To direct the Securities and Exchange Commission to require enhanced disclosures of employee stock options, and to require a study on the economic impact of broad-based employee stock option plans, and for other purposes.

Summary: Broad-Based Stock Option Plan Transparency Act of 2003 - Directs the Securities and Exchange Commission (SEC) to require companies to include within certain mandatory reports details regarding stock option plans, stock purchase plans, and other arrangements involving employee acquisition of an equity interest in the company, including: (1) a discussion of the dilutive effect of stock option plans (written in accordance with the Plain English Handbook published by the Office of Investor Education and Assistance of the Commission); (2) expanded disclosure of the dilutive effect of employee stock options on the company's earnings per share number; (3) prominent placement and increased comparability of all stock option related information; and (4) a summary of stock options granted to the five most highly compensated executive officers, including outstanding stock options of those officers.

Directs the SEC to examine and report to specified congressional committees on the effectiveness of the enhanced disclosures required by this Act in increasing transparency to current and potential investors.

Prohibits the Commission, between enactment of this Act and submission of such report, from recognizing as generally accepted accounting principles any new accounting standards regarding the treatment of stock options.

Directs the Secretary of Commerce to analyze and report to specified congressional committees on broad-based employee stock option plans, particularly in the high technology and any other high growth industries.

SECTION 1. SHORT TITLE.

     This Act may be cited as the ``Broad-Based Stock Option Plan 
Transparency Act of 2003.''

SEC. 2. CONGRESSIONAL FINDINGS.

     Congress finds the following:
            (1) Innovation and entrepreneurship, particularly in the 
        high technology industry, helped propel the economic growth of 
        the 1990s, and will continue to be the essential building 
        blocks of economic growth in the 21st century.
            (2) Broad-based employee stock option plans enable 
        entrepreneurs and corporations to attract quality workers, to 
        incentivize worker innovation, and to stimulate productivity, 
        which in turn increase shareholder value.
            (3) Broad-based employee stock options plans that expand 
        corporate ownership to rank-and-file employees spur capital 
        formation, benefit workers, and improve corporate performance 
        to the benefit of investors and the economy.
            (4) Concerns raised about the impact of employee stock 
        option plans on shareholder value raise legitimate issues 
        relevant to the current level of disclosure and transparency of 
        those plans to current and potential investors.
            (5) Investors deserve to have accurate, reliable, and 
        meaningful information about the existence of outstanding 
        employee stock options and their impact on the share value of a 
        going concern.

SEC. 3. IMPROVED EMPLOYEE STOCK OPTION TRANSPARENCY AND REPORTING 
              DISCLOSURES.

    (a) Enhanced Disclosures Required.-- Not later than 180 days after 
the enactment of this Act, the Securities and Exchange Commission 
(hereafter referred to as the ``Commission'') shall, by rule, require, 
for each company filing periodic reports under section 13(a) or 15(d) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78m, 78o(d)), that 
such reports include more detailed information regarding stock option 
plans, stock purchase plans, and other arrangements involving an 
employee acquisition of an equity interest in the company, particularly 
with respect to the dilutive effect of such plans, including--
            (1) a discussion, written in ``plain English'' (in 
        accordance with the Plain English Handbook published by the 
        Office of Investor Education and Assistance of the Commission), 
        of the dilutive effect of stock option plans, including tables 
        or graphic illustrations of such dilutive effects;
            (2) expanded disclosure of the dilutive effect of employee 
        stock options on the company's earnings per share number;
            (3) prominent placement and increased comparability of all 
        stock option related information; and
            (4) a summary of the stock options granted to the 5 most 
        highly compensated executive officers of the company, including 
        any outstanding stock options of those officers.
    (b) Equity Interest.--As used in this section, the term ``equity 
interest'' includes common stock, preferred stock, stock appreciation 
rights, phantom stock, and any other security that replicates the 
investment characteristics of such securities, and any right or option 
to acquire any such security.

SEC. 4. EVALUATION OF EMPLOYEE STOCK OPTION PLANS TRANSPARENCY AND 
              REPORTING DISCLOSURES AND REPORT TO CONGRESS.

    (a) Study and Report.--The Commission shall examine the 
effectiveness of the enhanced disclosures required in Section 3 in 
increasing transparency to current and potential investors during the 
3-year period following the issuance of a final rule pursuant to 
section 3(a). Not later than 180 days after the end of such 3-year 
period, the Commission shall transmit a report to the Committee on 
Financial Services of the House of Representatives and the Committee on 
Banking, Housing, and Urban Affairs of the Senate.
    (b) Moratorium on New Accounting Standards Related to Stock 
Options.--Beginning on the date of enactment of this Act and continuing 
until the transmission of the report required under subsection (a), the 
Commission shall not recognize as generally accepted accounting 
principles any new accounting standards related to the treatment of 
stock options.

SEC. 5. STUDY ON THE ECONOMIC IMPACT OF BROAD-BASED EMPLOYEE STOCK 
              OPTION PLANS AND REPORT TO CONGRESS.

    (a) Study.--The Secretary of Commerce shall conduct a study and 
analysis of broad-based employee stock option plans, particularly in 
the high technology and any other high growth industries. Such study 
and analysis shall include an examination of the following issues:
            (1) The impact of such plans on expanding employee 
        corporate ownership to workers at a wide-range of income 
        levels, with a particular focus on rank-and-file employees.
            (2) The role of such plans in the recruitment and retention 
        of skilled workers.
            (3) The role of such plans in stimulating research and 
        innovation.
            (4) Their impact on the economic growth of the United 
        States.
            (5) The role of such plans in strengthening the 
        international competitiveness of companies organized under the 
        laws of the United States.
    (b) Report.--Not later than 1 year after the date of enactment of 
this Act, the Secretary shall submit a report and analysis of the study 
required by subsection (a) to--
            (1) the Committee on Energy and Commerce and the Committee 
        on Financial Services of the House of Representatives; and
            (2) the Committee on Commerce, Science, and Transportation 
        and the Committee on Banking, Housing, and Urban Affairs of the 
        Senate.