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CA164 (Stock Compensation Plans) The following two items appeared on the Internet concerning the passage of SFAS No. 123(R). WASHINGTON, D.

How do the provisions of SFAS No. 123(R) differ from the bill introduced by members of Congress (Dreier and Eshoo), which would require expensing for options issued to only the top five officers in a company? Which approach do you think would result in more useful information? (Focus on comparability.)

CA16-4    (Stock  Compensation  Plans)     The  following  two  items  appeared  on  the  Internet  concerning the passage of  SFAS No. 123(R). WASHINGTON D . C . February 17, 2005     Congressman David Dreier (R–CA), Chairman of the House  Rules Committee,  and  Congresswoman Anna  Eshoo  (D–CA)  reintroduced  legislation  today  that  will  pre- serve  broad-based  employee  stock  option  plans  and  give  investors  critical  information  they need to understand how employee stock options impact the value of their shares. “Last year, the U.S. House of Representatives overwhelmingly voted for legislation that would  have ensured the continued ability of innovative companies to offer stock options to rank-and-file  employ- ees,”  Dreier  stated.  “Both  the  Financial  Accounting  Standards  Board  (FASB)  and  the  Securities  and Exchange  Commission  (SEC)  continue  to  ignore  our  calls  to  address  legitimate  concerns  about  the  im- pact  of  FASB’s  new  standard  on  workers’  ability  to  have  an  ownership  stake in the New Economy, and its failure to address the real need of shareholders: accurate and  meaningful information about a com- pany’s use of stock options.” “In  December  2004,  FASB  issued  a  stock  option  expensing  standard  that  will  render  a  huge  blow to  the  21st  century  economy,”  Dreier  said.  “Their  action  and  the  SEC’s  apparent  lack  of  concern  for protecting  shareholders,  requires  us  to  once  again  take  a  firm  stand  on  the  side  of  investors  and  eco- nomic  growth.  Giving  investors  the  ability  to  understand  how  stock  options  impact  the  value  of  their shares  is  critical.  And  equally  important  is  preserving  the  ability  of  companies to use this innovative tool to attract talented employees.” “Here  We   Go   Again!”   by   Jack   Ciesielski   (2/21/2005,  http://ww     w     .accountingobserve     r    .com/blog/2005/02/he     r    e-       we-go-again )         On  February  17,  Congressman David Dreier (R–CA), and Congresswoman Anna Eshoo (D–CA), officially entered  Silicon  Valley’s  bid  to  gum  up  the  launch  of  honest  reporting  of  stock  op- tion  compensation:  They co-sponsored a bill to “preserve broad-based employee stock option  plans and give investors  critical  information  they  need  to  understand  how  employee  stock  options  impact the  value  of  their  shares.”  You  know  what  “critical  information”  they  mean:  stuff  like  the  stock  com-  pensation  for  the  top  five  officers  in  a  company,  with  a  rigged  value  set  as  close  to  zero  as  possible. Investors  crave  this  kind  of  information.  Other  ways  the  good  Congresspersons  want  to  “help”  in-   vestors:  The  bill  “also  requires  the  SEC  to  study  the  effectiveness  of  those  disclosures  over  three  years,   during  which  time,  no  new  accounting  standard  related  to  the  treatment  of  stock  options  could  be  rec- ognized.  Finally,  the  bill  requires  the  Secretary  of  Commerce  to  conduct  a  study  and  report  to  Con- gress  on  the  impact  of  broad-based  employee  stock  option  plans  on  expanding  employee  corporate ownership, skilled worker recruitment and  retention, research and innovation, economic growth, and international competitiveness.” It’s  the  old  “four  corners”  basketball  strategy:  stall,  stall,  stall.  In  the  meantime,  hope  for  regime change at your opponent, the FASB. Instructions: How do the provisions of  SFAS No. 123(R)  differ from the bill introduced by members of Congress (Dreier and Eshoo), which  would require expensing for options issued to only the top five officers in a company? Which approach do you think would  result in more useful information? (Focus on comparability.)
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CA16­4 (Stock Compensation Plans) The following two items appeared on the Internet concerning the passage of SFAS No. 123(R).
WASHINGTON, D.C.—February 17, 2005 Congressman David Dreier...

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