Piper Cole's Weblog

My New Hero...

I have a new hero: Dr. Tom Campbell, Director of California's Finance Department.

Last Friday Tom announced a state study to determine the impact on state revenues of FASB‘s decision to require companies to expense stock options. Tom joins my list of heroes, which includes Reps Anna Eshoo (D-CA), David Dreier (R-CA), Richard Baker (R-LA) and Senators Mike Enzi (R-WY), Barbara Boxer (D-CA), John Ensign (R-NV) and Harry Reid (D-NV), who saw beyond the hype about stock options and realized that expensing stock options won‘t either provide better information for investors or stop executive compensation abuses, but will hurt rank and file employees, innovation, and the US economy.

Tom‘s a smart guy: he earned a Ph.D. in economics from the University of Chicago and a Juris Doctorate from Harvard Law School, he is a former member of both the US Congress (he was selected by Rollcall as smartest new member in his freshman year) and the California Assembly, and he is currently on leave from his position as Dean of the Haas School of Business, at the University of California, Berkeley. But what is more important to me is that he has the wisdom to see that the impact of FASB‘s decision will go far beyond a mere accounting rule, and that it could affect the economic vitality of the State of California. And he followed those instincts with action to get empirical evidence to give the State justification to weigh in on this debate. The impact of this rule on rank and file employees has been the subject of op eds, testimony, letters, speeches, comments to FASB and multiple other forms of communications, but the impact to state revenues has not been as thoroughly explored. This study by California will provide further evidence that, on balance, mandatory expensing is a bad idea.

I hope that other states will follow California‘s example.