Headlines about "Stock options"
Gathered from the web by the editors at BenefitsLink.com.
[Guidance Overview] IRS Redesignates Backdated Stock Options as a Tier II Issue (PDF)
At page 2. Excerpt: "Late last month, the IRS issued a directive announcing that the issue of backdated stock options was being redesignated from Tier I status to Tier II status. Tier II issues are those where the IRS' Large and Mid- Sized Business (LMSB) division believes there is a significant risk of noncompliance." (Miller Chavalier)
Employee Ownership Update for May 15, 2008
NCEO Executive Director Corey Rosen discusses a program in Indiana to encourage banks to loan to ESOPs; a pro-ESOP resolution in Congress; an inaccurate claim by many compensation professionals that broad-based equity plans don't work; an NCEO survey of equity compensation practices in closely held companies; and a Winning Workplaces Webinar on employee ownership. (National Center for Employee Ownership)
[Guidance Overview] Understanding the Option Dating Controversies: An Overview of the Law and Legal Issues
Excerpt: "The prior installment [on this issue] introduced the option backdating controversy . . . . This part provides a brief overview of the more salient direct and indirect legal issues, as well as some of the key questions and complications raised by the option backdating controversy. These practices touch on a number of different and complex laws and rules, including securities, corporate, tax, employee benefits, contract, and criminal laws, as well as accounting and auditing standards and rules applicable to companies that issue options and other equity awards." (Employee Benefit Plan Review via Blank Rome LLP)
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)
[Guidance Overview] Understanding the Option Dating Controversies
Excerpt: "The world of options, and equity compensation in general, operates within a number of different and often esoteric spheres of law, including corporate, securities, and tax law. Unfortunately, the rhetoric generated by this controversy has, in some cases, melded, obfuscated, or even obscured completely the applicable legal and practical issues. This article, one in a series, will attempt to explain the legal underpinnings of the option dating controversy, highlight a number of legal and practical issues faced by employers generally, and suggest best practices for ongoing equity compensation plans.' (International Foundation of Employee Benefit Plans via Blank Rome LLP)
SEC Sees Monster-ous Backdating Scheme
Excerpt: "The Securities and Exchange Commission today charged two former Monster Worldwide Inc. senior executives for their alleged participation in a scheme to secretly backdate stock options granted to thousands of company officers, directors and employees." (Investment News; free registration required)
Why Riskier Companies Grant More Employee Stock Options
Excerpt: "This paper documents that riskier firms grant more options to non-executive employees using a large panel of US firms from 1992 to 2005. These results are not explained by factors on the industry level. A simple model in which a risk-neutral firm and an employee with cumulative prospect theory preferences bargain over the employee's pay package can provide an explanation for this otherwise puzzling behavior." (Social Science Research Network)
When the Company Share Price Is a Factor in Compensation
Excerpt: "[47] percent of private sector employees in the United States have had at least part of their compensation tied to their company's profitability or stock price. That's right. If you include stock options, deferred stock, profit sharing or cash bonuses pegged to a company's performance, nearly half of the 114 million employees of private-sector companies had some stock or profit-related pay at the end of 2006." (The New York Times; free registration required)
Update on Stock Option Backdating
Excerpt: "In case you wondered how the backdating matters have been resolved, this week brings news that: The SEC settled with Broadcom Corporation for $12 million civil penalty, in addition to a permanent injunction. . . . A grand jury in Northern California indicted the former Mercury CFO for tax fraud in connection with her role in the Mercury's backdating scheme. Still no word on whether the SEC or prosecutors will act against any of the law firms that seemed to have facilitated the scandal." (Michael S. Melbinger of Winston & Strawn LLP)
[Guidance Overview] Additional Guidance Regarding Minnesota Taxation of Deferred Compensation, Severance and Stock Option Income Paid to Nonresidents
Excerpt: "The Minnesota Department of Revenue is preparing guidance addressing withholding and reporting issues raised by the new law taxing some deferred compensation, severance and stock option income paid to nonresidents. The law now taxes income earned in Minnesota but received when the taxpayer is not a state resident. The new law requires employers to withhold tax from such payments beginning April 1, 2008." (Oppenheimer Wolff & Donnelly LLP)
[Guidance Overview] The AMT and Stock Options: Taxpayers Continue to Lose in the Appellate Courts
Excerpt: "This 'substantially nonvested' exception to current taxation has been the subject of a substantial amount of litigation fueled by taxpayers' attempts to postpone the date of taxation so that subsequent stock losses can be recognized. One of the arguments posited by taxpayers in recent cases is that stock acquired through the exercise of stock options is 'substantially nonvested' if the company's insider trading policy prevents employees from trading the company's stock during certain blackout periods." (BNA Tax Management Inc.)
Can Your Long-Term Incentive Plan Become More Performance Based Again? (PDF)
Excerpt: "A top responsibility for Compensation Committees is to ensure a strong linkage between executive compensation and company performance. Long-Term Incentive Plans (LTIPs) typically provide the largest component of senior executives' compensation, most often through one or more of three equity-based types: Stock Options, Restricted Stock, and Performance Shares. This InsightOut™ assesses the relative strength of the linkages between company performance and each type of equity when included in an LTIP." (Buck Consultants)
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)
[Guidance Overview] Valuing Employee Stock Options for Closely Held Companies
Excerpt: "Until recently, non-public companies that granted options, warrants or other types of stock-based compensation to their employees were not typically required to determine values for these complex derivative instruments. Current financial reporting standards such as FASB Statement no. 123(R), Share-Based Payment, as well as recent federal tax law changes (IRC § 409A) are compelling companies to value these financial instruments using stock option valuation models developed for publicly traded stock options." (American Institute of Certified Public Accountants)
[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)
United Healthcare Options Backdating Suit Gets Class Action Status
Excerpt: "A federal judge in Minneapolis has granted class-action status to a lawsuit against UnitedHealth Group Inc. over stock options backdating." (PLANSPONSOR.com; free registration required)
[Guidance Overview] Summary of FASB Statement 123R Share-Based Payment - Revised 3/10/2008 (PDF)
14 pages. Excerpt: "Statement 123R creates a more 'level playing field' for equity incentive design that is expected to result in the increased prevalence of full-value and performance-vesting awards, and a corresponding decline in plain-vanilla, tax qualified, and reload stock options, and employee stock purchase plans. The remainder of this paper summarizes the most pertinent provisions of Statement 123R and related staff guidance provided by the FASB and the Securities and Exchange Commission (SEC)." (Frederic W. Cook & Co., Inc.)
New edition of The Stock Options Book
The NCEO presents excerpts from the new edition of The Stock Options Book, a comprehensive guide to employee stock options. The book also covers employee stock purchase plans (ESPPs). It is a required text in the Certified Equity Professional (CEP) program. (National Center for Employee Ownership)
New edition of Selected Issues in Equity Compensation
The NCEO presents excerpts from the new edition of Selected Issues in Equity Compensation, which provides in-depth coverage of topics like administrative issues, securities laws, etc., as they relate to equity compensation plans such as employee stock options and employee stock purchase plans (ESPPs). It is a required text in the Certified Equity Professional (CEP) program. (National Center for Employee Ownership)
New edition of Beyond Stock Options
The NCEO presents excerpts from the new edition of Beyond Stock Options, which covers restricted stock, phantom stock, stock appreciation rights, and other alternatives to employee stock options. It is a required text in the Certified Equity Professional (CEP) program. The book includes a CD with model plan documents. (National Center for Employee Ownership)
New edition of Accounting for Equity Compensation
The NCEO presents excerpts from the new edition of Accounting for Equity Compensation, which provides detailed coverage of how to account for stock options, ESPPs, and other equity instruments under SFAS 123(R). It is a required text in the Certified Equity Professional (CEP) program. (National Center for Employee Ownership)
Yahoo Inc. Implements Generous Severance Pay Benefits to Discourage Microsoft Takeover Attempt
Excerpt: "Yahoo Inc., owner of the most-visited U.S. website, adopted severance plans for employees that would pay as much as two years of salary to fend off a $44.6-billion bid from Microsoft Corp. . . . Yahoo's plans also entitle departing employees to health insurance, accelerated vesting of options and job-search assistance." (Bloomberg via Los Angeles Times)
[Guidance Overview] California Court of Appeal Upholds Optional Compensation Plan with Restricted Stock Opinions
Excerpt: "In the first Court of Appeal decision following the Supreme Court's recent decision in Prachaseisoraedj v. Ralphs Grocery Co., Inc., 42 Cal.4th 217 (2007), the Second District upheld a compensation plan that allowed an employee to direct his employer to purchase shares in the company's stock on his behalf with a portion of his cash compensation. The court upheld the plan even though participants forfeited the stock and the money used to buy it if they were discharged or voluntarily terminated within two years." (Thelen Reid Brown Raysman & Steiner LLP)
[Opinion] Companies with Long-Term Incentive Plans Based on Relative Total Return Need to Re-Examine Their Objectives
Excerpt: "Many long-term incentive plans for executives have undergone extreme makeovers, often by eliminating stock options and the use of free shares as a substitute. Some companies have made a stab at basing compensation on how well total return stacks up against a group of peer companies." (Bloomberg News)
[Guidance Overview] SEC Exemptions from Registration under Section 12(g) of the Securities Exchange Act of 1934 for Compensatory Employee Stock Options
Excerpt: "The purpose of the exemptions is to provide both reporting companies and private, non-reporting companies guidance and certainty in their compensation decisions and to prevent private, non-reporting companies from becoming subject to the registration and reporting requirements of the Exchange Act prior to the time they have public shareholders. Both exemptions are self-executing if the necessary requirements are met." (Bllank Rome LLP)
[Guidance Overview] Executive Compensation 2008 Planning Tips (PDF)
5 pages. The newsletter includes information on: ISO and Stock Purchase Plan Tax Returns; Registration Exemption for Stock Options; Rule 144 Restricted Stock Holding Periods; and, 409A compliance. (Seyfarth Shaw LLP)
KLA to Pay $65M in Stock Option Case
Excerpt: "[T]he settlement will be the second largest paid to shareholders of one of the dozens of companies entangled in a stock option scandal that swept across corporate America during the past two years, with Silicon Valley at the epicenter." (AP via Washington Post)
Ex-Safenet CFO Gets Prison Term in Options Case
Excerpt: "A former chief financial officer of information security company SafeNet Inc was sentenced on Monday to six months in prison for manipulating employee stock option grants. Carole Argo also was fined $1 million." (Reuters via Washington Post)
Southwest Employees Say no More Stock Options
Excerpt: "Southwest Airlines has used stock options to enrich employees during good financial periods, but officials with the Transport Workers Union of America are now seeking more traditional compensation for ground workers." (PLANSPONSOR.com; free registration required)
[Guidance Overview] SOX Section 304 Clawbacks for Backdated Options
3 pages. (Utz Miller & Kuhn, LLC)
[Guidance Overview] SEC Extends Availability of So-Called 'Expected Life Shortcut' for Use in Expensing of Share-Based Payments Under Fas 123
Excerpt: "In December, the SEC staff released Staff Accounting Bulletin No. 110 (SAB 110). For limited circumstances, this extends the availability of the shortcut used in expensing share-based payments under FAS 123." (JPMorgan)
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)
Beware Calendar Cash: The Feds Look Into Stock Option Backdating Schemes
Excerpt: "This article focuses on the general treatment of stock options under federal income tax rules, tax issues involving backdated stock options, and strategies for complying with IRS inquiries during tax examinations." (Pennsylvania Institute of Certified Public Accountants)
Opinion: With Its New CEO Incentive Plan, AmEx Has Created a Better Model for Executive Compensation
Excerpt: "[I'd] advise four key groups - CEOs, board members, government officials, and presidential candidates - to study the remarkable grant of stock options that American Express's (AXP, Fortune 500) board recently gave CEO Ken Chenault." (Fortune via CNNMoney.com)
Overview: SEC Issues Extension for Using Simplified Method to Calculate Employee Stock Option Expense (PDF)
1 page. Excerpt: "SAB 107 allows for the use of the simplified method until December 31, 2007, at which time it was expected companies would have adequate historical information available to them to calculate a reliable expected option term. The SEC understands that this historical data may not yet be readily available and on December 21, 2007, the SEC issued SAB 110 which extends the timeframe eligible companies will have to use the simplified method on an interim basis. Once detailed information on exercise terms becomes readily available, the SEC will suspend use of the method and will require companies to estimate the expected term of an option using historical data." (Frederic R. Cook)
Reminder: January 31 Deadline for Information Statements for Incentive Stock Options and ESPPs (PDF)
3 pages. Excerpt: "Section 6039 of the Internal Revenue Code requires that corporations provide a written statement to each current and former employee who receives stock pursuant to the exercise of an incentive stock option or who transfers for the first time stock received under an employee stock purchase plan (ESPP). The statement must be provided by January 31 of the year following the calendar year in which the stock transfer was made. The Tax Relief and Health Care Act of 2006 amended section 6039 to further require corporations to file an expanded information return with the Internal Revenue Service." (Pillsbury Winthrop Shaw Pittman LLP)
SEC Allows More Use of Simpler Options Expensing
Excerpt: "An SEC news release said its Staff Accounting Bulletin (SAB) 110 permits the simplified method of valuing stock option grants for income statement purposes if the company's historical experience is not enough to allow a more involved calculation. The agency said without the new SAB, eligible public companies would have lost the option to use the simplified method as of December 31, 2007.' (PLANSPONSOR.com; free registration required)
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)
Overview of Section 6039: IRS Interim Guidance on Information Returns to Be Filed with the IRS for ISOs and ESPPs
Excerpt: "The time and manner in which to file the information return to the IRS is to be set forth in regulations. However, the IRS has yet to issue regulations addressing this particular requirement. As a result, the IRS has temporarily waived the obligation to file an information return to the IRS for stock transfers covered under Section 6039. There is still, however, the existing requirement to furnish employees with a written statement containing certain specific information as provided in the current regulations." (Wilson Sonsini Goodrich & Rosati)
Overview: SEC Adopts Significant Changes to Rules 144 and 145 (PDF)
Excerpt: "In a nutshell, these amendments . . . reduce to six months the minimum holding period for resales of 'restricted securities' of 'reporting companies' (non-reporting companies will continue to be subject to a one-year minimum holding period) and, after the applicable holding period, non-affiliates will be able to resell without concern for virtually any of the requirements currently imposed on sellers of restricted securities. Although contemplated when the Amendments were proposed, the SEC did not reintroduce 'tolling' of the Rule 144 holding period for hedged positions." (Winston & Strawn LLP)
U.S. Incentive Plans, EU Employees and Conflicts of Law (PDF)
4 pages. Excerpt: "This [newletter] summarises important new incentives and employment law developments affecting US employers with operations in Europe." (Paul, Hastings, Janofsky & Walker LLP)
Summary of FASB Statement 123R on Share-Based Payment, Revised December 18, 2007 (PDF)
Excerpt: "Statement 123R creates a more 'level playing field' for equity incentive design that is expected to result in the increased prevalence of full-value and performance-vesting awards, and a corresponding decline in plain-vanilla, tax qualified, and reload stock options, and employee stock purchase plans. The remainder of this paper summarizes the most pertinent provisions of Statement 123R and related staff guidance provided by the FASB and the Securities and Exchange Commission (SEC)." (Frederic R. Cook)
Options Still Dominate Executive Compensation Package
Excerpt: "The median value of total retirement benefits of Fortune 500 CEOs in 2006 was only about half that of their outstanding options awards, according to a new study." (PLANSPONSOR.com; free registration required)
ICI Makes Recommendations on SEC Exemptive Application Proposal
Excerpt: "ICI believes that a recent SEC proposal, with minor modifications, would improve the efficiency and effectiveness of the agency's exemptive application process, thus allowing for fund industry innovation while still affording effective investor protections." (Investment Company Institute)
Overview: Rule 144 Adopting Release (PDF)
5 pages. Excerpt: "The SEC is adopting a six-month holding period for the resale of restricted securities of reporting companies by affiliates and non-affiliates. Restricted securities of non-reporting issuers will have a one-year holding period. The SEC believes that these new holding periods are appropriate given the differences in the amount of information available for reporting and non-reporting companies." (Drinker Biddle & Reath LLP)
Executive Compensation Update, December 2007 (PDF)
13 pages. The newsletter includes articles titled: IRS Postpones Year-End Deadline for Code Sec. 409A Changes; New Rules Issued on Reporting of Company-Owned Life Insurance Contracts; SEC Announces Scrutiny of 10b5-1Trading Plans; Court Upholds Plan Administrator's Interpretation in 'Claw Back' Case; Bad Facts Make Bad Law: Another Adverse Ruling in a Backdating Case; Consider Adopting Stock Option Award Guidelines; Executive Roth Plans: A New Funding Concept for Nonqualified Plans; and, Year-End Reminder: Determining When to Deduct Employee Bonuses can be Tricky. (Winston & Strawn LLP)
Overview: SEC Amendment of Rule 144 and Rule 145 to Allow More Flexibility in Reselling Securities (PDF)
2 pages. Excerpt: "On December 6, 2007, the Securities and Exchange Commission (SEC) issued final amendments to Rule 144 to shorten the holding periods for restricted securities. The SEC also made changes to ease the burdens to resell securities under Rule 144 and amended Rule 145 to eliminate presumptive underwriter status in most cases." (Reinhart Boerner Van Deuren s.c.)
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