The Employee Ownership Update
June 15, 2012
NCEO Announces 2012 Employee Ownership 100We have just released our annual update of the Employee Ownership 100, a list of the 100 largest majority employee-owned companies in the U.S. The companies on the list, once again led by Publix Super Markets, employ a total of 687,000 people worldwide. Companies that were on this list in both 2011 and 2012 saw their employment rise by an average of 6.3%. To be on the list, companies must be at least 50% owned by an ESOP or other qualified plan or by one or more other kinds of plans in which at least 50% of full-time employees are eligible to participate.
New Development: Net Loss Required in "Stock-Drop" CasesThe U.S. Court of Appeals for the Sixth Circuit upheld the dismissal of a stock-drop lawsuit against the fiduciaries of the KeyCorp 401(k) plan, finding that the plaintiff had not suffered net losses during the class period. The plaintiff, Ann Taylor, alleged multiple fiduciary breaches stemming from price inflation of the stock and from the continued availability of KeyCorp stock as one investment option in the plan.
The court specifically rejected the plaintiff's alternative-investment theory of damage, a theory also supported by the U.S. Department of Labor. The plaintiff sold much of her stock during the class period, resulting in a net profit to her, but argued that she suffered a loss because an alternative investment would have yielded greater returns. The court held that it is "common sense" that "plaintiffs suffer no 'actual injury' when they benefit from alleged artificial [price] inflation." An excellent summary of the case is available courtesy of McDermott Will & Emery.
Apple CEO Gives Restricted Stock Dividends to EmployeesApple CEO Tim Cook, whose compensation package is valued at $378 million, will give up $75 million in dividends on his restricted stock and instead use that to pay dividends on the restricted stock held by employees. Currently, the awards held by employees broadly do not pay dividends.
Employees Lose Ownership Stake in EircomThe Irish telecommunications company Eircom emerged from bankruptcy protection on June 12 with a new ownership structure. One third of the company's shares had been owned by the Eircom Employee Share Ownership Trust and the remainder by Singapore Technologies Telemedia, but following its bankruptcy, Ireland's largest, all shares are now held by a group of 200 former debt holders, led by the Blackstone Group of New York.
Certified Equity Professional Institute Announces New Executive DirectorDee Crosby is the new executive director of the Certified Equity Professional Institute (CEPI) at Santa Clara University. Dee has been on staff at CEPI since 2004. Before moving to Santa Clara, she worked in engineering management for several Silicon Valley companies.
Know Your ESOP Quiz: Half Price for NCEO MembersHow can you find out if employee-owners understand the technical aspects of your ESOP? The NCEO has developed the Know Your ESOP Quiz, a 10-item questionnaire that measures employees' understanding of important aspects of how ESOPs work. Through July 31, NCEO members can arrange for the NCEO to administer the online quiz at their companies for $100, half the usual price of $200. Companies will receive a report and presentation of quiz results. For more information, contact Jessica Thomas at firstname.lastname@example.org or 510-208-1301.
Author biography and other columns in this series