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The Employee Ownership Update

Corey Rosen

April 5, 1995

(Corey Rosen)

Kemper Securities to Be Sold to ESOP

Kemper Securities, a division of the Kemper Company, will be sold to an ESOP that will own 55% of the company. One percent will go to management and 44% to existing Kemper Company shareholders. Kemper Securities has been a lackluster performer in recent years. It employs 1300 stockbrokers. The ESOP will borrow $72 million to buy the company, making it the largest ESOP transaction since United Airlines.

USAir, Pilots Agree on Stock for Equity Swap

The pilots union and USAir have agreed on a transaction that would involve substantial concessions in pay and work rules by the pilots in return for board representation and stock. The proposal would only become effective if other labor groups at USAir reach a settlement. The proposal calls for employees, as a whole, to get 20% of the stock in the company and seats on the board. USAir's principal owners, British Airways and Berkshire Hathaway, have both expressed strong opposition to labor representation and stock ownership, but may have no choice if the company is to get concessions.

United Launches New Ownership Advertising Campaign

United Airlines has started an extensive series of print and electronic media ads stressing its employee owned character. The ads were kicked off by three page ads in major papers.

Companies Protest FASB Stock Option Proposal

Four hundred companies have petitioned the Financial Accounting Standards Board (FASB) in opposition to that body's proposal that companies provide a footnote disclosure of the value of outstanding stock options. The footnote approach replaced an earlier FASB proposal that the future value of options be subtracted from profits. The companies said no acceptable formula exists for assessing the value of the options and that disclosure could harm them competitively.

Employee Ownership Moves Forward in Poland

Despite a government environment that ranges from indifferent to unfriendly, employee ownership is still being chosen as one of the most common routes to privatization in Poland. Employees have been willing to devote some of their own resources to buying their companies when investors have been reluctant to get involved, the approach the government would prefer. According to UNIA, the Polish employee ownership organization, there are now over 1,000 employee ownership companies in Poland, most majority employee owned, translating into 31% of the privatized firms.

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