Employee Ownership Blog

Since a seminal case in 1985 (Massachusetts Mutual Life Insurance Company v. Russell, 473 U.S. 134), courts have largely, if not unanimously, concluded that individuals could not sue ERISA plan fiduciaries for individual losses to the plan.

The 2007 Global Equity Incentives Survey from PriceWaterhouseCoopers looked at equity practices among 152 multinational companies. The survey shows that options still are the most popular practice, but companies are only half as likely to offer them as they were in 2003.

Congratulations to the new NCEO board members. In a record turnout with a very tightly contested race, the winners were:

Open-book management transforms organizations and gives them a major advantage over others who keep employees in the dark. The NCEO is an annual cosponsor of the National Gathering of Games Conference, and NCEO Executive Director Corey Rosen will be one of the speakers.

New NCEO estimates show that ESOPs and ESOP-like plans added over $250 billion in assets in 2007 and added about 700,000 participants. The net number of plans grew more slowly, adding about 120 plans. The table below shows comparative data:

The February 7 issue of the Wall Street Journal has a full page of articles on ESOPs. The story was the result of a suggestion to Journal reporters from the NCEO.

A new NCEO analysis of Form 5500 filings shows that in 2006, company stock represented about $300 billion in 401(k) plan assets in about 2,900 companies. Of this, $133 billion was in the 748 401(k) plans that had a majority of their assets in company stock.

For several years now, I've had the opportunity to sit on an independent judging panel that selects The Principal 10 Best Companies for Employee Financial Security. Over the years, employee ownership companies have often made the list, although few have applied.

In General Mills v. United States, No. 06-3547 (DSD/SRN, Jan. 14, 2008), a district court granted summary judgment to the company for its use of a redemptive dividend to pay ESOP distributions. General Mills had three ESOPs operating in a single trust.

Procter & Gamble set up an employee ownership plan in 1903 that allowed employees to buy stock for a 2.5% down payment, with the rest borrowed from the company, but repaid out of profit sharing (a 12% or more "dividend" on wages available only to those buying stock).

The Certified Equity Professional Institute (CEPI) at Santa Clara University has launched its next round of research, extending its risks and controls project to restricted stock awards and restricted stock units.

Employers do not need to report the exercise of incentive stock options and sale of employee stock purchase plan shares to the IRS for 2007 transactions.