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To: David E. Taylor who wrote (119765)	6/3/2002 12:53:15 PM
From: hueyone	Read Replies (1) \| Respond to of 152472

And if employee stock options were to be banished as part of employee compensation, then I guess shareholders would be bearing a similar cost due to the increased salaries/bonuses etc. that would needed to retain key employees in a competitive environment. I am not aware of any proposals to banish stock options. The McCain/Levin bill for example, simply proposes that companies treat and report stock option expense to shareholders in the same manner they report to it the IRS. Most companies due indeed report stock options as an expense to the IRS when figuring their taxes. And Clarke Hare, I am wondering how the IRS is letting all these companies get away with "double counting" of stock option expense. If the Levin/McCain bill were passed, I doubt outside shareholders would be bearing a similar employee expense as to what they are now. It is precisely because of the stealth nature of these payments to employees, payment that go unreported, that we outside shareholders end up paying absurd amounts of compensation to people working for these companies. If companies were required to come clean and report to shareholders this expense in the same manner as they reported to the IRS, this enormous stealth compensation going to insiders would abate and there would be more profits for outside shareholders. Best, Huey

To: David E. Taylor who wrote (119765)	6/3/2002 12:55:46 PM
From: hueyone	Respond to of 152472

Here is a link to Senator Levin's testimony before the Senate Finance Committee last month regarding stock options and executive compensation. The entire testimony is definitely worth reading for anyone seriously interested in grasping the magnitude of the problem. levin.senate.gov One interesting fact I gleaned: Due to the stealth nature of stock option compensation, CEO pay has mushroomed to 500 times the average workers pay from 100 times the average workers pay during the last ten years. (When JP Morgan was a leading business figure, he mentioned that 20 times might be an appropriate figure). Of course Levin is not talking about legislating executive pay----just accounting for it on the financial statements to shareholders to the same extent the company is expensing it as payroll on the tax returns. Best, Huey

To: David E. Taylor who wrote (119765)	6/3/2002 1:03:32 PM
From: hueyone	Respond to of 152472

More Levin: levin.senate.gov Snip: It's time to end the stock option double standard. The Levin-McCain-Fitzgerald-Durbin-Dayton bill would not legislate accounting standards for stock options or directly require companies to expense stock option pay, but it would require companies to treat stock options on their tax returns the exact same way they treat them on their financial statements. In other words, a company's stock option tax deduction would have to mirror the stock option expense shown on the company's books. If there is no stock option expense on the company books, there can be no expense on the company tax return. If a company declares a stock option expense on its books, then the company can deduct exactly the same amount in the same year on its tax return. The bill would require companies to tell Uncle Sam and their stockholders the same thing – whether employee stock options are an expense and, if so, how much of an expense against company earnings. Enron has already shown how much damage, if not corrected, that the existing stock option double standard can inflict on company bookkeeping, investor confidence and tax fairness. Best, Huey