Oxley: Congress Belongs in Stock Option Debate
The term "stock options" refers to the practice of giving employees the option to buy or sell company stock at a fixed price in the future and is at the heart of a battle shaping up that pits Congress against the Financial Accounting Standards Board (FASB), which sets accounting standards for the private sector.
Rep. Michael Oxley (R-OH), chairman of the House Financial Services Committee, discussed the matter in a interview with Reuters without going so far as to endorse a bill sponsored by Rep. Richard Baker that would stop a FASB initiative requiring mandatory expending of stock options.
"You've got an unelected body called FASB that nobody has ever heard of that could very well make decisions that have an enormous impact on our overall economic picture," Oxley told Reuters.
FASB recommended last month that companies begin showing employee stock options as an expense in 2005, a move that could have an enormous impact on the U.S. economy. Particularly feeling the blow would be the technology sector where the stock option trend got its start in the 1990s — a trend some believe led to a few of the recent accounting scandals.
"We would be, in my estimation, foolhardy to sit back and simply allow it to happen just because some people think this is a real silver bullet in dealing with corporate governance," Oxley told Reuters.
Baker is holding subcommittee hearings on Wednesday as part of his efforts to delay any FASB action until the true economic impact of the rule can be determined by the Securities and Exchange Commission, which is looking into the matter. Baker’s bill would also limit stock option expensing to just the options given to the top five company executives.
After the hearing, it will be decided whether or not to move the bill forward to the House floor for a vote. A similar bill in the Senate has been hung up by Senate Banking Committee Chairman Richard Shelby, who does not believe Congress should be involved in the debate.