Employee Ownership Blog

The New Figures

Both the House and Senate versions of the Revenue Reconciliation Act of 1997 contain provisions affecting employee ownership law.

Congress sometimes passes legislation that appears to be general in scope, but really is meant mostly for a single company.

The House version includes a provision that prevents employers who sponsor 401(k) plans from requiring employees to invest their elective deferrals in company stock if the plan has 10% or more of its total assets in company stock.

A "Sense of the Senate" resolution in the Senate version called for hearings on whether companies should be allowed to deduct the spread on stock options when they are exercised if the company does not account for stock option costs on its income statement.

Legislation that would treat Subchapter S corporation ESOPs the same as C corporation ESOPs has been introduced in the House and the Senate. Both bills would also add other incentives to ESOPs.

Over the period 1991 through 1996, the ACS employee ownership index has measured the shareholder returns in public companies with 10% or more broad employee ownership. The index has substantially outperformed market averages.

A new study by the Ohio Employee Ownership Center indicates that employee control of companies at the board level does not account for the cases where these companies have failed.

The 370 employees of a Maine textile plant that makes blankets for Sunbeam electric blankets have bought their company from Sunbeam. Sunbeam has undergone radical downsizing in the last year. The Biddeford plan is sole supplier and will continue to be.

The plan by Travelers Group to contribute stock options to its 401(k) plan is getting another look from the IRS. The IRS had initially given the first-of-its kind plan a favorable private letter ruling, but it now is reexamining the issue.

McKay Nurseries, a wholesale and retail nursery in Waterloo, Wisconsin, has been named a winner of the Business Enterprise Trust award for 1997. The award is given to four individuals and companies each year by a foundation created by Norman Lear and based in Stanford.

A coalition led by the Italian worker cooperative movement will present a proposal to create employee ownership legislation in Italy. The proposal, to be presented in May, will create a trust-based employee ownership plan funded out of existing pension contributions by Italian employers.