 |
Sarbanes-Oxley News & Developments
New Dreier-Eshoo Bill Would Prevent Expensing of Stock OptionsCongress is at it again - a bill that would temporarily prohibit companies from expensing employee stock options gets airing this week.
> > The Broad-Based Stock Option Plan Transparency Act, introduced by Reps.David Dreier(R-Calif.) and Anna G.Eschoo (D-Calif.) on March 20, requires greater disclosure of corporate stock options.
The sponsors of the bill argue that mandating companies to expense options would effectively eliminate the use of broad-based options plans as an incentive for rank-and-file employees. They also claim such a move would create less accurate financial information for shareholders.
A Financial Accounting Standards Board member, Michael Crooch, is very concerned about the bill stating that it would disrupt the independent process the board use to make, unblased, objective and neutral decisions. Crooch is also worried that the proposed legislation would set an unwise precedent that likely would encourage further political intervention in the independent process of setting standards.
Corporate executives are starting to explore employee eompensation alternatives, such as variable options, as a better performance driver than fixed options. Currently, the IASB requires companies to expense stock options.
Opponents of convergence argue that such a move would likely reduce the number of companies that offer options to employees. Executives at a number of high tech companies - are often big users of employee stock options - claim that stock options align executive and shareholder interests. Options can enable start-ups and fast growing companies to attract prized workers without draining corporate coffers.
Source: CFO.com article
Published:2003-06-02
|
|
