It only requires that one notice the fact that most of the shareholder vote proposals on option expensing are sponsored by union pension funds to realize that the options expensing question is not really about accuracy, but about power.
So expensing options is a union driven conspiracy to gain power? I don't think so. Take a look at some of the groups who have submitted letters to the FASB in favor of expensing stock options on the income statements:
Gregory M. Smith, Director – Operations/Compliance &
Fund Accounting, Investment Company Institute---a
national association including 8,938 mutual funds, 535
closed-end investment companies and 6 sponsors of unit
investment trusts; its mutual funds members have assets of
about $6.539 trillion, accounting for approximately 95% of
total industry assets, and 90.2 million individual
shareholders, 1/31/03 letter to the FASB:
The Institute urges the Board to move forward with
a reconsideration of Statement No. 123 as soon as
practicable. We continue to believe that accounting
standards should (1) require the issuers to treat the fair
value of stock options granted to employees to be
recognized as expense in the income statement and (2)
ensure uniformity in how stock options are valued for this
purpose.
Sarah A. B. Teslik, Executive Director, Council of
Institutional Investors---an association of more than 130
corporate, public and union pension funds with more than
$3 trillion in pension assets, 1/21/03 Letter to the FASB:
The Council supports the principles outlined in the
IASB’s exposure draft, and we urge the Financial
Accounting Standards Board to propose and approve
similar rules. The IASB proposal is in line with the
Council policy on the issue, which states that since stock
options granted to employees, directors and non-employees
are compensation and have a cost, companies should
include these costs as an expense on their reported income
statements and disclose their valuation assumptions.
From FASB Chairman Herz's Statement to a Business Roundtable/Senate meeting on 5/8/03:
Most commentators that were users of financial statements, including individual investors, pension funds, mutual funds, creditors, and financial analysts, were generally supportive of mandatory expense recognition of all stock-basedcompensation.
fasb.org
Regards, Huey |
