In proposed regulations published June 9, 2003 (26 CFR Parts 1 and 14a, Reg 122917-02, June 9, 2003), the Internal Revenue Service proposed an update, reorganization, and elaboration of existing rules governing incentive stock options and employee stock purchase plans (ESPPs).
The Department of Labor has sued the fiduciaries of Enron's 401(k) plan and ESOP for improperly encouraging employees to invest in Enron stock and for continuing to hold Enron shares in the plan when there were reasons to believe that was not prudent.
In May of 2003, the Financial Accounting Standards Board (FASB) issued FAS 150, a new accounting guideline that appears to require companies with "mandatorily redeemable shares, which the issuing company is obligated to buy back in exchange for cash or other assets" to book the liability this obl
A newly released survey by Fidelity Investments shows that 25% of respondents say they have little or no understanding of their stock purchase plan and one-third have little or no understanding of their stock option plan.
In Boise Cascade Corp. v. U.S. (9th Cir., No. 01-36086, 5/20/03), the Ninth Circuit Court of Appeals ruled that Boise Cascade could take a tax deduction for distributions of convertible preferred stock from the company's ESOP.
The House has passed H.R. 1000, the Pension Security Act of 2003. The bill would exclude all ESOPs from its requirements except ESOPs in public companies that are combined with 401(k) plans or that allow employees to buy stock through deferrals into the plan.
The Bush Administration has dropped its sweeping proposals for reforming retirement plan law. Prospects for the idea resurfacing in the future seem small.
In action taken May 7, members of the Financial Accounting Standards Board (FASB) indicated they may take a somewhat different approach than the International Accounting Standards Board on some key issues.
Proposals to require that Intel and PeopleSoft expense their stock options narrowly lost in recent votes. The closeness of the votes is further evidence that the tide toward expensing has shifted.
Russell Long, the Senator who made ESOPs possible, died on May 9. Long was the son of Huey Long, the former governor of and senator from Louisiana. He was elected to the Senate at 29 and rose to the chairmanship of the Senate Finance Committee.
On April 22, FASB voted unanimously to require companies to expense options and other equity compensation. Now FASB must figure out just how this expensing will occur.
