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The Employee Ownership Update

Loren Rodgers

November 1, 2018

(Loren Rodgers)

Amazon's New Minimum Wage, Linked to Reduced Stock Compensation, Begins Today

In October, Amazon announced that, effective November 1, it would increase its minimum wage to $15 per hour, covering 250,000 people, or 40% of its current staff. The move earned praise from, among others, Senator Bernie Sanders, who said, "I urge corporate leaders around the country to follow Mr. Bezos's lead," referring to Amazon's CEO Jeff Bezos.

As part of the minimum wage adjustment, Amazon also said it would eliminate a restricted stock unit program, which provided shares to workers, including warehouse staff.
The New York Times published an extensive article comparing the Amazon restricted stock program to the former stock plan at Sears. Sears contributed 10% of pretax profit, and by the 1950s Sears employees owned a quarter of the company. The article quotes Joseph Blasi of Rutgers University as saying that in the mid-twentieth century "there was a notion that wages were not enough, and workers had a right to share in the fruits of their labor."

The article notes that Amazon "had been awarding two shares a year to warehouse employees, worth about $3,500 at the current price." It interviewed Amazon employees who calculated that their total compensation would decrease. In response to questions about the possibility that the change would decrease compensation for some workers, the Times reported that "Amazon officials said that over the next week they would adjust the pay of some employees to make sure workers did not end up losing money with the changes." The company also said it would create a new share compensation plan in 2019, but did not share any details.

Let Us Know Your Comments on SBA Rules for ESOP Loans by November 27

The proposed rules for implementing the Main Street Employee Ownership Act reduce the number of new ESOPs the Act is expected to produce, as we described in our prior update. The NCEO is seeking input from banks that make SBA-guaranteed loans and who might be interesting in submitting a comment this month. Please send any possibilities to Corey Rosen (CRosen@nceo.org) by November 27.

ESOP Association Releases Report on Company Performance

186 ESOP companies that are members of The ESOP Association responded to a questionnaire in September 2018 about key measures of their performance. The results, released in its 2018 ESOP Economic Performance Report, include:

The research, part of a project that began in 2000, was funded by the Employee Ownership Foundation.

Bill to Be Introduced to Allow Defining Companies on OTC Markets as Publicly Traded for ESOP Purposes

Under current regulations, companies traded over the counter are considered closely held for ESOP purposes. That means they have to comply with valuation and diversification requirements not applicable to public companies. Two OTC markets (OTCQX and OTCQB) are online trading platforms that have emerged since the regulations were issued. There are 68 companies on the exchanges, with about 200,000 employees in total. Senators Cory Booker (D-NJ) and Tom Tillis (R-NC) plan to introduce a bill to define ESOP companies on these markets as publicly traded. Proponents of the change argue these new markets provide enough active trading to set a true market price.

Employee-Owner Appreciation: Torch Technologies

ESOP-owned Torch Technologies released a video showing some employee-owners talking about what ownership means to them.

Coming Soon! The New NCEO Website

The NCEO will launch its new website in the near future. Stay tuned to www.nceo.org to see the new site, which we have rebuilt from scratch.

ESOP Companies: Take Our 2018 ESOP Executive Compensation Survey

We are currently collecting responses for the 2018 ESOP Executive Compensation Survey. The survey is open to all companies with an ESOP. Contribute data from your ESOP company to get discounted access to the results.

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