Employee Ownership Blog

Surveys and conventional wisdom have suggested that the coming of the new equity compensation accounting rules would quickly lead many companies with broad-based equity plans to eliminate them or cut back on them sharply.

The Assistant Labor Secretary for the Employee Benefits Security Administration, Ann Combs, has told the BNA Pension & Benefits Reporter (January 4, 2005) that the Labor Department will begin a special enforcement project on employer stock in defined contribution plans.

Effective December 29, 2004, final regulations under Section 401(k) (T.D.

Under the new accounting rules to come into affect this year, public companies will have to disclose how much money they intend to spend in the following year buying back shares to satisfy stock option exercises.

In Temporary Regulations 1.409(p)-1T, "Prohibited Allocation of Securities in an S Corporation," the IRS has issued comprehensive rules designed to prevent the abuse of ESOPs in S corporations.

In Notice 2005-1, the IRS has issued guidance on the new deferred compensation plan rules under Section 409(a) of the Internal Revenue Code. The guidance covers a broad range of issues, including some specifically concerning equity compensation.

Roughly half of the companies on the NCEO's list of 730 majority ESOP-owned closely held companies are in manufacturing.

Comcast became the first company to use the model created by Microsoft and JPMorgan more than a year ago to provide liquidity for underwater stock options. Under the arrangement, former employees can tender their options to Comcast, which will cancel the options.

Two new studies by Watson Wyatt, one using public filings and the other using data provided by Charles Schwab, look at the patterns of employee option exercises.

The IRS has issued the new plan limits for 2005. The relevant limits for ESOPs and 401(k) plans are as follows:

At its October 19 meeting, the Financial Accounting Standards Board (FASB) tentatively decided to change its stance on how closely held companies value options.

In Pennsylvania Federation, Brotherhood of Maintenance Way Employees v. Norfolk Southern Corp., No. 02-9049 (E.D.