Silicon Valley Loses the Keystone of a Golden Age

In the past couple of months, shareholders of Texas Instruments(TXN Quote), Hewlett-Packard(HPQ Quote), PeopleSoft(PSFT Quote) and IBM(IBM Quote) all have voted to require the companies to account for the cost of options.

Even stockholders of Intel, the world's largest chipmaker and a leading proponent of options, voted in favor of expensing at the company's annual meeting in May. It was a highly symbolic retort to Intel CEO Craig Barrett, who on March 31 penned a feisty editorial in The Wall Street Journal calling options "imaginary expenses" and complaining they are difficult to value.

For now, these shareholder resolutions are nonbinding. Indeed, the board of computer maker Apple(AAPL Quote) declined to enact options expensing even after shareholders voted in favor of the measure last year.

But investors are less inclined to take no for an answer. Angered by the Apple board's inaction, California's pension giant, Calpers, voted against the re-election of Apple board members at the company's annual meeting this April.

Given the likelihood that FASB will finally pass the rule on options expensing late this year, corporate governance experts predict that boards will fall into line.

"There will be some holdouts until FASB issues its final rule, but basically it's a situation where boards can run but they can't hide. Options expensing is here to stay, and some companies will recognize it sooner rather than later," said Nell Minow, editor of The Corporate Library, an independent investment research firm.

That doesn't mean Silicon Valley will ease up on its lobbying efforts anytime soon. In the latest bid to press their case, technology companies have mounted a campaign that focuses on how options benefit the little guy rather than top-level executives.

Of more than 2,600 letters received by FASB by the third week in May, more than 1,500 were from Cisco employees who were opposed to the proposal. (A Cisco spokesperson denied that the company has an orchestrated letter-writing campaign but said the company has sought to educate workers about looming changes in options policies through an internal Web site.)