On October 13, 1994, the IRS issued a technical advice memorandum (TAM 95030002) saying that employees could make voluntary pretax contributions to their ESOP or ESOP/401(k) plans to help pay off an ESOP loan.
In the early 1990s, the National Labor Relations Board issued a series of rulings, most notably in the Electromation case, that created concerns that employee involvement programs could be construed under the National Labor Relations Act (NLRA) as illegal company-dominated unions.
Labor Secretary Hilda Solis has filed an amicus brief in a controversial case involving company stock in Citigroup's 401(k) plan. In In re Citigroup ERISA Litigation, No. 07 Civ. 9790 (S.D.N.Y., Aug.
Australian's Group of 100, an organization of the chief financial officers of country's 100 largest companies, has called on the government to create more incentives for companies to share profits and provide equity compensation to employees.
According to a 2007 Towers Perrin analysis of 89 Fortune 250 companies, 51 now set the exercise price for stock options at not less than the grant date closing price. That is up from 29 before 2007.
A study by Bear Stearns has found that S&P 500 companies granted 20% fewer options in number and 22% less in value in 2005, while NASDAQ 100 companies reduced the number of options by 14% and the value by 16%.
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.
Two of the largest settlement agreements to date have been reached in employee class action suits concerning company stock in their 401(k) plans. Kmart agreed to a $115 million settlement with its employees over declines in its stock price.
The NCEO is currently conducting a survey on executive compensation in ESOP companies. Those filling out the survey will get free access to the results. The survey deadline is July 29. To fill out the survey, go to this link.
The NCEO's questionnaire on the scope and characteristic of ESOP companies' repurchase obligation will be closed at the close of business on Thursday, October 21.
