Corey Rosen
The Texas House of Representatives has passed HB 2389, “An Act relating to companies in which employees have ownership interests through employee stock ownership plans.” It will now head to the Senate, where, as SB 1233, it has already passed the International Affairs and Economic Development Committee by a vote of 8-0. The bill would:
Corey Rosen
The Colorado legislature has passed (by margins of 54-2 in the House and 26-9 in the Senate) a bill (HB23-1081) to expand its tax credits for converting to employee ownership. Governor Jared Polis has strongly supported the legislation and is expected to sign it. Under prior law, companies converting to ESOP ownership could get a tax credit for up to 50% of costs for conversion, with a maximum credit of $100,000 for conversion expenses; the dollar limit is now increased to $150,000. For worker cooperatives, prior law provided a credit of up to 50% of conversion costs, with a maximum credit of $25,000; the dollar limit is now increased to $40,000. Conversions to other qualified forms of employee ownership now also qualify for a credit of up 50% of the costs, up to a maximum credit of $25,000. Finally, the bill provides a tax credit of 50% of the costs, up to a maximum credit of $25,000, for a qualified employee-owned business expanding its employee ownership by at least 20%.
Corey Rosen
By a unanimous vote, both chambers of the Washington State Legislature have passed S.B. 5096, “An act relating to expanding employee ownership.” On May 9, Governor Jay Inslee signed the bill. The law creates the most ambitious state employee ownership program yet. It includes the following provisions:
Corey Rosen
Update: On August 25, 2023, the DOL announced that the proposed rules will be released by the end of the year.
Corey Rosen
The Canadian government’s proposed 2023 budget creates a framework for employee ownership through employee ownership trusts. The budget states:
Corey Rosen
New York Assembly bills A1920 and S962 would create a state employee ownership center to be housed at a university to provide outreach, education, and training on employee ownership, including ESOPs, worker cooperatives, and businesses that otherwise have a majority of their voting stock owned by employees. No specific funding is stipulated in the bill. It also provides that companies considering a transition to employee ownership can apply for loan assistance from the New York State business development loans. The loans could be funded through a public authority trust fund that could allocate up to $100 million in initial funding for this purpose. The bill does not contain a specific appropriation for this process, however. New York already authorizes public authority trusts funds for other purposes.
Corey Rosen
The John Lewis Partnership, an iconic British retailer, is considering outside investors for the first time, a move that would dilute its 100% ownership through an employee ownership trust. John Lewis operates the John Lewis & Partners department store chain (34 stores) and Waitrose supermarkets (332 stores) and has 80,000 employees. The company had a loss of £78 million last year, and faced even tougher years during the peak of the COVID-19 pandemic. Inflation, a weaker British economy, and supply chain issues have added to ongoing problems.
Corey Rosen
A new NCEO study found that, over the last 10 years, 68 private company ESOP court cases had results in settlements or judgments that cost the defendants a total of $385.5 million. The average payout per employee in these cases was $14,400 per participant. If these costs were spread out over all private company ESOPs, this would average about $6,200 per year per company. Of course, that is not how these amounts are paid, but it provides context to compare what companies and/or ESOP trustees pay per company in fiduciary insurance.
Corey Rosen
Employee retirement plan holdings in company stock in banks have declined in the last two decades, but employees at Silicon Valley Bank (SVB) and several other banks saw significant losses following SVB’s implosion, according to analysis in a March 13 article by Pensions and Investments. SVB had a combined ESOP and 401(k) plan that held about 19% of its assets in 2021 (the latest data available), valued at about $245 million at that time. Several other bank retirement plans were significantly invested in company stock, including Zions Bancorp, which held 23% of its assets in bank stock as of the end of 2021. Its stock fell 36% from March 8 to March 13. Many other banks have between 5% and 10% of their assets in company stock. Recent federal action will probably ameliorate the sort-term losses in stock price for most of these banks, but SVB employees are not likely to recoup their losses.
