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Politics : Formerly About Applied Materials

AMAT 322.51

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Feb 6 9:30 AM EST

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To: StanX Long who wrote (62326)	3/25/2002 1:54:48 AM
From: StanX Long	of 70976

Companies Face Stock Option Challenge By Andrea Orr Sunday March 24, 2:03 pm Eastern Time biz.yahoo.com PALO ALTO, Calif. (Reuters) - Silicon Valley likes to promote its culture of innovation and risk taking, where two hard-working guys left alone in a garage can build a major company that changes the course of technology. ADVERTISEMENT It is often less willing to talk about all of the big, established companies in its midst, which critics say continue to benefit from generous accounting practices more appropriate for struggling startups. Now these two images of Silicon Valley are colliding in Washington as an old debate resurfaces over the accounting used for stock options, a cherished form of compensation here, which some lawmakers say is in need of reform. Last month, Senator Carl Levin (D-Mich.) introduced a bill that would require companies to report the cost of the stock options they grant on their income statements, or lose the right to deduct these costs from their tax returns. Levin argues that companies are able to inflate their earnings and avoid paying taxes by not recording the cost of stock options. Legislators have been pushing for a change in the rules for a decade, and their campaign has gained momentum recently in the wake of the accounting scandal at Enron Corp (Other OTC:ENRNQ.PK - news), which handed out substantial tax-advantaged options packages to its executives.

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