Employee Ownership Blog

Two bills to amend the treatment of U.S. corporate income earned overseas that have significant provisions affecting ESOPs and equity compensation continue to face an uncertain fate. The American Jobs Creation Act of 2004 (H.R. 4520) and the Jumpstart Our Business Strength Act (S.

The Financial Accounting Standards Board (FASB) has made a number of changes to its exposure draft on equity accounting. The most significant of these are:

According to a new study of 401(k) account balances, company stock now accounts for 16.4% of all 401(k) assets, about the same as last year, but off its peak of 19% in 1999.

ESOP advisors continue to report very strong activity in new ESOPs in closely held companies. As the baby boomer generation retires, many owners of closely held businesses will look for transition strategies, and ESOPs seem well positioned to benefit from this development.

The percentage of public and private companies with one or more of any kind of equity compensation plans that specifically offered stock options to nonexempt employees dropped slightly in 2004 compared to 2003, falling to about 13% of the 996 companies responding to the annual WorldatWork Salary

A new survey of over 120 pre-IPO technology companies shows that 96% of their employees get new-hire stock option grants and 85% get follow-on grants.

Responding to criticism, the FASB has changed its approach to vesting issues when accounting for stock options. In FASB's exposure draft on options accounting, options with graded vesting would be treated as if employers had issued multiple awards.

In a Mellon HRIS survey of 108 mostly public companies, 44% of which were technology companies and 19% life sciences companies, 49% of the respondents reported that they make options or similar awards available to most or all employees on an annual basis.

Ray Carey's new book, Democratic Capitalism: The Way to a World of Peace and Plenty, is a comprehensive look at the concept of capitalism, both in terms of how it is now practiced and how Carey thinks it must be reformed.

The IRS has issued final regulations on incentive stock option plans. The proposed regulations were published last year.

The University of Wisconsin at Madison has started a three-day program for managers and supervisors on managing an employee ownership company. Courses will focus on communications, team-based management, marketing employee ownership, how ESOPs work, and other topics.

In Armstrong v Amsted Industries, Inc., No. 01 C 2963, MDL 1417 (U.S. Dist. Ct. ND Ill, 7/29/04), ESOP fiduciaries and company officers won an important victory concerning fiduciary obligations, changes in repurchase rules, and business acquisition decisions.