New York (CNN/Money) -
Investment heavyweight Warren Buffett lashed out at the U.S. House of Representatives Tuesday over stock options legislation that he said would set a new "mathematical lunacy record" and gave the bill's proponents "a flat-out F for logic."
Writing in Tuesday's Washington Post, he said the focus of the legislation was too narrow and clearly designed to undervalue stock options.
According to Buffett, the pending bill mandates that a coveted form of corporate pay, stock options, be counted as an expense on company balance sheets when they are issued to the chief executive and the other four highest paid company officers, but not counted as an expense when they are issued to other employees. The bill also says the value of those stock options should be fixed and no attempt be made to estimate the long term rise or fall in the price of those shares.
"I've been investing for 62 years and I've yet to meet a stock that doesn't fluctuate," he wrote. "The only reason for making such an Alice-in Wonderland assumption is to significantly understate the value of the few options the House wants covered. This undervaluation, in turn, enables chief executives to lie about what they are truly being paid and overstate the earnings of the companies they run."
He said companies estimate the value of things all the time -- software, jets, machine tools -- and are almost always wrong. Still, he wrote, speaking of the need to at least make an attempt to measure the performance of stock options, "it is better to be approximately right than precisely wrong."
He also said that while having nothing against the use of stock options or other bonuses as employee incentives, it made no sense to only expense the options given to the top five employees.
He urged House members to kill the bill or "if they are absolutely determined to meddle with reality, they could attack the obesity problem by declaring that henceforth it will take 24 ounces to make a pound. If even that friendly standard seems unbearable to their constituents, they can exempt all but the fattest five in each congressional district from any measurement of weight."