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The AAO Weblog covers accounting issues and current events as they relate the practice of investment analysis. All posts prior to September, 2007 are in the public domain, but after September 4, only subscribers to The Analyst's Accounting Observer will see all posts going forward. Only selected, occasional posts will be released to the public domain from September 4 forward.

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The Council Speaks Up
Location: BlogsAAO Weblog (Public)    
Posted by: Jack Ciesielski 6/30/2005 6:08 AM
The Cisco proposition for valuing employee stock options has been mentioned a number of times in this space. (If you don't believe me, and you're the masochistic type, just type "Cisco" into the search box at right.) The story has gone pretty cold lately; we don't know if the SEC is going to buy off on it or reject it out of hand. And the reason is that there's an awful lot of evaluation of that proposition going on that is not seeing the light of day.

The Council of Institutional Investors, a voice for institutional shareholders, picked up its pen and outlined its concerns about that lack of sunshine in a letter to Don Nicolaisen, chief accountant of the SEC.

The CII letter mentions the issues that came to its attention from press reports, and requested "that the Commission, should it consider any formal or informal action, provide full transparency on this proposal and open a public comment period of at least 90 days to solicit the views of investors and other interested parties."

The Council's got its due process right - any consideration of this proposition deserves to be disinfected publicly. The real question, though: does this proposition, lobbed in the final seconds of the game as an obvious tactic to delay stock option expense treatment, deserve any serious consideration?
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