FASB Stock Option Rules Subject of House Bill
This month, FASB is expected to propose new rules to require options be shown as an expense as opposed to a footnote in financial reports, the Wall Street Journal reported. The footnote compromise was reached a decade ago after Congress reacted in an uproar over stock-option accounting.
Rep. Richard Baker, R-LA, chairman of the House capital markets subcommittee, told the Journal he anticipates a vote later this year that would require further study before FASB makes changes to the stock option rules.
RSA Security Inc. Chief Executive Arthur Coviello the bill "must-pass legislation" for technology companies, the Journal reported.
"What FASB's proposing is not a middle ground," Rep. Spencer Bachus, R-AL, told the Journal. He suggested that the FASB's approach would stop the use of employee stock options, shock stock markets and "have broad-based, negative effects" on the overall economy.
"Small firms are going to take a direct hit to the bottom line" without protections afforded by the bill, testified Karen Kerrigan, chair of the Small Business Survival Committee.