Senator Barbara Boxer (D-California) and Representative Anna Eshoo (D-California) wrote the President a letter Wednesday asking him to intervene on behalf of technology companies, who often use stock options to entice employees into working for them. The proposed rule would require all companies to expense the value of all stock options. The two lawmakers want Bush to “actively support” the passage of a bill that would block the FASB proposal and lower the restrictions on stock options expensing. The proposed bill would instead suggest that companies would only have to expense the stock options of their top five officials, according to TheDeal.com.
“Expensing stock options, as the FASB has proposed, directly threatens rank-and-file worker opportunities to participate in the ownership of the fruits of their labor,” the two lawmakers wrote in their letter.
On the other side, Senators John McCain (R-Arizona), Peter Fitzgerald (R-Illinois), Carl Levin (D-Michigan), and Richard Durbin (D-Illinois) co-wrote a letter to Bush urging the President to oppose any back-door effort by Senators to enact legislation that would undermine the FASB proposal.
A press release by Fitzgerald suggests that the letter is in response to recent rumors regarding possible opposition attempts to attach legislation to an upcoming appropriations bill that would undermine FASB’s authority to set accounting standards, thus killing the stock option proposal.
“As Members of the United State Senate, we are writing to express our strong opposition to legislation that would undermine the integrity and independence of the Financial Accounting Standards Board’s standard setting process, and request that you and your Administration oppose any appropriations bill in the Senate that may include a legislative rider that would allow such legislation to be enacted,” the letter states.
The two letters came on the same day that senior technology executives were meeting with representatives of FASB. According to TheDeal.com, the executives received a cold reception to their proposal to change the method by which stock options are expensed. Instead of the traditional Black-Scholes method, the group wants to use a model created by Cisco Systems, Genentech Inc., and Qualcomm that would reduce the perceived cost of stock options by up to 70% (See FASB Considers New Model to Replace Black-Scholes for Pricing Employee Stock Options ).
FASB, an independent standards board, has come under attack from Congress for its proposed rule. In July, the House passed legislation that would prohibit the Security and Exchange Commission (SEC) from recognizing the rule.