Mike Levin: “I am introducing today on behalf of myself and Sen. McCain two separate bills relating to stock options. Stock options…”

“I am introducing today on behalf of myself and Sen. McCain two separate bills relating to stock options. Stock options are unfinished business from the last Congress. They are the 800-pound gorilla that has yet to be caged by corporate reform. Stock options allow a company's employees, usually its top executives, to purchase company stock at a set price for a specified period of time, perhaps 10 years. If the stock price rises after the option is issued, the executive can exercise the option, buy the stock at the set price, and then sell it on the open market at a profit. Today, most CEOs of U.S. publicly traded companies receive a large percentage of their pay from stock options. Despite their widespread use, stock options remain a stealth form of compensation because, under current accounting rules, they never have to appear on the company books as a compensation expense. In fact, they are the only form of compensation that companies do not have to book as an expense at any time. In addition, stock options are the only form of compensation that a company can claim as a deductible business expense on its tax return, even when no expense is ever recorded on the company books. These stock option accounting and tax rules are inconsistent and illogical.”