Employee Ownership Blog

Many of the tax provisions in the economic stimulus bill may provide some benefits to ESOP companies. The key provisions include:

The Center for Business Education at the Aspen Institute is providing a $1,500 award for a dissertation on shared capitalism through employee ownership. Details are at this link.

Of the 66 organizations on the Fortune magazine list of the 100 Best Companies to Work For in America that are not nonprofit organizations, law firms, or accounting firms, 38, or 57%, have broad-based employee ownership plans. Companies must have at least 1,000 employees to apply.

The percentage of workers receiving stock options in 2008 was unchanged from previous years, according to the Bureau of Labor Statistics.

New data from Aon Consulting's Radford Surveys + Consulting shows that 48% of 103 companies that have conducted options exchanges since 2005 have used options for options exchanges, 36% options for stock (usually a form of restricted shares), 13% a options for cash, and 3% a combination.

Based on a quick survey of consultants providing services to approximately 1,000 ESOPs, ESOP companies seem to be weathering the economic downturn relatively well. We asked several large ESOP providers to tell us how their clients have done in the last year.

Google has joined the ranks of companies allowing employees to exchange their stock options.

Because most ESOPs are used to provide for business transition in closely held companies, probably the most important issue for the future of ESOPs will be demographics. A 2001 Federal Reserve Survey of Consumer Finances reported that 50,000 businesses changed hands in 2001.

The NCEO's first survey of its ESOP membership is underway (a survey on equity compensation and one for service providers will follow). Results will change as more companies complete the survey, but some preliminary highlights are emerging:

In the wake of the market collapse, a number of lawsuits are being filed by participants arguing that fiduciaries of their 401(k) plans or, less often, ESOPs should have removed company stock as an investment option and/or notified employees of impending financial problems.

Watson Wyatt recently completed its second annual analysis of stock option valuation assumptions and results under Statement of Financial Accounting Standards (FAS) 123(R).

As the stock market slides, more stock options and related deferred compensation instruments are underwater, and the related deferred tax assets may no longer be recoverable, according to an article in the Journal of Accountancy.