|
"To maximize the opportunity for international convergence" was a
major reason for pushing through the new U.S. standard, said FASB Chairman
Robert Herz in congressional testimony.
"The proposed statement would result in greater international comparability," said FASB of its ruling. Mr. Herz also warned Congress that if the U.S. doesn't move to expensing options in alignment with Europe, "we would be the odd man out." Yet what is so bad about being the "odd man"? Twenty-five years ago, the U.S. was told it would have to go completely to the metric system or suffer grave economic consequences. Yet foreigners still want to do business with the "odd man" even if it's in pounds, gallons and inches. And America is indeed "odd" compared to the rest of the world in terms of its unparalleled levels of opportunity and prosperity. It's this "oddness" that attracts folks from all over the world, including old Europe, to come make a new start in the U.S. But messing with the American innovation of stock options could put a damper on America's unique culture of entrepreneurship and risk-taking. And this, in fact, may be what European bureaucrats are counting on. Most European companies don't utilize broad-based stock options, but they are a crucial part of America's economic engine, instrumental in the growth of companies from Microsoft to Home Depot. This new standard would either reduce earnings for innovative companies or reduce their use of stock options to attract and motivate employees. Either way, "it would reduce our competitive advantage," says John Palafoutas, the American Electronics Association's senior vice president for domestic policy. I wonder how many of the European countries that help
drive the US economy have done so in metric and helped stave off the "grave
economic consequences" by using metric behind the scenes.
|
