Media Contact: Heather Wong, 202.225.3072
Washington, D.C. – Congresswoman Zoe Lofgren (D- San Jose) today offered the following statement in support of H.R. 3574, the Stock Option Accounting Reform Act. The bill passed overwhelmingly by a 312 to 111 margin.
“Mr. Chairman, the illusion that stock options only benefit fat-cat corporate executives is just that, an illusion. 53% of companies that offer stock option plans offer them to all employees. Within the technology industry, 88% offer them to all employees. Stock options are even more important in start-ups. According to the National Venture Capital Association, more than 70% of venture-backed companies award stock options to all employees.
“These figures make clear that tech companies rely on stock options to attract and retain talented employees.
“But that doesn’t seem to matter to FASB. FASB has approached this debate with blinders on. They have charged full steam without any analysis of how mandatory expensing would affect employees, innovation and investment.
“And for what? FASB claims that mandatory expensing will help average investors better value a company. But there is no good way to value stock options. Under FASB’s plan, options would have to be reported based on fair market value, and no one is sure how to measure that accurately.
“This lack of a uniform, reliable valuation method could make it more difficult, not less, for investors to compare companies and could even open up the possibility of earnings manipulation by management.
“Mr. Chairman, this is the most important technology vote we will take this year. I urge my colleagues to support our tech industry and this legislation, and I yield back the balance of my time.”