I 
109TH CONGRESS 
1ST SESSION 
H. R. 913
To direct the Securities and Exchange Commission to require enhanced disclo-
sures of employee stock options, and to require a study on the economic 
impact of broad-based employee stock option plans, and for other pur-
poses. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 17, 2005
Mr. DREIER (for himself, Ms. ESHOO, Mr. BLUNT, Mr. CROWLEY, Mr. SHAD-
EGG, Mr. WU, Mr. CANTOR, Mr. INSLEE, Mr. ROYCE, Mr. MCINTYRE, 
Mr. GARY G. MILLER of California, Ms. ZOE LOFGREN of California, Mr. 
HEFLEY, Mr. LANTOS, Mrs. BLACKBURN, Mr. MILLER of North Caro-
lina, Mr. COX, Mr. SMITH of Texas, Mr. SIMPSON, Mr. ROGERS of Michi-
gan, Mr. HAYWORTH, Mr. SENSENBRENNER, and Mr. WILSON of South 
Carolina) introduced the following bill; which was referred to the Com-
mittee on Financial Services 
A BILL 
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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Broad-Based Stock 
Option Plan Transparency Act’’.
SEC. 2. CONGRESSIONAL FINDINGS. 
Congress finds the following: 
(1) Innovation and entrepreneurship, particu-
larly 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 em-
ployee stock option plans on shareholder value raise 
legitimate issues relevant to the current level of dis-
closure 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 TRANS-
PARENCY AND REPORTING DISCLOSURES. 
(a) ENHANCED DISCLOSURES REQUIRED.—Not later 
than 180 days after the enactment of this Act, the Securi-
ties and Exchange Commission (hereafter referred to as 
the ‘‘Commission’’) shall, by rule, require, for each com-
pany 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 informa-
tion regarding stock option plans, stock purchase plans, 
and other arrangements involving an employee acquisition 
of an equity interest in the company, particularly with re-
spect to the dilutive effect of such plans, including—
(1) a discussion, written in ‘‘plain English’’ (in 
accordance with the Plain English Handbook pub-
lished by the Office of Investor Education and As-
sistance of the Commission), of the dilutive effect of 
stock option plans, including tables or graphic illus-
trations 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 com-
parability 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 op-
tions 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 characteris-
tics of such securities, and any right or option to acquire 
any such security. 
SEC. 4. EVALUATION OF EMPLOYEE STOCK OPTION PLANS 
TRANSPARENCY AND REPORTING DISCLO-
SURES AND REPORT TO CONGRESS. 
(a) STUDY AND REPORT.—The Commission shall ex-
amine the effectiveness of the enhanced disclosures re-
quired 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 trans-
mission of the report required under subsection (a), the 
Commission shall not recognize as generally accepted ac-
counting 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 con-
duct 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 em-
ployee 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 re-
search 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 re-
port 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.
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