Stock options top tech lobbying list at convention

NEW YORK — While the prime-time speeches at Madison Square Garden occupy center stage at this week’s Republican National Convention, much of the event’s real politicking is taking place at hundreds of private receptions scattered throughout Manhattan. At two tech-focused gatherings Wednesday, industry companies, lobbying groups and politicians came together to network and consider the IT industry’s legislative agenda.

Little hard selling went on at the events honoring “high-tech champions” and members of the Congressional Internet Caucus, but speakers and attendees did take a few moments to spotlight their key issues. At the morning event, sponsor TechNet focused on looming changes to accounting rules that will force companies to deduct the cost of stock options from their earnings. The proposed rule change has sent shock waves through the options-reliant IT industry, with many companies saying they’ll have to scale back employee options plans if the change takes effect.

“Options are the number one, two and three issues we’re dealing with right now,” said Rick White, president and chief executive officer of TechNet. TechNet is a Washington, D.C., lobbying group whose 200 members include representatives from a number of technology companies, such as Microsoft Corp., Oracle Corp., Hewlett-Packard Co., Intel Corp. and Cisco Systems Inc.

The U.S. Financial Standards Accounting Board (FASB) signaled last year that it intends to mandate options expensing, but the issue gained urgency in March when the board released for comment a draft proposal outlining its intended changes. If finalized, the new rules would affect public companies in their first fiscal year beginning after Dec. 15.

Opponents of mandatory options expensing scored a surprise victory in July, when the U.S. House of Representatives voted 312 to 111 in favor of overruling FASB and requiring expensing only of options given to a company’s five highest-paid officers. The bill now sits with the U.S. Senate, where it faces a procedural hurdle in getting past Banking Committee Chairman Richard Shelby, an Alabama Republican who opposes the bill and has blocked it in his committee.

“I think if we had an up-and-down vote in the Senate, we’d win,” said White, pointing to the bill’s 3-to-1 endorsement in the House. He spoke in favor of the bill at Wednesday’s reception, as did Dwight Decker, chairman of communication chip maker Conexant Systems Inc. in Red Bank, New Jersey.

“There are arguments on both sides about good or bad accounting. I don’t think it matters whether (mandatory options expensing) is good or bad accounting. What we’re certain of is that it’s very bad public policy,” Decker said. “Let’s push this over the top and protect the innovation economy in North America.”

Politicians attending the gathering included Congressman Tom Davis, a Virginia Republican who voted in favor of the bill, along with IT company executives and lobbyists whose interest areas overlap with TechNet’s, such as National Taxpayers Union President John Berthoud. Berthoud said his group backs TechNet’s opposition of mandatory options expensing, which fits ideologically with the National Taxpayers Union’s push for limited government regulation of businesses.

Also attending Wednesday’s event was Jonathan Zuck, president of the Association for Competitive Technology (ACT) IT industry lobbying group. ACT made its name as a fierce opponent of the government’s antitrust prosecution of Microsoft. ACT’s current top priority is pushing for strong intellectual property (IP) protections, which it sees as critical to the IT industry’s growth, Zuck said.

“IP is the issue for our industry,” he said.

Officials of both ACT and TechNet acknowledged technology concerns will take a backseat at the convention to national issues of security and economic policy.

“This isn’t the place for action items,” Zuck said. “It’s not about what’s on the convention agenda, it’s about the opportunity to talk with people we’ll be dealing with in the fall. Education and relationship-building is the focus.”