>>Nasdaq chief attacks 'pitiful' Europe
By Andrew Hill in New York
Published: January 29 2003 22:05 | Last Updated: January 29 2003 23:59
Europeans are trying "to lower America to their own pitiful level of innovation and labour mobility" by backing the convergence of accounting standards, according to the vice-chairman of Nasdaq, the US stock market.
In one of the most strongly worded attacks yet on the stricter accounting treatment of stock options as an expense, Alfred Berkeley (pictured) also criticises accountants, "the shareholders" rights crowd", and media "wage-slaves" for campaigning for a new accounting standard that he says will stifle US economic growth.
Mr Berkeley's letter to the Financial Accounting Standards Board is bound to foment the debate over one of the most controversial areas of corporate and accountancy reform.
Under current US rules, companies choose whether to deduct stock option costs from profits. Most do not but a flurry of companies, led by Coca-Cola and General Electric, announced last year that they would start treating option costs as an expense, in part to demonstrate greater transparency.
The FASB has begun a discussion of the differences between its optional approach and a proposal by the International Accounting Standards Board that it should be compulsory to treat stock option costs as an expense.
In his letter, one of more than 40 received by FASB ahead of Saturday's deadline for comments, Mr Berkeley writes that by encouraging the broad ownership of equity the US will "avoid . . . the stultifying lack of opportunity that characterises Europe and much of the world".
His comments could contribute to the souring of US-European ties following comments last week by Donald Rumsfeld, US defence secretary, about the reluctance of "old Europe" to back an early war in Iraq.
The seven-page letter does not directly refer to the IASB, which is planning to announce its standard by the end of this year. Kevin Stevenson, IASB director of technical activities, pointed out that the international rulemaker did not just represent European interests. Without having seen Mr Berkeley's letter he said it "sounded like ill-considered comment".
Opponents of the deduction of option costs from profit argue there is no accurate way to measure the value of employee stock options, a concern echoed in other letters sent to the FASB.
Corporate governance activists claim excessive stock option awards to top executives contributed to a culture of greed at US companies that led to last year's round of scandals.<<
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For the full text of Alfred Berkeley's letter to the FASB, click here
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