. . . But They Do Create Good Jobs : Stock options are necessary growth tools for start-up firms.

Stock options make it possible to start new companies and create new jobs. They enable small companies to stretch scarce venture capital dollars and attract skilled and motivated employees. Stock options encourage risk-taking and spur technological innovation.

One recent survey of companies with stock option plans found that nine out of 10 such companies with fewer than 100 employees offer the options to every single employee, not just top executives. For employees, they are the difference between just a job and becoming stockholders with the opportunity to participate in the company’s successes. In many cases, options also represent a bonus for employees--a dividend that provides for home ownership, a child’s education, a comfortable retirement--even the capital to open a business on their own, creating more jobs.

The Financial Accounting Standards Board has proposed to require a charge to the company’s financial statements whenever a stock option is granted, even though the stock’s value may never rise or the option may expire worthless. The fact is that accurately estimating the current value of an employee’s stock option is nearly impossible.

The accounting board’s proposal is so potentially damaging and offers so little improvement in the comparability and integrity of financial statements that I have concluded, as have the overwhelming majority of users and preparers of financial statements, that it must not go forward. We are being asked to give up a vital tool for economic growth and job creation in return for a proposal that has been rejected by most of the accounting profession.

The proposed rule is bad policy, bad economics and bad accounting. It should simply be withdrawn.