Employee Ownership Blog

The Financial Accounting Standards Board (FASB) has, as expected, issued proposed rules stating that if a company reprices its options, they are subject to variable accounting rules, meaning that companies will have to record as an expense the difference between the new lower grant price and any

Employees of Champion International's Canton, NC, paper plant plan to use an ESOP to buy their facility. The ESOP will own 40% of the new company, with the rest owned primarily by the KPS Fund.

According to Erkki Helaniemi of Alexander Corporate Financing in Finland, 127 Finnish companies now offer stock options to most or all employees. Employees are taxed on the options only upon exercise, when they pay ordinary income tax rates. The company, however, does not get a tax deduction.

According to Hubert Alleyne of the International Communications Network, Trinidad is now considering legislation to encourage employee ownership. Alleyne previously worked for the Royal Bank of Trinidad and Tobago, a pioneer in employee ownership in Trinidad.

Another very large company has been bought by a 100% ESOP. Nypro is a half-billion dollar contract manufacturer of plastics injection molding. It employs 5,500 people worldwide, including 2,500 in the U.S. who will be eligible for the ESOP.

There has been much hand-wringing among stock analysts over employee influence in the CEO selection process at United Airlines. These analysts will wring even more now that employees will be given a voice in how executives are compensated.

President Clinton's revenue proposals for the year 2000 call for the elimination of the special exemption from "UBIT" (unrelated business income tax) for ESOP in S corporations. Under existing law, any earnings attributable to an ESOP in an S corporation are not currently taxed.

Companies with broad-based stock option plans, ESOPs, or other employee ownership arrangements accounted for 47 of the "Best 100 Companies in America to Work For," up from 31 last year. The list is published each year in Fortune (1/11/99; also available at at their Web site).

New research by Stephen Smela at the University of Minnesota shows that companies in the West North Central U.S.

1998 saw the continued rapid growth of broad-based employee ownership plans, particularly through the continuing expansion of the trend for companies to give stock options to most or all employees. The NCEO estimates that at least 18 million employees in the U.S.

A new survey of the 1,250 largest global companies by Arthur Andersen shows that 43% operate global share plans for executives, while 27% operate global share plans for all of their employees. Another 7.75% plan to introduce broad-based plans in 1999.

Can an ESOP company be too successful? Gregg Kelly of Orthodyne Electronics isn't complaining about how well his company's ESOP has performed, but he does worry that some employees will leave to take advantage of the huge run-up in their stock.