Employee Ownership Blog

This year, 7 of the 15 winners of the Wall Street Journal Winning Workplaces awards were employee ownership companies.

The Securities and Exchange Commission is looking at 10b5-1 plans, plans that allow insiders holding equity incentives in their company to sell their stock on a prearranged schedule. The plans can exempt the insiders from blackout periods on trading because of insider knowledge.

In April, the IRS issued final regulations under Section 415 of the Internal Revenue Code, which places limits on annual additions to defined contribution plans. Generally, the regulations simply codify existing requirements, but they also made some changes worth noting.

Traditionally, California has had the nation's strictest rules for the issuance of equity awards in closely held companies.

A new research project on ESOP terminations, performed by the NCEO and funded by the Employee Ownership Foundation, collected data from 23 large ESOP plan administration firms. They reported results from over 3,300 companies.

Tax reform legislation introduced by Representative Charles Rangel (D-N.Y.) would impose a tax on synthetic equity held in S corporation ESOPs.

In an intriguing article in the WorldatWork Journal (4th quarter, 2007), Timothy Clark of George Washington University and Balaji Krishnamurthy, CEO of LogiStyle, propose an intriguing model of paying bonuses to employees ("Executive Stewardship Incentives from Innovative Bonus-Payout Meth

In Five Key Errors in Designing Equity Compensation Plans in Closely Held Companies, I explore some common errors closely held companies make in designing equity plans.

In Notice 2007-86 (October 22, 2007), the IRS has extended the time for compliance with the deferred compensation rules under Internal Revenue Code Section 409A through December 31, 2008. This does not mean companies can ignore the law until then.

Congressman Charles Rangel (D-NY) has proposed taxing synthetic equity at exercise in S corporation ESOPs in a way that would reflect their share of the foregone corporate taxes attributable to the ESOP as income. Interest would be charged on any resulting underpayment for the period.

The 2006 Trendsetters Survey from PricewaterhouseCoopers asked 301 companies identified as very fast-growing about their plans for an exit strategy. Nineteen percent cited an ESOP. Companies could pick more than one choice, so the total percentages for each selected item sum to 146%.

In their new study "Swinging for the Fences: The Effects of CEO Stock Options on Company Risk-Taking and Performance" (Academy of Management Journal, Oct./Nov.