Employee Ownership Blog

Continental AG, one of the world's largest tire manufacturers, has set up a broad employee stock ownership program. The program could provide a model for other German companies, including former East German companies being privatized.

A report from the University of Southern California shows that only 10% of the Fortune 1000 companies are engaged in sophisticated approaches to participative management. The study was commissioned by the Association for Quality and Participation.

Employee participation is thriving at some companies, however, as a recent conference demonstrated. The third annual "Great Game of Business" conference was held in St.

Privately held ESOP companies must repurchase their shares from departing employees. This "repurchase obligation" can be substantial.

One of the most touted solutions to the repurchase obligation is corporate owned life insurance (COLI). The House Republican tax bill, however, would eliminate special tax preferences for COLI.

ESOPs are legally intended to be plans that are primarily invested in employer stock. This does not exempt their fiduciaries, however, from the prudence requirement that any particular decision to buy employer stock must be a financially sound one.

Since 1945, United Parcel Service (UPS) has been broadly owned by its 28,000 management and supervisory personnel. Now the 315,000-employee company will make ownership available to all full-time employees.

The IRS has now changed its position on pass-through voting of ESOP shares.

If Congress passed a flat tax, what would happen to ESOPs and other tax-favored employee ownership plans? At first blush, the answer might seem they would disappear. If there were no more tax deductions, there would be no more tax incentives. In fact, the situation is more complicated.

Two researchers report in a new NCEO publication that the tide of employee ownership is receding in Russia but rising in China.

In Roth v. Sawyer-Cleator Lumber Co. (CA 8, No. 94-3368, 7/27/95), a U.S. Court of Appeals revisited a case that has been the subject of a number of rulings. Sawyer-Cleator had an ESOP that paid departing employees over 10 years in equal installments with interest.

TWA, which continues to advertise itself as "employee owned," has received approval for a Chapter 11 bankruptcy reorganization that it and its unions believe will lead to a recovery. As part of the agreement, however, employee ownership will drop from 45% to 30%.