Dreier, Eshoo Introduce Broad-Based
Stock Option Transparency Legislation

March 20, 2003

WASHINGTON, DC - Congressman David Dreier (R-CA), Chairman of the House Rules Committee, and Congresswoman Anna G. Eshoo (D-CA) today formally introduced the "Broad-Based Stock Option Plan Transparency Act of 2003." The legislation will ensure that investors have accurate and meaningful information about a company's use of employee stock options, whether they are given to high level executives or lower level workers. Dreier and Eshoo were joined at a press event today by rank-and-file employees of high tech companies who spoke about their first hand experience with stock options.

"Broad-based stock options incentivize employees by making them partners in their company's success," Dreier said. "But expensing proponents who do not like stock options as a business management tool, are using accounting standards to eliminate them. That's unfortunate because investors need clear and accurate information about stock options. Rather than mandate a disincentive to provide stock options, we need to require companies to be as transparent as possible. That's what we are calling for today."

"Mandatory expensing of stock options would unfairly harm rank-and-file employees while at the same time create less accurate financial information for investors and shareholders," said Eshoo. "We must preserve broad-based stock option plans for rank-and-file workers; we also must recognize that investors are calling for easy-to-follow and transparent information about how companies are using those plans. Our bill accomplishes both."

The "Broad-Based Stock Option Plan Transparency Act of 2003," H.R.1372, directs the Securities and Exchange Commission (SEC) to require, by rule, enhanced reporting disclosures of all employee stock options given by publicly-traded companies. Additionally, the SEC would not be permitted to recognize any new accounting standard related to stock options until they have submitted a report to Congress on the effectiveness of the new disclosures, following a three year period of study. The bill would also require that the Secretary of Commerce spend a year studying the impact of broad-based employee stock option plans in expanding corporate ownership, recruiting skilled workers, stimulating research and innovation, and growing the U.S. economy.