Headlines about "ESOPs"
Gathered from the web by the editors at BenefitsLink.com.
Employee Ownership Update for May 1, 2008
NCEO Executive Director Corey Rosen discusses the NCEO's new survey of equity compensation practices in private companies and invites private companies to participate. He also recommends six principles for making messages stick (for example, in communicating an ESOP to employees). Finally, he addresses the impact of the ESOP repurchase obligation on valuation. (National Center for Employee Ownership)
Presentation: Plan Litigation and Latest Trends in Equity Compensation
Presented at the NCEO/Beyster Institute Joint Annual Employee Ownership Conference in Chicago, Illinois, April 3, 2008. (Janich Law Group)
[Guidance Overview] IRC Section 409(p) Anti-Abuse Testing, History of Regulations, and Private Letter Ruling (PLR) 200804023
Excerpt: "PLR 200804023 was published on January 25, 2008 and is the first 409(p) anti-abuse private letter ruling." (The One-Stop ESOP Blog)
ESOP Benefits of Fiduciary Who Breached His Duties Can Offset Plan Loss
Excerpt: "The U.S. District Court for the Northern District of Alabama has determined a former bank president breached his fiduciary duty to the bank's Employee Stock Ownership Plan (ESOP) by not disclosing his criminal acts against the bank to the plan's committee." (PLANSPONSOR.com; free registration required)
Employee Ownership Update for April 10, 2008
NCEO Executive Director Corey Rosen discusses AECOM Technology Corp., a publicly traded company with a global employee ownership program; the impact of small ideas on a company; and the question of whether ESOP-owned companies can qualify for minority ownership status for federal Section 8(a) contract preferences if most of the beneficial ownership goes to qualifying minority employees. (National Center for Employee Ownership)
Johnson & Perkinson Announces Filing of Employee Retirement Class Action Complaint Against The Bear Stearns Companies Inc.
Excerpt: "The complaint, on behalf of participants and beneficiaries who obtained Company stock through an employee stock ownership plan between December 14, 2006 and the present, seeks redress under the Employee Retirement Income Security Act of 1974 ('ERISA'). The complaint alleges the failure of the plan fiduciaries to act solely in the interest of the participants and beneficiaries, and to exercise the required skill, care, prudence and diligence in administering the retirement plan, as is required by ERISA." (CNNMoney.com)
Termination Before Selloff not Intentional Benefits Interference
Excerpt: "The U.S. District Court for the Middle District of Pennsylvania has found that an employer was not motivated by a desire to deprive an Employee Stock Ownership Plan participant of benefits when it terminated him to move along a sell of one of its units to another company." (PLANSPONSOR.com; free registration required)
Executive Compensation - Besides Stock Options, What Else Is There?
Excerpt: "There are several alternatives, including restricted stock plans, phantom stock, stock appreciation rights, and employee stock ownership plans. Each of these plans is an alternative to the stock option, and some do not involve stock ownership at all." (Wisconsin Technology Network, LLC)
[Opinion] Employee Ownership: It's Good for Business – and for the Soul
Excerpt: "Study after study has confirmed the fact that employee ownership helps companies be more productive, more competitive, and more profitable. In short, employee ownership is good for business. And that's a great thing. But there is something more that is at work in employee ownership companies. In the way they operate, and by their very nature, these companies tap into the universal human hunger for meaning, for the pursuit of a higher purpose – one that transcends the drive for personal benefit. These companies generate outsized returns not only for the pocketbook, but for the soul." (The Beyster Institute)
Europe Takes a Closer Look at Employee Stock Ownership
Excerpt: "[G]overnments in Austria and Germany are devising legislation that takes inspiration from pioneers like Voestalpine, and they are using tax law to encourage employee stock ownership. More stock in the hands of workers could help compensate for wages that have stagnated in much of Europe even as stock markets have staged a long-term rally, the recent turmoil notwithstanding. The politics are appealing as well." (The New York Times; free registration required)
Employee Ownership Update for March 28, 2008
NCEO Executive Director Corey Rosen discusses Bear Stearns and employee ownership, why sharing ownership could be more painful to owners then valuable to participants, how to nominate your company for the Fortune 100 Best Companies to Work For list, and the Great Game of Business conference. (National Center for Employee Ownership)
[Guidance Overview] ESOP Update: Deduction Disallowance Under Section 267; Section 409(p) Letter Ruling; and King & Prince Seafood Decision (PDF)
5 pages. This update covers the following: IRS Emerging Issue: S Corporation Accrued Expenses to ESOP Participants a Potential Pitfall for the Less Than 100% S Corporation ESOP; IRS Issues First Private Letter Ruling on Section 409(p) of the Code; and, U.S. District Court Opinion Rendered in King & Prince Seafood Corporation ESOP Litigation. (Morgan, Lewis & Bockius LLP)
[Opinion] Countering Negative ESOP Coverage with the Facts
This opinion piece counters the recently published 'Treasury and Risk' editorial, The New Retirement Drama: ESOPs, about Bear Stearns and ESOPs. (The One-Stop ESOP Blog)
[Opinion] The New Retirement Drama: ESOPs
Excerpt: "As Bear Stearns becomes the latest corporate giant to implode, a new group of employees must face retirement with far less savings than they anticipated. While the Bear Stearns debacle is reminiscent of Enron Corp.'s $2 billion pension disaster, it highlights a different potential employee investment drama. How will retirement savings held in Employee Stock Ownership Plans (ESOPs)--such as the one at Bear Stearns--fare if more companies disappear into the mortgage morass." (Treasury & Risk)
New edition of the book S Corporation ESOPs
The NCEO presents excerpts from the new (third) edition of its book S Corporation ESOPs, a guide to the issues involved with having an employee stock ownership plan (ESOP) in a subchapter S corporation. The third edition features two new chapters, plus updates to other chapters. (National Center for Employee Ownership)
Employee-Ownership Plans Increasingly Common
Excerpt: "A successful ESOP needs 'a lot of communication, some sense of history as an organization, and . . . some track record of success so employees are not frightened at the prospect' of owning their own company . . . ." (IBJ Media Corp.)
[Opinion] Bear Stearns and Employee Ownership
Excerpt: "[The target page offers a look at] the available facts about just what kinds of employee ownership plans exist there. For the broad employee population, there was an employee stock ownership plan (ESOP) that held about $285 million in Bear Stearns stock in 2007. The plan was funded by the company. This was not, however, the sole, or even main, retirement plan at the company. In addition, there was a profit sharing plan funded by the company that had about $300 million in diversified investments and a 401(k) plan with $720 in diversified investments. So from a retirement plan standpoint, Bear Stearns is not at all like Enron and some other companies several years ago where employees were heavily or primarily invested in company stock, generally in their 401(k) plans, and were left with limited or no retirement assets after their companies melted down. The ESOP accounted for about 3% of total Bear Stearns Stock." (The National Center for Employee Ownership)
Bear Stearns' Ills Draw Company Stock 'Investigation'
Excerpt: "The law firm of Stember Feinstein Doyle & Payne, LLC has announced it is investigating possible illegal conduct relating to the Bear Stearns Companies Inc. Employee Stock Ownership Plan, Profit Sharing Plan and Deferred Compensation Plan." (PLANSPONSOR.com; free registration required)
Bear Stearns and Employee Ownership
NCEO Executive Director Corey Rosen discusses the ESOP and other stock plans at Bear Stearns in the context of its recent troubles. (National Center for Employee Ownership)
How to Get Workers to Think and Act Like Owners
Excerpt: "[J]ust establishing an ESOP often isn't enough to get employees to think like owners. Companies that want to create an ownership culture need to make an explicit effort to teach employees about their stake and keep them focused on increasing stock value, says Corey Rosen, executive director of the National Center for Employee Ownership. To that end, they should give workers the freedom to take initiatives to cut costs and boost a company's bottom line. Companies should 'push decision-making down,' he says." (The Wall Street Journal)
Is There a Link Between ESOPs and Better Company Performance?
Excerpt: "A developing body of research suggests that exceptional business performance for ESOP firms is driven by a change from the traditional hierarchal business model." (Workforce Management; free registration required)
Implications of the LaRue Decision for ESOPs
NCEO Executive Director Corey Rosen discusses the implications for employee stock ownership plans (ESOPs) of the U.S. Supreme Court's decision in LaRue v. DeWolff, Boberg & Associates (No 06-856), which concerns a 401(k) participant. (National Center for Employee Ownership)
[Guidance Overview] Supreme Court Expands Liability Exposure of Fiduciaries of Individual Account Plans (PDF)
3 pages. Excerpt: "In a unanimous decision, the U.S. Supreme Court has held that individual participants in defined contribution plans can sue to recover losses incurred by their individual plan accounts. The long anticipated decision in LaRue v. DeWolff, Boberg & Associates, Inc. will affect the rights and obligations of participants, sponsors, and fiduciaries of all defined contribution plans, including 401(k), profit-sharing, and employee stock ownership plans." (Morgan, Lewis & Bockius LLP)
Differing Treatment of Dividends in ESOP Stock Did Not Affect Status As Employer Securities
Excerpt: "In a private letter ruling, the IRS has ruled that company securities held in an employee stock ownership plan (ESOP) were 'employer securities' despite differences in their treatment of special dividends." (Wolters Kluwer Financial Services)
Employee Ownership Update for February 14, 2008
NCEO Executive Director Corey Rosen discusses the significant growth of ESOPs in 2007; a special Wall Street Journal feature on ESOPs; new data on employee ownership in 401(k) plans; and entries for The Principal 10 Best Companies for Employee Financial Security program. (National Center for Employee Ownership)
Study Finds Employee Ownership Improves Performance of Newly Privatized Businesses
Excerpt: "The authors' conclusion? Privatization per se is not a 'magic bullet.' Where profits and sales efficiency increased for privatized firms, it was due in large part 'to successful training and development programs that were implemented and because employees and managers were urged to gain a more vested interest after gaining options to buy shares in their enterprises.'" (The Beyster Institute)
[Guidance Overview] Federal Court Permits Dividend Deduction for Stock Redeemed from ESOP (PDF)
3 pages. Excerpt: "A corporation that is interested in claiming a tax deduction for costs associated with redeeming shares from an ESOP should consult with legal counsel with expertise in this area and proceed cautiously. The IRS has clearly stated its position as evidenced by its issuance of final regulations specifically disallowing the deduction after the General Mills ruling. This suggests that one district court decision will not, in itself, change the IRS's enforcement position or prevent disallowance of the deduction in other court jurisdictions." (Morgan, Lewis & Bockius LLP)
Employee Ownership Update for January 29, 2008
NCEO Executive Director Corey Rosen discusses a court decision allowing General Mills to take a deduction where it made a redemptive dividend to pay ESOP distributions; a fascinating account of employee ownership at Proctor & Gamble early in the 20th century; and the Certified Equity Professional Institute's extension of its risks and controls project to restricted stock awards and restricted stock units. (National Center for Employee Ownership)
Employee Ownership Update for January 15, 2008
NCEO Executive Director Corey Rosen discusses new guidance on incentive stock option and employee stock purchase plan reporting; proposed French legislation to democratize stock options; developments in stock drop cases in ESOPs and 401(k) plans; the William McGuire case; and submissions for the Innovations Award. (National Center for Employee Ownership)
Current ESOP Participant Can Represent Former Participants in Suit
Excerpt: "The U.S. District Court for the Eastern District of California has determined that a current participant in an Employee Stock Ownership Plan (ESOP) can adequately represent a class that includes former, cashed-out participants in a fiduciary breach suit." (PLANSPONSOR.com; free registration required)
Complaint Need Not Identify Specific Funds for Imposition of Constructive Trust
Excerpt: "In this dispute over ESOP funds, an interesting issue arose that may have broader applicability in the subrogation and reimbursement context. To impose a constructive trust over funds pursuant to ERISA Section 502(a)(3), Great West Life & Annuity Ins. Co., 534 U.S. 204, 213-14 (2002) requires that the particular funds or property upon which a constructive trust is to be imposed must be identified and traceable. But must the complaint identify the traceable funds, or may that await discovery in the litigation?" (Health Plan Law blog by Attorney Roy F. Harmon III)
Text of Proposed IRS Regs on Diversification Requirements for DC Plans Using Employer Securities (PDF)
8 pages. Excerpt: "This document contains proposed regulations under section 401(a)(35) . . . . Under section 401(a)(35)(B), each individual must have the right to direct the plan to divest employer securities allocated to the individual's account that are attributable to employee contributions or elective deferrals and to reinvest an equivalent amount in other investment options meeting the requirements of section 401(a)(35)(D)." (Internal Revenue Service)
Employee Ownership Update for December 28, 2007
NCEO Executive Director Corey Rosen discusses Sam Zell's assumption of control at the Tribune Company, now owned by an ESOP; IRS Notice 2007-100, which provides transition relief under the Section 409A deferred compensation rules; a growing trend toward employee ownership in the construction industry; and the top 10 employee ownership stories of 2007, such as the decline in employees holding stock options. (National Center for Employee Ownership)
Employee Ownership Update for December 14, 2007
NCEO Executive Director Corey Rosen discusses a new study finding that the repurchase obligation is not a main driver of ESOP terminations; a useful summary of proposed changes in taxing S ESOP synthetic equity in Rep. Rangel's bill; an innovative idea for bonuses; and a new article on five common errors in equity compensation plan design. (National Center for Employee Ownership)
Picture of European Employee Share Ownership in 2007: Comparing 14 European Countries and Austria (PDF)
7 pages. Excerpt: "This information is based on EFES database, including all European groups whose market capitalisation was more than 200 millions Euro in May 2007. These are 2.500 groups, employing 33 millions people, on which 41 Austrian groups." (European Federation of Employee Share Ownership)
Employee Ownership Update for December 3
NCEO Executive Director Corey Rosen discusses a Supreme Court case on the standing of individual plan participants to sue; the DOL's elimination of the Form 5500 Schedule E filing requirement for ESOP companies; falling retirement plan participation; and Winston Churchill on employee ownership. (National Center for Employee Ownership)
Picture of European Employee Share Ownership in 2007 - Comparing 14 Countries and Austria (PDF)
7 pages. Excerpt: "This information is based on EFES database, including all European groups whose market capitalisation was more than 200 millions Euro in May 2007. These are 2.500 groups, employing 33 millions people, on which 41 Austrian groups. Compared with a set of 14 European countries, employee share ownership looks underdeveloped in Austria." (European Federation of Employee Share Ownership)
Legislative Language of ESOP Proposal Revealed (PDF)
1 page. Excerpt: "Section 3701 of HR 3970, by Congressman Charles Rangel, is the ESOP S Corp provision . . . . Please note, the provision defines as an option any interest that is the same as what is defined as synthetic equity in IRC 409(p)(6)(C). The new tax provision would apply to options granted after the date of enactment. There is strong opposition to the entire bill, and enactment would be no earlier than some time in 2008, or perhaps even later, if ever." (ESOP Association)
Employee Ownership Update for October 29, 2007
NCEO Executive Director Corey Rosen reports on the extension of the date for complying with the Section 409A deferred compensation rules; a proposal to tax synthetic equity in S corporation ESOPs; a survey finding 19% of fast-growing companies plan ESOPs as a business transition strategy; and a new study finding that large stock option grants to CEOs appear to hurt investors. (National Center for Employee Ownership)
Updated Chart Shows COLA Increases in Penson Limits, Social Security Wage Base, for 2008
On October 18, the IRS issued News Release IR-2007-171, announcing the changes in pensions and benefits limits for 2008. That same day, the Social Security Administration announced the wage base (i.e., the maximum amount subject to social security taxes) for 2008. An updated chart, showing these limits for 1996 to 2008, is available at the above link. (Calhoun Law Group, P.C.)
IRS Announces Pension Plan Limitations for 2008; 402(g) Elective Deferral Limit Still $15,500
Excerpt: "The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $225,000 to $230,000. The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan is increased from $145,000 to $150,000. . . . The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) is increased from $100,000 to $105,000. . . . Administrators of defined benefit or defined contribution plans that have received favorable determination letters should not request new determination letters solely because of yearly amendments to adjust maximum limitations in the plans." (Internal Revenue Service)
Please Take Survey by IRS Advisory Group: Improving the Employee Plans Compliance Resolution System
Are an attorney, accountant, actuary, consultant, third-party administrator, financial services provider, or other kind of retirement plan practitioner? Please help an official IRS advisory group supply the IRS with ideas for improving the Employee Plans Compliance Resolution System, by completing this online survey or emailing your response to the group. The deadline is the end of next week (October 19). These recommendations will address, but not be limited to, the directive to the Secretary of the Treasury under the Pension Protection Act of 2006 to continue updating and improving EPCRS. (IRS Advisory Committee (ACT) on Tax Exempt and Government Entities)
ESOP Terminations: A Report on the Reasons Companies Terminate Employee Stock Ownership Plans (PDF)
24 pages. Originally published April 17, 2007. Excerpt: "This report describes the results of the first phase of a research project on the reasons companies terminate employee stock ownership plans (ESOPs). It summarizes interviews with company leaders at former ESOP companies and suggests directions for the quantitative research planned for phase 2 of this project." (National Center for Employee Ownership)
Employee Ownership Update for September 28, 2007
NCEO Executive Director Corey Rosen discusses a new NCEO study of ESOP account balances, indicating that ESOP participants receive a much larger benefit from their employers than non-ESOP participants; proposed changes to SEC Rule 144; two recent surveys finding that employee ownership, while still comprising a small part of the European economy, is growing; and nominations for the NCEO's board. (National Center for Employee Ownership)
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