Manufacturers and others have until June 30 to comment on the Financial Accounting Standards Board's (FASB) proposed rule changes for booking stock options and other share-based payments. It appears they won't need that long. Reaction to the proposal, released March 31, was nearly instantaneous. The National Association of Manufacturers and AeA, two Washington, D.C., trade associations, were among those attacking the proposal, under which all forms of share payments to employees would be treated like other forms of compensation by recognizing their cost in the company's income statement. The expense generally would be the fair value of the shares on the date they were granted, FASB says. Current accounting practices require only that the cost of fixed-plan employee stock options be disclosed in the footnotes to a company's financial statements. "Requiring companies to expense employee stock options will increase the cost of providing these important benefits and lead to the eventual elimination of broad-based stock-option plans, hurting rank-and-file workers the most," said Kimberly Pinter, director of corporate financial and tax policy for the NAM. "That would have the perverse effect of leaving stock options only in the hands of top executives." NAM also argues that there is no accurate method for valuing stock options. Technology firms particularly would be hard hit, points out the technology trade group AeA. "High-tech companies issue options and ESPPs [Employee Stock Purchase Plans] for virtually all employees -- a practice quite different from other industries," said AeA President and CEO William T. Archey, in a statement. Added Ken Wasch, president of the Software & Information Industry Association (SIIA): "Not only does the proposal fail to accomplish its objective of clarifying corporate accounting, but it poses an enormous threat to innovative companies and the U.S. economy at the worst possible time." The AeA and SIIA are supporting the passage of Congressional legislation that would require the expensing of options for top executives only. However, the FASB proposal was immediately praised by Sens. John McCain, R-Ariz., and Carl Levin, D-Mich., with Levin noting, "About 500 companies, including Coca-Cola, General Motors, General Electric, Dow Chemical, Amazon, Home Depot and Wal-Mart now expense stock options without suffering the dire consequences predicted by opponents." FASB says it held more than 35 public meetings and conducted field visits and consultations since adding the project to its agenda one year ago. The proposal provides more complete and higher quality information to investors, says the Norwalk, Conn.-based organization. FASB also states that the proposal "would achieve substantial convergence in this important area between U.S. and international accounting standards." The draft proposal is available at FASB's Web site, www.fasb.org.