Employee Ownership Blog

A new NCEO issue brief on the performance effects of ESOPs reports that research consistently shows they improve performance in closely held companies but have a less clear impact in public companies.

A 2007 Bureau of Labor Statistics survey indicates that about 8% of all private sector employees (about 9 million people) have stock options.

In PLR 200732028, the IRS ruled that a C corporation ESOP can contribute up to 25% of pay to cover principal payments on an ESOP loan, plus contribute up to 25% of pay in addition if the contributions are not used to repay either principal or interest on the loan.

If there is sufficient interest, the NCEO will start a management book club. Any member could suggest a book for interested people to read. Thoughts and reviews would be posted on the Web site in the members' area, and a conference call could be arranged to discuss the book.

According to an NCEO analysis, one third of the largest 900 companies that had ESOPs in 2004 (the Fortune 500 and the Russell 400) had reduced the stock held in the plan to zero or close to it by the end of 2005.

In an important decision, the U.S. Circuit Court of Appeals for the Third Circuit ruled that an employee who had been cashed out of a 401(k) plan nonetheless had standing to sue over questions about the prudence of investments in company stock. The decision in Graden v.

In the August 7 issue of the BNA Pension Reporter, noted tax analyst Robert Willens, a managing director at Lehman Brothers, argued that real estate investment trusts (REITs) that perform active and substantial management duties should be eligible as qualified replacement property under Se

Many closely held companies, especially those aiming for a sale or an IPO, base their grants of equity awards on a percentage of the company.

The Office of Management and Budget has calculated the costs of special ESOP tax benefits at $1.89 billion for 2007, rising to $2.67 billion by 2012.

On July 5, 2007, the SEC issued a proposal to exempt certain stock options and their underlying shares from the current rule that they be counted toward the 500-shareholder rule requiring companies to comply with securities laws if they have more than 500 shareholders and $10 million in assets.

Ron Burkle of Yucaipa Capital and Brad Greenspan, an Internet entrepreneur, are proposing to buy the Dow Jones Company, publisher of the Wall Street Journal, using an ESOP as part of the transaction.

The Institute for Integrated Rural Development, a nonprofit organization in Bangladesh, is starting a 534-employee employee-owned garment manufacturing business for poor rural women in the country.