OFFICIALS LEGISLATION INTEREST GROUPS PUBLIC STATEMENTS COMMITTEES VETOES

Stock Option Reform Act

Date: July 20, 2004
Location: Washington, DC
Issues: Business and Consumers Employment and Affirmative Action


STOCK OPTION ACCOUNTING REFORM ACT -- (House of Representatives - July 20, 2004)

The SPEAKER pro tempore. Pursuant to House Resolution 725 and rule XVIII, the Chair declares the House in the Committee of the Whole House on the State of the Union for the consideration of the bill, H.R. 3574.

Ms. LOFGREN. Mr. Chairman, the illusion that stock options only benefit fat-cat corporate executives is just that, an illusion. Fifty-three percent of companies that offer stock option plans offer them to all employees. Within the tech sector, 88 percent offer them to all employees. With start-ups it is even more important. According to the National Venture Capital Association, more than 70 percent of venture-backed companies award stock options to all employees.
As my colleague, the gentlewoman from California (Ms. Eshoo), has noted, this is an essential component to the innovation economy that really is pulling the entire American economy forward, but that does not seem to matter to FASB.

When stock options that have a strike price of $40 are being traded at $18 and the FASB accounting system accounts for that as a valuable option, there is something wrong with the standards that they are using. We need to study this matter and to make sure that in our efforts to be clear, we do not destroy the tech economy.

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