Accounting Change Sparks Heated Debate : Statements: Employee stock options’ value would be deducted from earnings. Executives say share price would fall.

An accounting rule makers’ public hearing on a controversial stock-option proposal turned into a fight Monday between executives who oppose the plan as confusing and public officials demanding clarity in corporate earnings reports.

“You’re concerned about accounting principles, and I care about creating jobs,” Bernard Marcus, chairman and co-founder of Home Depot Inc., told the Financial Accounting Standards Board. “Your numbers are not creating anything.”

Home Depot will no longer offer its employees stock options if the rule is passed, he said.

The FASB has proposed requiring companies to estimate the value of stock options and deduct that value from its reported earnings. Opponents of the proposal say it would amount to bad accounting and bad public policy.

Marcus said the FASB was acting because of pressure from Sen. Carl Levin (D-Mich.). He charged that Levin is trying to redistribute the nation’s wealth.

Levin scoffed at the idea, espoused by a number of companies, that stock options represent a way to share capital with employees.

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Calling the current system “stealth compensation,” he said companies can deduct stock options as a business expense on their tax returns, yet attach no value to stock-option grants on their financial statements.

“With few exceptions, stock options primarily compensate corporate executives,” Levin said. He cited a study that found that less than 2% of companies offer such options to all employees.

“Stock options are an executive pay issue, and the argument over accuracy is simply a smoke screen from people who don’t want to charge earnings at all,” Levin said.

Marcus said Home Depot offers options to about 3,000, or 6%, of its 50,000 employees.

He said the company would stop granting stock options if the rule passed, that he feared the company’s stock price would fall because lower earnings would be shown on the reports.

When FASB project manager John Althoff asked the basis of that belief, Marcus said: “You’re trying to confuse me with logic.”

One analyst said past accounting-rule changes have had little effect on stock prices.

“There’s relatively little impact of making changes in accounting standards,” said Peter Knutson of the Assn. for Investment Management & Research.