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The Employee Ownership Update

Corey Rosen

March 7, 2000

(Corey Rosen)

NCEO Now Estimates Seven to 10 Million Employees Actually Receive Stock Options

We at the NCEO now estimate that between seven and ten million employees actually receive stock options in their companies, up from under one million in 1992. Precise estimates are not possible because companies do not have to report the distribution of options under their plans. The estimate is based on various surveys of public companies completed in the last year, names of specific companies the NCEO has obtained from various sources, and our own estimates of the prevalence of option plans in closely held companies, particularly technology companies. The first two sets of data are very reliable (the surveys come to very similar numbers, for instance), but the last is just an educated guess. We believe, in any event, that our estimates are conservative.

Labor Department Asks for Legislative Fix to Options Overtime Issue

T. Michael Kerr, head of the Department of Labor's Wage and Hour Administration, has asked Congress to amend the Fair Labor Standards Act to clarify that gains made from the exercise of stock options or other employee ownership programs do not have to be counted as compensation for the purpose of calculating overtime pay. The Department had reached that conclusion in an opinion letter issued last year. Department officials said they were not going to retract the letter, which applies only to the specific company that asked for it and does not necessarily represent Department policy. However, Kerr said that the Department would support a legislative solution to the problem.

Kerr made his remarks at a hearing March 3 before the Subcommittee on Workforce Protection of the House Committee on Education. Committee members are already drafting bipartisan legislation on this subject, and staffers have begun a similar effort in the Senate. Legislation could be brought to committee votes on the next several weeks.

Business Writer Michael Lewis Says Employee Ownership "Most Powerful Trend in American Work"

Writing in the March 5 issue of the New York Times Magazine, best-selling business author Michael Lewis (Liar's Poker and The New, New Thing, among others) says that "the single most powerful trend in American work [is] employee ownership." Lewis has somewhat mixed feelings about this development, however, arguing that broadly distributed stock options increase job hopping.

The March 5 issue is devoted to the changing nature of work in the US, and almost every article mentions employee ownership in some context or another. Rosabeth Moss Kantor, former editor of the Harvard Business Review and one of the leading authorities on organizational development, also notes the widespread use of employee ownership, saying it can only be a good thing because it helps get employees focused on business success.

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