IV

103D CONGRESS

1ST SESSION H. CON. RES. 98

Expressing the sense of the Congress regarding the accounting standards

proposed by the Financial Accounting Standards Board.

IN THE HOUSE OF REPRESENTATIVES

MAY 11, 1993

Ms. ESHOO submitted the following concurrent resolution; which was referred

to the Committee on Energy and Commerce

CONCURRENT RESOLUTION

Expressing the sense of the Congress regarding the accounting standards proposed by the Financial Accounting

Standards Board.

Whereas the Financial Accounting Standards Board is reconsidering the proper accounting treatment for stock compensation plans, including broad-based employee stock

option plans and employee stock purchase plans;

Whereas the Board has suggested that stock options granted

under stock compensation plans should be reported by

companies on their income statements as expenses, similar to cash compensation or health benefits;

Whereas improved financial reporting and disclosure of employee compensation is of paramount importance;
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•HCON 98 IH

Whereas all 6 of the largest accounting firms have urged that

the current stock option accounting standards be left in

place;

Whereas the potential distortion that may result from implementing the Board’s proposal may detract from recent

attempts to provide better and clearer information to the

public;

Whereas new businesses in new-growth sectors, such as hightechnology industries, often lack financial resources and

must rely on stock options to attract qualified employees;

Whereas the Board’s proposal will reduce incentives to grant

stock options, thereby limiting an important element in

the feasible compensation mix of these companies and

posing a threat to entrepreneurship in general;

Whereas employee ownership in American companies has

greatly expanded through the use of stock compensation

plans, and a majority of the emerging growth companies

distribute stock options to most or all of their employees;

Whereas a rule recently promulgated by the Securities and

Exchange Commission increases the disclosure obligations

of public companies, thereby improving financial reporting and disclosure of employee compensation, especially

for high-level executives;

Whereas stock compensation plans have the potential to stimulate American productivity and enhance American competitiveness;

Whereas discouraging the use of stock options will reduce the

ability of new businesses to obtain proper financing and

reduce America’s ability to compete in the world economy; and
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•HCON 98 IH

Whereas one function of Congress is to discern how Federal

policies affect the general public and to ensure that the

general economic health of the country is not unduly

harmed by these policies: Now, therefore, be it

1 Resolved by the House of Representatives (the Senate

2 concurring), That it is the sense of the Congress that—

3 (1) the accounting standards proposed by the

4 Financial Accounting Standards Board will have

5 grave economic consequences, particularly for busi6 nesses in new-growth sectors, which rely heavily on

7 entrepreneurship; and

8 (2) the Board should not change the current ac9 counting rules under Accounting Principles Board

10 Decision 25 by requiring that businesses deduct

11 from profits the value of stock options.

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