US Trade Groups Urge Senate To Adopt New Accounting Measures For Stock Options

by Mike Godfrey, Tax-News.com, Washington

13 September 2004

Several US business and technology groups have written to Senate lawmakers urging the chamber to pass a bill aimed at changing accounting procedures for stock options, according to a Dow Jones report.

Under the bill introduced by Senators Mike Enzi (R-Wyo), and Harry Reid (D-Nev), only stock options awarded to top executives would have to be treated as a business expense whilst options granted to ordinary employees could be kept off the books.

A letter sent Thursday to Senate Majority Leader Bill Frist (R-Tenn.) and Senate Minority Leader Tom Daschle (D-N.D.), signed by 13 business groups, noted the Enzi-Reid bill would preserve the benefits of broad-based stock option plans. They urged the Senate to pass the legislation before the end of the current session, Dow Jones reported.

A similar bill was approved by the House of Representatives earlier in the summer.

Current rules allow companies to treat options, which give holders the right to buy company stock at an agreed price at a future date, as an expense, although there is no legal requirement for them to do so.

Among the business groups backing the bill are the Semiconductor Industry Association, the Software Finance & Tax Executives Council, the Biotechnology Industry Organisation and the American Electronics Association.

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