House votes to block proposal on options

By Associated Press
July 21, 2004

WASHINGTON -- The House voted yesterday to override a rule that would require companies to count stock options against their profits, but a key senator promised to prevent such action in that chamber.

The vote was 312-111, across party lines, for a bill blocking a proposal by the rule-setting board for accounting. The board is seeking to force publicly traded companies to record as an expense all forms of share-based payments to employees, including stock options.

The bill was backed by House leaders of both parties -- a rare occurrence in recent months. However, there was dissent among both the Republican and Democratic rank and file.

Similar legislation has stalled in the Senate, where Banking Committee chairman Richard Shelby, an Alabama Republican, opposes it.

Shelby derided the House action as ''political interference" in the work of independent accounting experts. ''I will continue to fight any effort to pass similar legislation in the Senate," he said.

The rule change proposed in March by the Financial Accounting Standards Board could dramatically reduce the reported earnings of many big companies, particularly in the high-tech industry where stock options for employees have been popular.

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