Stock options battle set for Capitol Hill
Regulators and angry company representatives are to meet face to face tomorrow on Capitol Hill to fight it out over controversial proposals to make companies expense stock options.
Link: Stock options rule gets CBI support
US senators are to host the round table in a bid to ‘plumb the depths’ of the stock options debate which is causing huge consternation in the US, particularly among technology companies.
Three questions will be central to the debate: do stock options represent a cost to the company when they are granted or do they represent shareholder cost that should be reflected in diluted earnings when they are exercised? Does a method exist to accurately value stock options at the time they are granted? What would be the economic impacts of an accounting standard that requires expensing of stock options when they are granted?
The issue has become more pressing for critics of the proposal since Bob Herz, chairman of the US standard setting board, said he favoured the move. Herz will also attend the round table discussions.
‘The issues surrounding stock options raise important questions that go to the heart of investor confidence, accurate financial reporting, the continued use of broad based stock option plans and economic growth. We hope to stimulate an informative and productive discussion,’ the senators wrote in an invitation letter to perspective roundtable participants.