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 that--
            (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; and
            (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 date of enactment of this Act, the Securities and Exchange 
Commission (in this Act referred to as the ``Commission'') shall, by 
rule, require, for each company required to file 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 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 earnings per share number of the company;
            (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.--
            (1) Study.--During the 3-year period following the date of 
        issuance of a final rule under section 3(a), the Commission 
        shall conduct a study of the effectiveness of the enhanced 
        disclosures required by section 3 in increasing transparency to 
        current and potential investors.
            (2) Report.--Not later than 180 days after the end of the 
        3-year period referred to in paragraph (1), the Commission 
        shall transmit a report of the results of the study conducted 
        under paragraph (1) 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.--During the period beginning on the date of enactment of this 
Act and ending 60 days after the date of transmission of the report 
required under subsection (a)(2), the Commission shall not recognize as 
generally accepted accounting principles for purposes of enforcing the 
securities laws any accounting standards related to the treatment of 
stock options that the Commission did not recognize for that purpose 
before April 1, 2003.

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

    (a) Study.--
            (1) In general.--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.
            (2) Content.--The study and analysis required by paragraph 
        (1) shall include an examination of--
                    (A) 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;
                    (B) the role of such plans in the recruitment and 
                retention of skilled workers; and
                    (C) the role of such plans in stimulating research 
                and innovation;
                    (D) the impact of such plans on the economic growth 
                of the United States; and
                    (E) 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 of Commerce shall submit a report on the study 
and analysis 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.
Broad-Based Stock Option Plan Transparency Act of 2003 - Directs the Securities and Exchange Commission (SEC) to require that certain mandatory periodic reports include detailed information regarding stock option plans, stock purchase plans, and other arrangements involving an employee acquisition of an equity interest in the publicly traded company, particularly with respect to the dilutive effect of such plans.

Requires such reports to include: (1) a discussion, written in "plain English" of the dilutive effect of stock option plans, including tables or graphic illustrations; (2) expanded disclosure of the dilutive effect of employee stock options upon the earnings per share number of the company; (3) prominent placement and increased comparability of all stock options related information; and (4) a summary of the stock options granted to the five most highly compensated executive officers of the company, including any outstanding stock options of those officers.

Directs the SEC to study and report to Congress on the effectiveness of the enhanced disclosures in increasing transparency to investors.

Prohibits the SEC from recognizing as generally accepted accounting principles for purposes of enforcing the securities laws any accounting standards related to the treatment of stock options that it did not recognize for that purpose before April 1, 2003.

Instructs the Secretary of Commerce to report to Congress on a study and analysis of broad-based employee stock option plans, particularly in the high technology and any other high growth industries.
A bill to direct the Securities and Exchange Commission to require enhanced disclosures of employee stock options, to require a study on the economic impact of broad-based employee stock option plans, and for other purposes.