Washington D.C. - A dozen prominent consumer and investor groups this week expressed unified opposition to a bill that, if enacted, would block the Financial Accounting Standards Boards (FASB)'s efforts to require companies to count stock options as an expense. Though a small minority of business lobbyists have loudly expressed their opposition to expensing options, this is the first time that consumer and investor groups have sent a unified letter to members of Congress on the issue of options.

"If we are to restore confidence in American business and encourage sustained economic growth, we must begin by restoring honest and accurate accountant standards," reads the letter, which is signed by representatives of Citizen Works, Clean Yield Asset Management, the Consumer Federation of America, Consumers Union, Corpgov.net, Domini Social Investments, the Motley Fool, the Gray Panthers, Public Citizen, Transamerica Investment Management, U.S. Investors Organization, and the U.S. Public Interest Research Group (US PIRG).

The letter argues that if Congress passes the "Broad-Based Stock Option Plan Transparency Act" (S. 979 / H.R. 1372), it would actually undermine transparency in financial reporting. Additionally, this effort to interfere with the independent standard-setting process flies in the face of last year's corporate reform legislation, which included provisions to protect FASB from just this sort of pressure.

The groups also noted the disparity in current accounting rules that allows companies to ignore the expense of stock options when calculating stock value and to simultaneously count them as an expense for tax deductions. In addition to inflated stock value, the inaccuracy also leads to a "gross distortion of executive pay," the letter said, citing that roughly three-fourths of executive pay now comes in the form of options that fail to truly align the interests of managers and shareholders.

"Stock options were the steroids of corporate greed in the '90s," said Citizen Works president Theresa Amato. "Options created the conditions as well as a key tool for countless executives to cook the books. We need to remove this inducement to commit corporate crime without further delay."

"Just a year after giving near unanimous approval to legislation designed in part to allow FASB to develop accounting rules free from the threat of outside interference, some members of Congress have already reneged on that promise and are trying to prevent FASB from adopting a stock options expensing rule that it believes is in investors' best interests," said Barbara Roper, Director of Investor Protection for the Consumer Federation of America. "If they succeed, they will not only undermine the transparency of corporate financial disclosures, they will deal a fatal blow to the independence of the accounting standard-setting process."

"The expensing of stock options is long overdue. It will help bring corporate balance sheets into line with reality, and allow investors to measure the true value of executive compensation packages," said Adam Kanzer, Director of Shareholder Advocacy for Domini Social Investments. "In the name of transparency, this bill would actually allow corporations to continue to obscure critical information. It is dramatically out of step with the increasing demand for openness and transparency in the wake of the corporate scandals of the last two years."

For a copy of the letter, click here