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Lawmakers returned to Washington on Tuesday for what could be the final session of the 108th Congress and the climax to a fierce debate over whether publicly held companies should be required to account for stock options. Sen. Richard Shelby, R-Ala., chairman of the Senate Banking Committee, has vowed to block a bill making its way through the Senate that would scuttle plans by the Financial Accounting Standards Board to force companies to count options as an expense against profits beginning Dec. 15. “Senator Shelby will make every effort in the Senate to see that this bill does not pass,” said Andrew Gray, a banking committee spokesman. The Senate is expected soon to debate a bill, S. 1890, introduced by Sen. Mike Enzi, that would blunt FASB’s proposal by requiring companies to deduct options only for a company’s five top executives. Supporters of the legislation hope it will gain momentum in the Senate after House lawmakers approved the measure in July by a vote of 312-111. John Palafoutas, senior vice president of domestic policy and congressional affairs for AeAnet, a technology trade association that opposes FASB’s proposed rule, said strong support for the bill in the lower chamber puts pressure on the Senate to consider the legislation. “Senators deliberately did not pay attention to this because they thought it had no chance, but with the strong vote in the House they will have to take a hard look at this,” Palafoutas said. Jeff Peck, chief lobbyist for the International Employee Stock Options Coalition, a Washington advocacy group that also opposes FASB’s proposal, said the House vote made a powerful statement, but conceded that the Senate Banking Committee is unlikely to approve the bill, which would prevent a full floor vote on the measure. Coy Knobel, a spokesman for Enzi, said the senator and the cosponsors of his bill are “weighing all their legislative options at this time.” That could include attaching a version of the measure to Senate and House spending bills scheduled for adoption by Oct. 1, the start of the government’s fiscal year. FASB’s ace in the hole could be Shelby, who also sits on the Appropriations Committee. He has pledged to thwart any effort to insert a rider overriding the board’s options plan into spending legislation or to delete any amendment to a House appropriations measure. Shelby has hinted that that he could sink such efforts in a conference committee on appropriations. “We’re hopeful it would not come to that point,” said Gray, noting that Shelby’s allies on the FASB options proposal include Sen. John McCain, R-Ariz., and Securities and Exchange Commission Chairman William Donaldson. In August, Donaldson sent a letter to Senate Majority Leader Bill Frist, R-Tenn., and 15 other senators asserting that the Enzi bill would undermine FASB authority as the main standards-setting organization for the accounting industry. “I believe strongly that the FASB’s consideration of this proposed standard regarding stock options should be allowed to run its full course,” he wrote. Enzi said last week by e-mail that he “understands and fully respects the FASB’s statutory authority … but with this authority comes responsibility, and FASB should meet or exceed the level of responsibility that federal agencies are required to have for small businesses.” The Wyoming Republican also said FASB has failed to conduct a study of the economic impact of the options rule. “Without this essential information it is nearly impossible to set objective, fair, open and balanced standards,” he said. Sen. Ted Stevens, who chairs the Appropriations Committee, did not return calls for comment. But the Alaska Republican has previously indicated that he opposes attaching a stock-options amendment to a government spending bill. Such a step could effectively bog down a spending measure by sparking a filibuster that requires 60 votes to overcome. Currently, 26 senators are co-sponsoring the Enzi bill. The AeA hopes to round up more support on Sept. 21 when technology industry executives descend on Capitol Hill to lobby against FASB’s plan. “It’s about as volatile a time in the Senate that you’re going to find,” Palafoutas said. “We’ve called 74 senators and already made appointments with a dozen. We have to push for passage.” Copyright �2004 TDD, LLC. All rights reserved.

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