On today's opinion page [link requires free registration], Warren Buffett calls it as he sees it:
For these C.E.O.'s I have a proposition: Berkshire Hathaway will sell you insurance, carpeting or any of our other products in exchange for options identical to those you grant yourselves. It'll all be cash-free. But do you really think your corporation will not have incurred a cost when you hand over the options in exchange for the carpeting? Or do you really think that placing a value on the option is just too difficult to do, one of your other excuses for not expensing them? If these are the opinions you honestly hold, call me collect. We can do business.
I'm in 100% agreement with Mr. Buffett regarding the repeal of the 1994 law that caused this whole disaster. It would be a major improvement over making more laws that regulate things the government has no business regulating. We have an accounting standards board. They need to grow some balls, stand up to their customers and demand that they account for compensation as the expense that it is. TIAA-CREF also came out today demanding that companies in which they invest put equity plans to a shareholder vote. It's not enough, but it's better than nothing.
We haven't heard much about pension fund accounting, but again, Mr. Buffett has a good point. Unfortunately, I think that understanding how this works might be beyond our bought-and-paid-for congress. The right thing to do would be, again, for FASB to come out with this.
Will they do the right thing? Who knows, but we need to let the market find it's bottom, ASAP. We all need to find out what companies are really worth so we can all get on with our lives. This see-sawing is driving everyone nuts.