Employee Ownership Blog

Leaders in the House and Senate have moved to start the process for reforming retirement plan law again with the introduction in each chamber of legislation paralleling what passed in each House last year.

Bills to tie tax deductions to expensing stock options were reintroduced in both Houses by their 2002 sponsors. The "Ending to Double Standard for Stock Options Act" was introduced in the House by Pete Stark (D-CA) and in the Senate by John McCain (R-AZ) and Carl Levin(D-AZ).

In letters to Goldman Sachs and Texas Instruments, the SEC has ruled that companies cannot exclude shareholder proposals to require that options be performance based as "ordinary business matters." The letters follow a trend from the SEC to require companies to allow votes on how option plans are

DynCorp, one of the 10 largest majority ESOP-owned companies, has agreed to be sold to CSC Corporation for just under $1 billion. DynCorp had revenues of $2.3 billion and 23,000 employees worldwide, providing defense, security, aerospace, and aviation services.

By Joseph Blasi, Douglas Kruse, and Aaron Bernstein. Basic Books, 2003.

The retirement plan proposals of President Bush would represent the most sweeping changes in retirement plans in decades.

A common assumption in the stock options debate is that expensing will drive down the prices of companies that provide options in a more than nominal way, and will be especially hard on companies with substantial options grants.

Leaders in both parties have indicated they plan to move retirement plan reform bills this year. In the House, John Boehner (R-OH) will reintroduce the Republican bill he shepherded through that House last year. In the Senate, Tom Daschle (D-SD) will push a comprehensive Democratic bill (S.

Amo Houghton (R-NY) has introduced H.R. 286, a bill to permanently exempt gains from exercises of incentive stock options and employee stock purchase plan options from payroll taxes. The IRS has delayed implementation of a rule to impose the taxes indefinitely. Houghton has 29 cosponsors.

This important new book (published by Basic Books; list price $27.95) makes a persuasive case that ownership needs to be shared more broadly.

The "Best 100 Companies to Work For" again show a high overrepresentation of employee ownership companies. Of the 93 companies on the list that could have a stock plan (some are professional partnerships), we identified 46 that we know have broad equity plans.

On December 6, the Securities and Exchange Commission overruled a staff letter in the case of National Semiconductor concerning the right of shareholders to request a vote on expensing options.