FASB Stock Option Rules Subject of House Bill

If RSA Security Inc. had to record the stock options it gives to 80 percent of its workers as expenses, its $14 million profit in 2003 would have instead been a $21 million loss. If the Financial Accounting Standard Board (FASB) prevails with new stock option rules, that’s exactly what will happen to some companies.

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.

You may like these other stories...

AgFeed agrees to pay $18 million to settle SEC accounting fraud caseMichael Rapoport of the Wall Street Journal reported on Monday that AgFeed Industries Inc. has agreed to pay $18 million to settle US Securities and...
Hertz and Icahn make peaceThere won’t be any nasty, protracted proxy battle between Hertz Global Holdings and activist investor Carl Icahn. The rental car chain agreed last Thursday to give Icahn – who has...
Following other recent high-profile hacking events, investigators discovered yesterday that hackers broke into the draft work paper files of several famous CPA firms. Revealing images of the scantily clad documents have been...

Already a member? log in here.

Upcoming CPE Webinars

Sep 18
In this course, Amber Setter will shine the light on different types of leadership behavior- an integral part of everyone's career.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.