COSTLY EXPENSING

As part of its long-term goal of restoring investor confidence, a panel comprising some of the nation's foremost economic experts, under the auspices of The Conference Board, is developing a series of recommendations that will be heavy on new corporate governance guidelines. While the objective is certainly positive, restoring Main Street's confidence in Wall Street will take more than platitudes from economic eggheads — and getting there may prove more painful for telecom than other industries. One of the recommendations seeks to force companies to expense options given to employees. Though the idea is quickly gaining popularity, such a requirement would reduce telecom companies' earnings per share about 12% on average. More damaging would be the impact on future options grants. Small start-ups, which traditionally have been the engine driving innovation in telecom, would lose one of the few weapons they have left to lure experienced managers. Perhaps it's ironic that on the same day the panel issued its first set of recommendations — which focused on executive compensation — Lucent Technologies' share price sank below $1 for the first time ever. The stock, which was once considered a safe haven for widows and orphans, is now mired in rumors that it may be de-listed from the New York Stock Exchange. Given that the telecom industry's executives have a credibility rating that is hovering somewhere between personal injury lawyers and used car salesmen, effecting change may be tilting at windmills. But carriers and vendors have a responsibility to make their voices heard.