(Washington, D.C.) – Citizens Against Government Waste (CAGW), along with other conservative and free market organizations, today urged Securities and Exchange Commission (SEC) Chairman William Donaldson to oppose mandatory expensing of stock options.  The Financial Accounting Standards Board (FASB) is expected to release an exposure draft of its recommendation on stock option expensing within weeks.

“Mandatory expensing would be a blow to an economy that is finally on an upswing after several down years,” CAGW President Tom Schatz said.  “The administration has worked hard over the last three years to create job growth.  A decision to impose mandatory expensing of stock options would be a huge step backward for U.S. companies, especially small businesses, trying to recruit and retain top-level talent.”

In the wake of corporate financial scandals, many different solutions have been offered to provide more accounting transparency.  Evidence shows that stock option expensing would not target those that committed corporate fraud, but instead hurt ordinary workers.  In the 100 largest high-tech Internet firms, non-executive employees hold 19 percent of their company’s stock, compared to executives who hold only 14 percent.

“By imposing such a regulation, the FASB would simply be placing another unneeded burden on companies in an effort to over-compensate for last summer’s corporate scandals,” Schatz continued.  “Real reforms are needed to increase corporate governance.  Forcing companies to expense stock options would only hurt ordinary workers who benefit not only financially, but the feelings of entitlement and ownership in the work they do.”

Stock options are beneficial to both companies and individuals.  Overall productivity for companies with broad-based stock options increases four percent.  Meanwhile, workers’ average returns increase nearly two percent.

“Stock options help keep the American dream alive for the average worker,” Schatz concluded.  “Imposing another regulation will make it that much more difficult to succeed, and create unnecessary expenses for both the government and taxpayers.”

Citizens Against Government Waste is the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.