KB Home and Occidental Petroleum Corp. executives said during Senate testimony that tax deductions received from granting stock options were much higher than they reported to shareholders due of their company's strong share performance.
Stephen Bollenbach, KB's newly appointed chairman, told a U.S. Senate hearing in Washington Tuesday that the disparity would be smaller had their companies not done so well over the past year. Oxy board member John Chalsty was also in attendance.
The testimony comes after Senator Carl Levin (D-Mich.) said he was considering legislation that would limit tax deductions to amounts reported as an expense to shareholders after his panel found that in 2005 U.S. corporations claimed tax deductions on options that exceeded their reported costs to the company by $43 billion.
The panel found that Los Angeles-based KB granted about $11 million in options while claiming tax deductions of $144 million. Los Angeles-based Occidental Petroleum issued $29 million while deducting $353 million.
Both executives said their companies did not intentionally issue option-based pay incentives to reap tax deductions. Shares in Oxy have gained 57 percent since the beginning of 2005 while shares in KB have dropped 32 percent.
Shares in KB were off 58 cents, or 1.2 percent, to $46.49 while shares in Oxy were down 23 cents to $58.15 in afternoon trading on the New York Stock Exchange.
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