This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

US House subcommittee clears stock option legislation

  • capitol.gif Image

15 May 2004

A subcommittee within the US House of Representatives has cleared draft legislation – known as H.R.

3574, the Stock Option Accounting Reform Act – that would restrict the expensing of stock options in the United States to options granted to chief executives and the next four highest paid officers. Small businesses would be exempt from expensing options entirely, and newly public companies could delay expensing for three years. And the bill would prohibit the Securities and Exchange Commission from enforcing the proposed FASB rule until the SEC studies its economic impact. The legislation moves on to consideration by the full committee and, if approved, then on to the House. Before it could become law, identical legislation would have to be passed in the US Senate. Supporters of the legislation say it would "would preserve broad-based employee stock option plans and improve American competitiveness." A number of members of Congress have said they will oppose this legislation. For example, one senator issued a statement calling the House bill "misguided", saying that "stock option compensation is an expense that should be recorded on a company's income statement.... Companies that do not expense stock option compensation are misleading investors. [He] also expressed concern that members of Congress were substituting political decisions for complex technical accounting decisions and were undermining the independence of the nation's private accounting standards board."

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.