The Employee Ownership Update
October 15, 2012
New PwC/NASPP Study Shows Multinational ESPP Participation DecliningA new study of equity compensation in global companies finds that participation in stock purchase plans has declined since 2007. A majority of the companies that reported levels of participation between 26% and 50% now say that rates have fallen to 0% to 25%. The NCEO has previously found that a key determinant of stock purchase plan participation is past stock price performance, even though the economically rational approach would be to buy more when prices are low. Instead, employees tend to build expectations of future growth based on their most recent experiences. The study also reports data on trends in the number of companies offering equity plans, the kinds of equity offered, and tax and compliance issues.
UK Chancellor of the Exchequer Proposes "Shares for Rights"In a speech on October 8, George Osborne, the United Kingdom's Chancellor of the Exchequer and a member of the Conservative Party, proposed a new tax incentive for employee ownership, but with a catch. Under his proposal, employers could grant shares worth 3,000 to 80,000 USD to employees, and employees would not be subject to capital gains tax on the increase in value. In return, employee would waive their protections against unfair dismissal and redundancy and would agree not to request flexible working arrangements or time off for training. The Guardian quoted Osborne as saying, "Workers: replace your old rights of unfair dismissal and redundancy with new rights of ownership... Workers of the world unite."
An editorial in the Financial Times concludes "the question of how to liberalise the labour market should be kept separate from that of how to encourage employee share ownership. Neither objective will benefit from mixing the two." The FT also ran a follow-up article extensively quoting the NCEO's Corey Rosen, who said, "It simply does not make sense for an employee to give up rights that could potentially be worth a great deal of money or job security in return for saving a few thousand pounds in possible capital gains taxes."
DOL Alleges Overvaluation of ESOP StockThe Department of Labor filed a lawsuit against Sierra Aluminum Co and GreatBanc Trust based on an investigation by the Employee Benefits Security Administration (EBSA). The DOL alleges that GreatBanc failed to sufficiently investigate the projections the company provided for the appraiser to use in calculating the fair market value of company stock. The DOL named Sierra Aluminum as a defendant, saying that the company's agreement to indemnify GreatBanc violated ERISA.
Premiere of Documentary on Worker CooperativesA new documentary, Shift Change, will have its world premiere in Oakland on October 18. The film shows the connections between the Mondragon cooperatives in Spain's Basque country and a number of U.S. worker cooperatives and coop incubation efforts, such as the Evergreen cooperatives ("the Cleveland initiative") and Women's Action to Gain Economic Security.
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