Corey Rosen
Employees in companies with ESOPs share the rewards of work through ownership, but most ESOP companies also share some of their annual profits with employees. My new paper "How ESOP Companies Share Profits with Employees," found in the Culture and Communications section of our Document Library (NCEO member login required), explores the many approaches ESOP companies use to do this.
Corey Rosen
In the new report A Nation at Risk to A Nation at Work: The Case for a National Talent Strategy, the Bipartisan Policy Council urges Congress and the administration to improve incentives for employee ownership. Founded in 2007, the council holds meetings and issues reports on a wide variety of topics. Its current co-chairs are former Massachusetts Democratic governor Deval Patrick and former Tennessee governor Bill Haslam. The Council includes a variety of prominent former political leaders as well as thought leaders.
Corey Rosen
A February 17, 2026, memo to the Financial Accounting Standards Board (FASB) from the Private Company Council (PCC), the primary advisory body to the FASB on private companies, raises the issue of whether the FASB should reconsider its current rules for accounting for ESOP repurchase obligations in private companies. Drawing on NCEO research, the memo says that private company ESOPs have grown significantly since the FASB last looked at this issue in 1993. At that time, FASB decided not to require private ESOP companies to record the repurchase obligation on their balance sheet but did require that companies provide a description of the obligation, the fair value of the shares allocated as of the balance sheet date, and the number of allocated and unallocated shares. It also concluded that redemptions of ESOP shares from participants are purchases of treasury stock, even if there is a put option, and thus are not obligations requiring recognition. The guidance can be found in FASB Accounting Standards Codification Subtopic 718-40, Employee Stock Ownership Plans, which originated in Statement of Position (SOP) 93-6, Employers’ Accounting for Employee Stock Ownership Plans.
Corey Rosen
The Worker Ownership, Readiness, and Knowledge Act (the WORK Act), part of the SECURE 2.0 Act of 2022, directed the Department of Labor (DOL) to establish an Employee Ownership Initiative to promote employee ownership and employee participation. It also authorized funding through the office for state employee ownership outreach and education programs starting in FY 2025. Congress did not appropriate funds for this program, but the most recent DOL appropriation bill contains a “joint explanatory statement” from the appropriation committees directing that $2 million be allocated in the coming year.
Corey Rosen
A new analysis from KPMG shows a record gap between the share of GDP going to profits and the share going to compensation. Corporate profits were 8% of GDP in 1992 but are 15.85% today; compensation has dropped from 66.2% in 1982 to 61.9% today. The data parallel other research showing that productivity gains have risen much faster than compensation. In a LinkedIn post, Diane Swonk, chief economist and managing director at KPMG, wrote, “This chart from my recent Economic Compass still haunts me. A friend refers to it as the ‘revolution chart,’ which [is] disturbing but telling. Inequality fuels social and economic instability.”
Corey Rosen
The Employee Ownership Development Act (Illinois House Bill 4955), introduced by Democratic Representative Will Guzzardi, would direct the state treasurer to segregate up to 5% of the state’s investment portfolio into an “Employee Ownership Development Account.” The funds would be made available to companies that are majority employee-owned through ESOPs, employee ownership trusts, or worker cooperatives. Funds would be invested through “employee ownership development firms,” which are capital providers with a track record of providing capital to employee ownership companies. The funds must invest at least 1.5 times the amount of capital provided by the state. Funds can be used for ownership transitions or expanding existing employee ownership companies.
Corey Rosen
According to a report by Paul Mulholland of the Profit Sharing Council of America, the ERISA Advisory Council did not meet in 2025 and has no plans to meet in 2026. The 15-member council is mandated by Section 512 of the Employee Retirement Income Security Act of 1974 (ERISA). The council makes recommendations on ERISA issues to the Secretary of Labor. The council is appointed by the Secretary, with three members representing employee organizations, three from employers, three from the general public, and one each from various professional fields. The council is supposed to hold at least four meetings per year. Mark DeBofsky, a member of the council until the end of 2025, reports that there were no emails, notices, or other communications from the DOL to the council, and that inquiries went unanswered.
Corey Rosen
The 2026 appropriations bill for the Department of Labor (DOL), passed on February 3 by Congress, lacks line-item funding for state employee ownership offices authorized by the WORK Act. The Senate Appropriations Committee had recommended a specific appropriation last July. However, a joint explanatory statement from the House and Senate appropriation committees states that $2 million should be provided for the Employee Ownership Initiative. In general, the joint explanatory statement notes that its recommendations on spending (which cover a variety of issues) “should be complied with unless specifically addressed to the contrary in this explanatory statement.”
Corey Rosen
Thanks to Kosta Juri, director of operations at the Institute for Economic Democracy (IED), and Rachel Bachmann, head of strategic initiatives at IED, for helping draft this post.
Last week, the European Parliament (EP) plenary adopted (by 492 votes in favor, 144 against, and 28 abstentions) a resolution with recommendations to the European Commission to propose a harmonizing directive aimed at creating an EU-wide unified legal framework (the “28th Regime,” referring to an additional legal framework alongside those of the current 27 member states) for innovative companies.
