Public Company Accounting Reform and Investor Protection Act of 2002 (S. 2673)
July 11, 2002
To Members of the United States Senate:
On behalf of the United States Chamber of Commerce, the world's largest business federation representing more than three million businesses of every size, sector and region, I write regarding our concerns with an amendment that may be considered to S. 2673, the Public Company Accounting Reform and Investor Protection Act of 2002, now before the Senate.
We understand that an amendment may be offered for S. 2673 that would reflect the language of S. 1940, the Ending the Double Standard or Stock Options Act, and require companies to expense employee stock options at the time they are granted. This amendment would dramatically alter the longstanding practice of expensing stock options at the time they are exercised and would increase taxes on businesses that issue stock options to their employees. The proponents of this legislation argue that current accounting rules provide inaccurate information regarding a company's finances. In fact under this legislation, companies would be forced to account for stock options at a time when their true value cannot be determined – before the options are exercised. Such a change in accounting practices would discourage companies from offering stock options to their employees.
If the Senate does consider this issue, we would urge the Senate to instead adopt a substitute amendment that would call on the Securities and Exchange Commission to conduct a study and make recommendations regarding the accounting of stock options. We urge the Senate not to discourage companies from offering stock options to their employees and strongly urge you to vote against any amendment that would require the expensing of employee stock options. Because of the importance of this issue, votes on or related to this amendment may be used in our annual "How They Voted" ratings.
R. Bruce Josten
Executive Vice President, Government Affairs
U.S. Chamber of Commerce