Employee Ownership Blog

Trustees of United Airline's ESOP will start selling shares in the plan in order to provide some diversification in the face of a possible bankruptcy filing. Reports indicate up to 20% of the shares could be sold now, and perhaps more later.

Meanwhile, a company that has used employee ownership effectively, Southwest Airlines, may be unable to continue to offer options to its employees.

SEC Chair Harvey Pitt told the Council of Institutional Investors on September 23rd that he believes shareholders should be allowed to vote on whether companies should expense stock options.

The International Corporate Governance Network, an organization of leading institutional investors, has agreed on a series of proposed corporate reforms that includes a call for companies to expense options, dole out options in smaller but more frequent packages (to avoid the need for repricing),

Supporters of pension reform are increasingly skeptical any bill will pass this year.

The September 20 edition of BusinessWeek Online contains a persuasive article by commentator Chris Farrell (also heard on NPR's "Sound Money" program) titled "Stock Options for All." Farrell argues that CEOs are getting far too much already and could easily give up some of their options to spread

Negotiators are reportedly close to an agreement on a pension reform bill that will merge versions passed by the Senate Finance Committee and Senate Health, Education, Labor, and Pensions (HELP) committee.

In Meredith Corp., SEC No-Action Letter (avail. 8/9/02), the SEC ruled that the decision of the Meredith Corporation to not allow a shareholder proposal to require the company to expense options is an "ordinary business matter" and therefore not subject to a required shareholder vote.

On May 10, 2002, the IRS issued Revenue Procedure 2002-38, in which it clarified that under Section 1378 of the Internal Revenue Code, an S corporation's taxable year must normally be its calendar year.

The Securities and Exchange Commission has ruled that companies cannot exclude shareholder proposals under the Rule 14a-8 exclusion that allows companies to avoid shareholder votes on proposals dealing with "ordinary business matters," such as employee compensation.

In a case that could have implications for efforts to set up S ESOP Corporation management companies, a U.S.

Senate Democrats have pledged to try to revive pension reform legislation after the August recess.