To require the mandatory expensing of stock options granted to executive officers, and for other purposes.
(This measure has not been amended since it was reported to the House on July 15, 2004. The summary of that version is repeated here.)
Stock Option Accounting Reform Act - (Sec. 2) Amends the Securities Exchange Act of 1934 to require an issuer of registered securities to show as an expense in its annual report the fair value of all stock purchase options granted after December 31, 2004, to: (1) all individuals serving as the chief executive officer of an issuer, or acting in a similar capacity, during the most recent fiscal year, regardless of compensation level; and (2) the four most highly compensated executive officers (other than a chief executive officer) that were serving as executive officers of an issuer at the end of the most recent fiscal year ("named executive officer").
Defines the fair value of an option to purchase such stock.
Exempts small business issuers from the Act's requirement.
(Sec. 3) Amends the Securities Act of 1933 to prohibit the Securities and Exchange Commission (SEC) from recognizing as "generally accepted" any accounting principle relating to the expensing of stock options unless it complies with both: (1) specified expense recomputation requirements; and (2) a required joint study by the Secretaries of Commerce and of Labor of the economic impact of the mandatory expensing of employee stock options.
Requires the recomputation and re-reporting of the expense of a stock purchase option that is exercised, to equal the difference between the price of the underlying stock and the exercise price.
Requires the re-reporting as a reduction of the total expense originally required to be reported if the option expires or is forfeited.
(Sec. 4) Directs the SEC to require each issuer to include in its periodic report more detailed information regarding stock option plans, stock purchase plans, and other arrangements involving an employee acquisition of an equity interest in the company, including: (1) a discussion, written in accordance with the Plain English Handbook published by the SEC Office of Investor Education and Assistance on the dilutive effect of stock option plans; (2) expanded disclosure of the dilutive effect of employee stock options on the issuer's earnings per share; (3) prominent placement and increased comparability and uniformity of all stock option related information; (4) the number of outstanding stock options; (5) the weighted average exercise price of all outstanding stock options; and (6) the estimated number of stock options outstanding that will vest in each year.
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Motion to reconsider laid on the table Agreed to without objection.
Rule provides for consideration of H.R. 3574 with 1 hour of general debate. Previous question shall be considered as ordered without intervening motions except motion to recommit with or without instructions. Measure will be considered read. Specified amendments are in order.
House resolved itself into the Committee of the Whole House on the state of the Union pursuant to H. Res. 725 and Rule XVIII.
The Speaker designated the Honorable Tom Latham to act as Chairman of the Committee.
GENERAL DEBATE - The Committee of the Whole proceeded with one hour of general debate on H.R. 3574.
DEBATE - Pursuant to House Resolution 725, the Committee of the Whole proceeded with ten minutes of debate on the Oxley amendment.
DEBATE - Pursuant to House Resoultion 725, the Committee of the Whole proceeded with ten minutes of debate on the Sherman amendment.
POSTPONED PROCEEDINGS - At the conclusion of debate on the Sherman amendment, the Chair put the question on adoption of the amendment and by voice vote, announced that the noes had prevailed. Mr. Sherman demanded a recorded vote and the Chair postponed further proceedings on the question of adoption of the amendment until later in the legislative day.
DEBATE - Pursuant to House Resolution 725, the Committee of the Whole proceeded with ten minutes of debate on the Maloney amendment.
POSTPONED PROCEEDINGS - At the conclusion of debate on the Maloney amendment, the Chair put the question on adoption of the amendment and by voice vote, announced that the noes had prevailed. Mrs. Maloney demanded a recorded vote and the Chair postponed further proceedings on the question of adoption of the amendment until later in the legislative day.
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DEBATE - Pursuant to House Resolution 725, the Committee of the Whole proceeded with twenty minutes of debate on the Kanjorski amendment in the nature of a substitute.
POSTPONED PROCEEDINGS - At the conclusion of debate on the Kanjorski amendment, the Chair put the question on adoption of the amendment and by voice vote, announced that the noes had prevailed. Mr. Kanjorski demanded a recorded vote and made a point of no quorum. The Chair postponed further proceedings on the question of adoption of the amendment until later in the legislative day and the point of no quorum was considered as withdrawn.
The House rose from the Committee of the Whole House on the state of the Union to report H.R. 3574.
The previous question was ordered pursuant to the rule.
The House adopted the amendment in the nature of a substitute as agreed to by the Committee of the Whole House on the state of the Union.
Passed/agreed to in House: On passage Passed by the Yeas and Nays: 312 - 111 (Roll no. 397).
Roll Call #397 (House)On passage Passed by the Yeas and Nays: 312 - 111 (Roll no. 397).
Roll Call #397 (House)Motion to reconsider laid on the table Agreed to without objection.
The Clerk was authorized to correct section numbers, punctuation, and cross references, and to make other necessary technical and conforming corrections in the engrossment of H.R. 3574.
Received in the Senate.
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.