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The well-oiled technology industry lobbying machine is mobilizing to take on the Senate after scoring a huge win last week when House lawmakers voted to limit the expensing of employee stock options. The 312-111 vote in the lower chamber has the tech industry basking in the glow of a major victory, and lobbyists predict it will raise the political profile of the issue in an election year. The hope is that it will prompt senators to take another look at comparable legislation sponsored by Sens. Mike Enzi, R-Wyo., and Barbara Boxer, D-Calif. The measure, which like the so-called Baker bill requires companies to book options only for their top five executives, has 25 co-sponsors. The Senate “never thought they would have to pay attention to this issue,” said Mark Heeson, president of the National Venture Capital Association. “Now they have to.” One challenge is to sway a key senator, Richard Shelby, chairman of the Senate Banking Committee. The Alabama Republican has repeatedly vowed to block any effort by Congress to interfere with the independent Financial Accounting Standards Board, which has proposed to require larger companies to expense all employee options. “I remain firmly convinced that Congress should not intervene in the FASB rulemaking process,” Shelby said Tuesday shortly after the House voted. He also noted that Federal Reserve Chairman Alan Greenspan reiterated his opposition to congressional interference with FASB during testimony before Shelby’s committee. Backing Shelby are Commerce Committee Chairman John McCain, R-Ariz., and Sens. Peter Fitzgerald, R-Ill., Carl Levin, D-Mich. and Richard Durbin, D-Ill. The lawmakers introduced Wednesday a resolution reaffirming FASB’s charter as an independent standards-setting organization. “Congress moved to increase accounting transparency with the landmark Sarbanes-Oxley Act of 2002, but now it is beginning to turn back the clock on important corporate reforms,” Fitzgerald said. Despite such opposition, Jeffrey Peck, chief lobbyist for the International Employee Stock Options Coalition, said he is cautiously optimistic about the bill’s prospects for Senate passage this year. “We’ve got a strong group of co-sponsors and an even larger group of ‘undecideds’ focusing on the stock-option issue now,” he said. Peck added that last week’s overwhelming bipartisan vote sent a powerful statement not only to the Senate, but also to FASB and the Securities and Exchange Commission. “To a large extent the ball’s in FASB’s and the SEC’s court,” he said. “Do they pay attention to the comment letters? Do they do the field testing or do they thumb their nose at the House vote?” Heeson also noted that during Congress’ summer recess, the NVCA and other tech advocates plan to lobby senators in their home states to persuade them to support the bill. “There is going to be more pressure put on Shelby by other senators,” he said. Coy Knobel, a spokesman for Enzi, said the senator believes the bill would not be necessary if FASB listened to the concerns of the people who would be most affected by its proposed rule. “In light of FASB’s unwillingness to constructively review the small business concerns, he would like to get the bill to the floor for a vote,” Knobel said. Meanwhile, some legislative observers speculate that Boxer might attach the Senate version of the Baker bill as an amendment to a must-pass appropriations measure before Congress adjourns in the fall. “There’s a lot of ways to skin that cat,” Peck said. In fact, language has already been inserted into a report on the Labor and Health and Human Services departments spending bill that would delay any options expensing plan by ordering a study on its impact, a tech lobbyist said. Adding language to the report is a first step to getting it included in the final spending bill. Consideration of that bill is unlikely before September, a Labor Committee spokeswoman said. Still, critics of the legislation continue to throw their support behind FASB’s proposal. Richard L. Trumka, secretary-treasurer of the AFL-CIO, called the Baker bill “intellectually dishonest and economically irresponsible” in testimony before the House Financial Services Committee Thursday. “The House appears bent on once again subverting the integrity of our financial accounting system by giving runaway CEO pay special legislative protection,” he said in testimony. Proponents of the FASB plan are optimistic that senators will block the Enzi-Boxer measure. “We’re hopeful that this effort will fail,” said Rebecca McEnally, vice president of advocacy at the Virginia-based CFA Institute, a group representing financial analysts. Copyright �2004 TDD, LLC. All rights reserved.

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