Employee Ownership Blog

Fortney Stark (D-CA) has introduced the House version of the "Ending the Double Standard for Stock Options Act," a bill that mirrors the Senate bill of the same title (S. 1940) introduced by Senators Carl Levin (D-MI) and John McCain (R-AZ). The bill has two principal provisions:

A new report from the Democratic Policy Committee in the U.S. Senate shows that 40% of Fortune 50 corporations had employer stock in their plans. Seventeen of the companies had more than 50% of their assets invested in company stock.

More lawsuits are being filed against companies that has substantial amounts of employer stock in their 401(k) plans.

The April 8 issue of Time features a story titled "We're All the Boss," highlighting how "giving workers stock helps a firm only if it also gives them a say." The story reflects NCEO research on the impact of employee ownership on employee and corporate success with employee ownership.

Two House committees and one Senate committee have now passed retirement reform proposals. The House Education and the Workforce Committee and the House Ways and Means Committee bills generally follow the outlines of President Bush's proposals.

Stand-Alone ESOPs Exempted; IRS Blocked from Implementing Withholding Taxes on ISOs and ESPPs

(Updated May 10, 2002)

As Congress continues to deliberate on reforming retirement plan law in the wake of Enron, it is becoming clear that closely held company ESOPs will probably not be substantially affected by any likely changes.

The scenario for public company ESOPs is somewhat murkier. All the principal legislative proposals would exempt stand-alone ESOPs from any diversification requirements. However, the Kennedy bill would add the additional fiduciary and employee representation issues outlined above.

One legislative outcome is now very clear: there will not be caps on the amount of employer stock in 401(k) plans or KSOPs, nor will employer matches of company stock receive a lower tax deduction. Proposals along these lines are receiving little support.

Senator Edward Kennedy has introduced legislation that is expected to serve as the retirement law focus for Senate Democrats. The bill is expected to be marked up favorably by the Senate Labor Committee, but its prospects on the floor of the Senate are more uncertain.

The Securities and Exchange Commission has finalized disclosure rules for equity compensation plans. The required disclosure is in addition to SFAS 123 accounting rules that already require companies to disclose substantial information about their plans.