View the step-by-step solution to:

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

This question was answered on Mar 24, 2010. View the Answer
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.)
LT wk2 CA16.4.doc

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 (R–CA), Chairman of the House Rules Committee, and Congresswoman Anna Eshoo (D–CA) reintroduced legislation today that will pre­ serve broad­based 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 rank­and­file 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 we­go­again) On February 17, re­
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 co­sponsored a bill to “preserve broad­based 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 broad­based 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.)

Top Answer

Dear Student,... View the full answer

LT wk2 CA16[1].4.doc

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...

This question was asked on Mar 23, 2010 and answered on Mar 24, 2010.

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors and customizable flashcards—available anywhere, anytime.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access or to earn money with our Marketplace.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
  • -

    Flashcards

    Browse existing sets or create your own using our digital flashcard system. A simple yet effective studying tool to help you earn the grade that you want!

    Browse Flashcards