FSA supports Broad-Based Stock Option Plan Transparency Act of 2003

May 12, 2003 – San Jose, CA – The Fabless Semiconductor Association (FSA), a semiconductor trade organization, said that it strongly supports new legislation on employee stock option plans entitled, “Broad-Based Stock Option Plan Transparency Act of 2003.”

The legislation, which was presented to the House on March 20 by Representatives Dreier and Eshoo of California, and the Senate on April 29 by Senators Ensign (R-NV) and Boxer (D-CA), seeks to improve the transparency of company stock option plans by requiring the Securities and Exchange Commission (SEC) to implement better annual and quarterly reporting and disclosure methods for public companies, rather than requiring the expensing of all granted options by a company.

“The FSA membership is deeply concerned about the future of employee stock option plans, as many fabless companies rely on this benefit to recruit and maintain high-level design talent and loyal employees,” stated Jodi Shelton, co-founder and executive director of the FSA. “We are pleased to see new legislation evolve that more accurately addresses the problems created by employee stock-option plans, and that provides a fair and timely solution to this issue.”

In addition to its recommendations on a new process for stock option disclosure, the legislation would also require the SEC to engage in a three-year evaluation period following its implementation to study and consequently testify to the US Congress on the effectiveness of the new reporting method. This sub rule provides a safeguard to the SEC in the event that the new reporting standards are not effective or could be altered to better meet investor needs.

Lastly, the legislation requires the Secretary of Commerce to conduct a study on broad-based employee stock option plans to determine their general role in American business, their effectiveness in recruitment and employee retention, as well as their impact on US economic growth. This study will be beneficial to Congress, assisting them to more fully understand the issues involved prior to voting on future legislation.


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