Employee Ownership Blog

ESOPs are legally intended to be plans that are primarily invested in employer stock. This does not exempt their fiduciaries, however, from the prudence requirement that any particular decision to buy employer stock must be a financially sound one.

Since 1945, United Parcel Service (UPS) has been broadly owned by its 28,000 management and supervisory personnel. Now the 315,000-employee company will make ownership available to all full-time employees.

The IRS has now changed its position on pass-through voting of ESOP shares.

If Congress passed a flat tax, what would happen to ESOPs and other tax-favored employee ownership plans? At first blush, the answer might seem they would disappear. If there were no more tax deductions, there would be no more tax incentives. In fact, the situation is more complicated.

Two researchers report in a new NCEO publication that the tide of employee ownership is receding in Russia but rising in China.

In Roth v. Sawyer-Cleator Lumber Co. (CA 8, No. 94-3368, 7/27/95), a U.S. Court of Appeals revisited a case that has been the subject of a number of rulings. Sawyer-Cleator had an ESOP that paid departing employees over 10 years in equal installments with interest.

TWA, which continues to advertise itself as "employee owned," has received approval for a Chapter 11 bankruptcy reorganization that it and its unions believe will lead to a recovery. As part of the agreement, however, employee ownership will drop from 45% to 30%.

Within the next few weeks, the IRS will issue a revenue ruling indicating that trustees can vote shares for which ESOP participants do not provide directions.

The IRS is looking into the tax status of corporate owned life insurance (COLI), which many employee ownership companies now use to handle repurchase liability.

Efforts to trade concessions for ownership at USAir have broken off. Both sides say they are too far apart to reach agreement and will not revisit the issue until contracts expire in 1997.

A new study estimates the amount of employer stock held in 401(k) plans to be higher than previously reported.

Leaders of the Chinese State Commission on Economic Restructuring recently completed a three-week tour of the U.S., including meetings with U.S. employee ownership experts.