The issue of expensing stock options rests with the Senate.

This week, the House of Representatives overwhelmingly passed a bill that would severely limit the number of companies that must expense options -- and the number of options they must expense. The House bill would block the Financial Accounting Standards Board's proposed rule requiring all companies to include on their income statements next year the cost of all the options they grant.

The action now moves to the Senate, which has shown much less interest in a parallel bill promoted by Republican Mike Enzi of Wyoming. The bill's opponents include Republican Richard Shelby of Alabama, who heads the Senate Banking Committee, the panel with jurisdiction over the measure.

Noting Shelby's repeated opposition, many observers give the Senate little chance of passing Enzi's bill. But that doesn't mean that the game is over. The tech industry, which vehemently opposes stock-options expensing, is lobbying fiercely to turn the House measure into law. Election-year politics may well boost the industry's lobbying power, some analysts say.

"I think that anyone that thinks the Senate rejecting the Enzi bill is a slam dunk is a fool," said Lynn Turner, the former chief accountant of the Securities and Exchange Commission and now head of research at proxy adviser Glass Lewis. "I think this is going turn into open warfare now."

The bill passed by the House and the one under consideration in the Senate would require companies to expense stock options granted to their four highest-paid executives, plus the CEO. But in calculating that expense, the bills would require companies to assume that the volatility of their stock is zero, essentially wiping out much -- if not all -- of the estimated fair value of the options as calculated by formulas such as Black Scholes.

The bills would further exempt companies with annual revenue below $25 million from having to expense any options. Also getting an exemption from expensing would be companies that have been public less than three years.

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