News Release
July 19, 2002
Contacts:
|
|
Coy Knobel (Enzi) |
|
Adam Kovacevich (Lieberman) |
|
|
202 224-3424 |
|
202 224-9965 |
Enzi, Lieberman Call for
SEC Action On Range of Stock Option
Reforms
Introduce Stock Option Fairness and Accountability Act
WASHINGTON – Senators Mike Enzi (R-WY) and Joe Lieberman (D-CT) today called
on the Securities and Exchange Commission (SEC) to analyze several possible
reforms to deter abuse of stock options by corporate executives, including the
rules for accounting for options, and propose legislative and regulatory
recommendations for addressing these issues.
Arguing that there is a
range of policy issues regarding stock options that need to be addressed, beyond
the narrow question of accounting treatment, Enzi and Lieberman introduced
legislation today, S. 2760, directing the SEC to evaluate several different
reform ideas that have arisen out of the recent spate of corporate scandals.
This proposal is based on an amendment to the accounting reform bill that Enzi
and Lieberman filed last week, but were unable to offer on the floor.
Enzi and Lieberman also sent a letter to the SEC today urging the
commission to not wait for legislation to pass before acting on their request,
asking for a report within 60 days. They noted that such an immediate review
would help "restore investor and shareholder confidence, calm the markets, and
prevent perceived problems associated with stock options."
"It is our
view the debate on stock options has focused narrowly on the accounting of stock
options, and failed to focus on other critical stock option policy issues," the
letter said. "We seek to broaden the debate to ensure that Congress, the
Commission, and other relevant agencies take action to eliminate any problems
which might exist with stock options, while ensuring their benefits are
retained."
Among other things, the Enzi-Lieberman bill (the Stock Option
Fairness and Accountability Act) would require the SEC to look at: stock option
accounting, including the accuracy of option pricing models; current disclosure
requirements to investors and shareholders; corporate governance requirements,
including shareholder approval of stock plans; stock holding periods for senior
executives; and the impact of new expensing rules on company productivity,
worker hiring and retention, and employees of all income levels.
The
companion letter that Enzi and Lieberman sent the SEC today, which was cosigned
by Senators George Allen (R-VA), Barbara Boxer (D-CA), Conrad Burns (R-MT), John
Ensign (R-NV) Bill Frist (R-TN), said that the SEC was the best-positioned body
to analyze the range of policy issues surrounding stock options. "The Senate
should not be legislating detailed accounting or regulatory standards regarding
stock options or other accounting issues. These are issues best left to the SEC
and its expert staff."
In making the case for SEC action, Enzi and
Lieberman reiterated that it is the abuse of stock options by corporate
executives, not options themselves, that are the problem, arguing that stock
options have proven to be important "incentives for productivity and growth."
"In most instances," their letter said, "they reflect America's best business
values—the willingness to take business risks, the vision to develop new
entrepreneurial companies and technologies, a way to broaden ownership and
participation among employees, and a strong performance incentive for both
management and employees."
-30-
(For a copy of the bill and/or letter please contact either
press office)