SEC Backs FASB’s Role on Options Rule

Securities and Exchange Commission Chairman William Donaldson urged Congress to let the Financial Accounting Standards Board craft rules for treating stock options as an expense in corporate income statements.

“The process established by the FASB to consider the pending stock option proposal should be allowed to run its course,” Donaldson wrote in a letter to Rep. Paul E. Kanjorski (D-Pa.).

The board in March proposed requiring companies to deduct the cost of options from profit. The proposal is opposed by some computer-technology and start-up companies whose leaders say the change will depress profit, limit hiring incentives and make it harder to compete.

At a congressional hearing Tuesday, FASB Chairman Robert Herz defended the accounting board’s plan while some lawmakers said the proposal was already harming companies.

“Many technology firms have already announced that they will no longer issue employee options,” Rep. Edward R. Royce (R-Fullerton) said at the House Financial Services Committee subcommittee hearing.