Silicon Valley is still resisting treating employee stock options as an expense, but its stance may be bending ever so slightly.

According to Bloomberg News, TechNet, a Palo Alto, California-based trade association whose 250 members include such blue-chip names as Intel, Microsoft, Oracle, Cisco Systems, and Hewlett-Packard, is considering a new proposal put forth by Intel. Intel's idea: computer companies should create a "quarterly impact sheet" detailing the number of option grants, the timetable for exercising them, and the potential effect on the corporate bottom line.

TechNet's president Rich White told Bloomberg: "We recognize that there has been some abuse of stock options at the senior level, and our main focus is to preserve stock options for rank-and-file employees."

Among the initiatives the group is considering are a requirement that executives hold options for five years before exercising them and restrictions on executives' ability to sell shares. The group is not ready to treat option costs as an expense.

At a minimum, the group's new tactic represents a tacit acknowledgement by the technology industry that support for expensing options among accounting industry groups like the Financial Accounting Standards Board, lawmakers on Capitol Hill, and institutional investors has reached a critical mass.

To the extent that TechNet is exploring alternatives to the existing treatment under FAS 123, it may be acknowledging that it can't completely forestall a revised standard, but it may be able to soften the impact by proposing a middle course.

This year, as the options issue has become a hot-button one in the corporate accountability crisis, TechNet has been one of the more outspoken opponents of any alteration to FAS 123. Indeed, the group's Web site has a scathing rebuke to the International Accounting Standards Board proposal to expense options.

The TechNet statement says, "IASB's proposal will create a widespread burden on the business environment—financial statements would be misstated, stock prices would drop, stock option plans would be scaled back and venture capitalists would finance fewer companies. Forcing a charge against earnings would diminish the use of stock options, negatively affecting the workforce at a time of rising unemployment and considerable layoffs, without providing valuable information to investors and others."

With or without Silicon Valley, the number of companies on the options-expensing bandwagon continues to grow. Last Friday, Home Depot Inc. became the latest large company to say it would begin expensing them. Had Home Depot been expensing options in 2001, its net income would have been cut by 8 percent to $2.8 billion from $3.04 billion.

Up until this summer only a handful of publicly traded companies expensed options, but in the last two months the number of household names that have announced they would make the change has grown on an almost daily basis.

By last count, at least 76 public companies, including General Motors, General Electric, Merrill Lynch, and American Express have announced that they will expense options in their next fiscal year. Aside from a few exceptions like Amazon.com and Computer Associates International, the leading technology companies have been among the holdouts.

(Editor's note: To find out why management at AMB Property decided to expense employee stock options, read this week's edition of Five Questions, with AMB CFO Mike Coke.)

Houston Judge Freezes Fastow Accounts
Friday, the Houston Chronicle reported that a federal magistrate judge froze some accounts of former Enron Corp. CFO Andrew Fastow. A member of the family of Peter Fastow, Andrew's brother, reportedly tried to move millions of dollars from one of the accounts that was already on a list of assets subject to seizure by the Justice Department.

The Chronicle reported that although the order to freeze the assets by U.S. Magistrate Calvin Botley was sealed, the assets subject to the order were more extensive than the $23.6 million listed by the Justice Department in its court filing last Wednesday.

The owner of assets frozen in a criminal trial is usually given an opportunity to protest the action before the court, the Chronicle reported. Prosecutors must then prove that the assets were the proceeds of a crime.

While the full extent of the freeze is not clear, some of the assets targeted by federal prosecutors are held by former Enron treasurer Ben Glisan, who was also the chief accountant in the finance division run by Fastow. The Chroniclereported that Glisan had been trying to cut his own deal with prosecutors, but it's not clear where his negotiations with federal agents stand.

It's possible that prosecutors gained such a wealth of incriminating evidence from the guilty plea entered by former Enron global finance managing director Michael Kopper that Glisan's bargaining position may have been weakened.

Qwest COO Takes a Mulligan on House Testimony
Back on March 20, Afshin Mohebbi, president and chief operating officer at Qwest Communications International Inc., told the House Committee on Financial Services: "In accounting for the purchase and sales of [indefeasible right of use], Qwest complies with generally accepted accounting principles [GAAP]."

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