SEC chief to Senate: Stay out of options debate
FASB SHOULD BE FREE TO ACT, HE SAYS
By Mark Schwanhausser
Mercury News
With a climactic showdown shaping up this fall in Congress over a bill that would scuttle accounting rules for companies that pay stock options to employees, the head of the Securities and Exchange Commission has told the U.S. Senate to stay out of the debate.
The argument has already pitted Silicon Valley's technology industry, which supports the bill, against an accounting board under the SEC's jurisdiction. The board has proposed rules that would require companies to count the options as an expense subtracted from profits starting Dec. 15.
That's a change that would crimp profits at many valley companies.
The Senate is expected to debate a bill that would scale back the accounting rule drastically by requiring companies to deduct only those options doled out to a company's five top executives. The bill is riding a wave of momentum after an overwhelming 312-111 victory in the House in July.
But William Donaldson, chairman of the SEC, said the bill would rob the Financial Accounting Standards Board of its authority to regulate the nation's accounting procedures. ``I believe strongly that the FASB's consideration of this proposed standard regarding stock options should be allowed to run its full course,'' Donaldson wrote to Senate Majority Leader Bill Frist and 15 other senators in an Aug. 19 letter released last week.
Tech industry lobbyists downplayed Donaldson's letter, saying he was repeating a position he stated previously.
What some tech lobbyists are more worried about than Donaldson is finding a way to circumvent two powerful senators who have vowed to block the bill, S. 1890, from moving through the committees that they chair:
• Sen. Richard Shelby, the Alabama Republican who chairs the Banking Committee, has vowed to fight the bill. Shelby also sits on the Appropriations Committee, giving him a good vantage point to spoil an attempt to tack the bill onto a spending bill.
• Sen. Ted Stevens, the Arkansas Republican who chairs the Appropriations Committee, has indicated he opposes attaching any version of the stock-options bill as a rider to an appropriations bill.
Tech industry lobbyists acknowledge that a pushing a stand-alone bill through normal Senate channels is unlikely. Instead, lobbyists hope to attach the bill to an omnibus bill that their foes can't afford to block.
The problem is, such end runs can trigger bitter jurisdictional battles and filibusters that require 60 votes to overcome.
``What we know is the chairmen with jurisdiction have strong feelings,'' said Jeffrey Kummer, a senior manager in Deloitte & Touche's tax policy group in Washington. ``If someone is making life difficult, you'd better have the votes.''
Currently, 26 senators have introduced or co-sponsored the bill, and about a dozen more have said they'd support the bill, two lobbyists say. The AeA, formerly known as the American Electronics Association, hopes to round up more support Sept. 21 when high-tech executives fly to the Capitol for a third lobbying blitz.
``The question,'' said AeA lobbyist John Palafoutas, ``is whether the people who want this in will fight hard enough, and do they have the power with the people who want it out?''
mercurynews.com |
