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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: Boca_PETE who wrote (2390)	4/9/2003 5:36:28 PM
From: Wally Mastroly	Read Replies (2) \| Respond to of 10065

Where Are We Versus Where Are We Going - link via Les H. Message 18817398

To: Boca_PETE who wrote (2390)	4/23/2003 11:22:32 AM
From: Wally Mastroly	Read Replies (1) \| Respond to of 10065

(FASB)Board Backs Rules Change on Stock Options (Comment: ..but pushes out deadline for method of determination.) Accounting-Standards Panel Unanimously Agrees That Firms Should Treat the Grants as Expenses By Jackie Spinner Washington Post Staff Writer - washingtonpost.com Wednesday, April 23, 2003; Page E01 The private board that writes U.S. accounting rules unanimously agreed yesterday that companies should be required to treat grants of stock options to executives and employees as expenses, a key show of support for a measure strenuously opposed by high-tech industries and some members of Congress. The seven-member Financial Accounting Standards Board, meeting at its Norwalk, Conn., headquarters, determined that options "are goods and services that are being exchanged and you must recognize it just as you would other goods and services," spokeswoman Sheryl L. Thompson said. The board will now move on to what Chairman Robert H. Herz has acknowledged will be its most difficult task: determining how to value options. The board said it expects to have a new rule in place sometime next year. Current rules do not require companies to count options as expenses, only that they disclose -- in the footnotes to financial statements -- what earnings would have been had options been an expense item. Using one of several valuation methods, Microsoft Corp. has said its earnings in its last fiscal year would have been reduced by about 32 percent if it had to expense options. But shareholder groups have criticized the practice of not expensing options, arguing that in a series of high-profile corporate failures, options created an incentive for executives to use accounting tricks to inflate profits, thereby boosting stock prices and increasing the value of their own options. Federal Reserve Chairman Alan Greenspan has said he supports the expensing of options. The accounting standards board attempted to mandate an expensing policy in 1993 but backed down after Congress threatened to strip it of its power. Some members of Congress are again trying to stop the effort. Rep. David Dreier (R-Calif.), chairman of the House Rules Committee, and Rep. Anna G. Eshoo (D-Calif.) introduced a bill last month that would prohibit the Securities and Exchange Commission from enforcing a new stock-option rule until it studied the issue for three years. The bill also would require that the secretary of commerce spend a year studying the corporate and economic impact. And yesterday, Sen. Barbara Boxer (D-Calif.) said she and Sen. John Ensign (R-Nev.) plan to introduce a similar bill when Congress returns next week from its spring recess. "Given FASB's history on stock options, I am not surprised that they ruled to expense them," Boxer said in a statement. "However, FASB admits that it doesn't take into account the economic impact of its decision. . . . This bill will send this whole matter to the SEC for review before the proposed rule goes into place and we are dealing with its unintended negative economic consequences." Options give employees the right to buy a company's shares at a predetermined price during a specified period. If the market price of the shares rises above that set price, the employee can exercise the options and then sell the shares for a profit. Lobbyists for technology companies said they expected the decision but were surprised that the FASB was not further along on how to value options. "They are as confused as anyone else on how you can do it," said Rick White, executive of TechNet, a Silicon Valley-based coalition. White said that in addition to the difficulty of devising an expensing formula, Congress should consider the impact expensing would have on the competitiveness of tech firms worldwide. Other countries, especially China, are luring tech talent with options packages. "It's mystifying to many as to why the FASB has the foot on the accelerator, speeding to rush this in," said Jeffrey Peck, a Washington lobbyist who is working for a coalition opposed to treating options as expenses. Staff writer Jonathan Krim contributed to this report. © 2003 The Washington Post Company