Hundreds of Small and Mid-sized Tech Companies Ask Congress to Pass Stock Option Legislation


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Washington, D.C. — More than 220 small and mid-sized companies have signed an AeA letter to Congressional leaders asking for the passage of the Broad-Based Stock Option Plan Transparency Act of 2003 (S 979 and HR 1372).

The companies are members of AeA, the nation's largest high-tech trade association.

The Financial Accounting Standards Board (FASB) proposes to expense stock options, which AeA contends will hurt rank-and-file employees' ability to participate in the ownership of their own company. Smaller high-tech companies need stock options for attracting and retaining the most capable workers.

According to AeA, the FASB proposal is lacking in several areas:

  • It requires bad accounting practices that will obscure the real performance of the company.
  • It provides no flexibility for companies to determine the best way to inform shareholders and investors of accurate financial performance. No single approach works for all companies.
  • It will force companies to use what is likely a meaningless value for stock options. FASB has acknowledged in the past the difficulty of valuating stock options.
  • It will lead to less information in financial statements than is currently available and give a misleading view of a company.

A survey conducted by AeA last year found that public high-tech companies on average grant stock options to 84 percent of their employees. The survey also revealed that a full 60 percent of public high-tech companies provide stock options to all employees. In addition, rank-and-file workers of public high-tech companies are the recipients of the lion's share of options with 66 percent of option grants going to non-executives, according to the survey.

Advancing the business of technology, AeA is the nation's largest high-tech trade association. For more information, visit www.aeanet.com.

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