Employee Ownership Blog

A proposed federal acquisition regulation (FAR Case 92-24) that would have limited the ability of government contractors to fund ESOPs has been withdrawn.

In return for wage and other concession, pilots at Delta will get stock options worth as much as 19% of the carrier, plus a non-voting seat on the board. Delta joins Southwest in offering options to all its pilots.

In a March 14 cover story, Business Week lauded the progress United Airlines has made as a participative, employee-owned company. The article pointed out how work teams throughout the company have saved huge amounts of money.

The Budget Reconciliation Act passed by Congress contains a provision to eliminate section 133 of the Internal Revenue Code. Section 133 allows lenders to exclude 50% of the interest income they receive on loans to majority ESOPs passing through full voting rights.

One of the trickiest issues for ESOPs has been how to value different kinds of investments in multi-investor transactions. If the ESOP borrows money to be repaid out of future earning, while other investors put in cash, should each get a dollar's worth of stock for each dollar pledged?

A new study by Theresa Welbourne at Cornell and Alice Owens at Vanderbilt shows that initial public offerings by companies that offer stock and profit sharing to employees, provide worker training, and stress good work relations do much better than companies not practicing these "employee-friendl

Journal Communications is one of the largest employee-owned firms, and the largest in the communications industry. Majority employee-owned for over 50 years, it employs about 6,000 people. It publishes the Milwaukee Journal-Sentinel and has several subsidiaries in various media fields.

On October 13, 1994, the IRS issued a technical advice memorandum (TAM 95030002) saying that employees could make voluntary pretax contributions to their ESOP or ESOP/401(k) plans to help pay off an ESOP loan.

The ability of lenders to exclude 50% of the interest income they receive on ESOP loans remains up in the air. When Congress passed the Budget Reconciliation Act, this provision was eliminated, but President Clinton vetoed the bill and it remains in much-discussed limbo.

The 2,700 employees of Canadian Pacific Express have purchased the company from Canadian Pacific Corporation and changed its name to Interlink Freight Systems. The company had been a subsidiary of Canadian Pacific.

The Administration's proposed budget does not include repeal of section 133 of the Internal Revenue Code. Section 133 allows commercial lenders to deduct 50% on the interest income they receive on loans to majority ESOPs that pass through full voting rights.

Can a company change its distribution rules to pay people out later than initially promised and not face legal problems? According to a recent court case (Thomas Lee v. The Builders' Supply Co., 8:CV93-267, USDC NE), it can.