance tool.
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