Headlines about "Stock plans - misc"

Gathered from the web by the editors at BenefitsLink.com.
[Opinion] Big Investments in Employer Stock Can Mean Big Losses for Retirement Plans
"A massive 38 percent of [Chesapeake Energy's] main 401(k) retirement plan's assets were in company stock, despite only 5 percent of those assets still being tied up in a vesting period. It is no wonder that employees jumped at a generous offer to match, dollar-for-dollar, the first 15 percent of their salary with shares of stock. What makes a heck of a lot less sense is why they held on to them after they were free to diversify. While this has been a bit of a disaster for employees, as Chesapeake shares have fallen by nearly half, [the author says] holding more than 5 percent of your financial assets in your employer's stock is bad policy whatever the returns and no matter how well run the company." (Reuters)

Is It Safe to Own Company's Stock in a 401(k) or Profit Sharing Plan?
"Buying stock that then falls sharply is painful, especially for investors who also happen to be company employees.... Financial advisers say employees like to invest in their employers for several reasons, including loyalty, hopes to profit from their work and a sense that they have a better read on the company than ordinary investors. But many advisers say that the practice increases the risk of losing your job and your retirement savings at the same time if your employer fails." (Reuters)

[Guidance Overview] Eleventh Circuit Becomes Latest to Adopt Rebuttable Presumption That Fiduciaries Act Prudently by Investing in Employer Stock
"[This] decision is an adaptation of the presumption of prudence first announced in Moench v. Robertson, ... which is commonly referred to as the 'Moench presumption.' ... [but the Eleventh Circuit here] determined that the Moench presumption was more appropriately viewed as a standard of review rather than an evidentiary presumption. ... [A]ffirming the application of the presumption at the pleading stage is in marked contrast to a recent Sixth Circuit decision to the contrary in Pfeil v. State Bank ... The resolution of this circuit split is a developing issue in ERISA litigation, and it is likely to have a significant impact on the viability of ERISA stock drop law suits going forward. It may also eventually lead the United States Supreme Court to consider the application of the Moench presumption." (Jenner & Block)

Take Steps to Ensure Effectiveness of Stock-Based Pay
"Is it time for employers to rethink stock-based compensation for broad groups of employees? The answer depends on what the company wants to accomplish and whether stock-based pay is the best way to spur the employee performance to achieve those goals." (Society for Human Resource Management)

[Opinion] Company Stock Ought Not Be Legal as Defined Contribution Retirement Plan Investment
"It's time to end the tax deduction for a contribution of company stock to qualified retirement plans. It's bad for employees, bad public policy, bad accounting and bad tax policy. Here's a modest suggestion: If you hold your employer's stock in your 401(k) dump it; if you are a plan sponsor you should terminate any option for company stock in your plan. In fact, the SEC and Department of Labor should prohibit it." (Forbes)

Stock Compensation at Facebook: What Its SEC Registration Statement Reveals
"The move to granting restricted stock units instead of stock options may have been better for the company for many reasons, including the prospect of minimizing share dilution, along with the relief of having fewer post-IPO multi-millionaire employees to retain and motivate. Depending on the size of the RSU grants relative to previously made stock options grants at Facebook, a basic calculation shows that, given the stock-price appreciation, employees with RSUs would be sitting on much larger gains if they had received stock options." (myStockOptions.com)

Identifying Opportunities in Employee Benefits and Executive Compensation Considerations in Private Equity Transactions
"In both asset and equity transactions, the treatment of equity plans, change in control agreements and other non-qualified deferred compensation arrangements can be the subject of significant negotiation. In addition to compliance with Section 409A, if the transaction triggers a change in control or a separation from service for the executive, executives can find themselves in possession of substantial payments earlier than desired. Often non-qualified deferred compensation arrangements and some equity plans are unfunded (with no associated 'rabbi trusts'), which results in significant payments made from the target's general assets." (McDermott Will & Emery)

ERISA Stock Drop Lawsuit Against BP over Gulf Oil Spill Might Rise from the Dead
"National Law Journal has an article about the ERISA stock drop lawsuit against BP, indicating that this lawsuit may not be dead yet.... [It] says the plaintiffs will be attempting to salvage their lawsuit by filing an amended complaint with the court." (The Pension Protection Act Blog)

[Guidance Overview] JOBS Act Expands Registration Exception for Private Companies and Employee Stock Plans
"The JOBS Act also requires the SEC to adopt safe harbor provisions that companies can follow when determining whether holders of their securities received the securities pursuant to an employee compensation plan in transactions that were exempt from the registration requirements of Section 5 of the Securities Act." (Haynes and Boone)

Employee Ownership Update for April 16, 2012
NCEO Executive Director Loren Rodgers discusses new employee ownership fellowships at Rutgers University, two films on employee ownership, the Certified Equity Professional (CEP) exam, a new CEO at SAIC, and the OEOC conference. (National Center for Employee Ownership)

[Guidance Overview] Alternative Investments Options Were No Shield from Fiduciary Liability for Failure to Divest Stock in Plan Sponsor
"Plan participants who invested individual account assets in a company stock fund established a causal link between a fiduciary's delay in divesting the plan of company stock and the harm suffered by the plan that was sufficient to survive a motion to dismiss[.]" (Wolters Kluwer Law & Business / CCH)

[Guidance Overview] Federal District Court Dismisses Fiduciary Liability Claims in BP Stock Drop Lawsuit
"In dismissing all claims, the court determined that plaintiffs failed to show that the plan fiduciaries had access to nonpublic information regarding the safety programs, and that the presumption of prudence applied." (Haynes and Boone)

[Guidance Overview] SEC Issues First Guidance on JOBS Act
"[SEC] has published Frequently Asked Questions to provide initial guidance on the implementation and application of the law." (Ballard Sphar LLP)

Certain Executive Pay Mandates Eased for 'Emerging Growth' and Private Companies
"The Jumpstart Our Business Startups Act, signed into law April 5, eases executive pay compliance for a new category of issuers: 'emerging growth companies.' Qualifying companies that go public after Dec. 8, 2011, are temporarily exempt from the Dodd-Frank Act's shareholder say-on-pay mandates and its pay-for-performance and internal pay equity disclosures. While exempt, these start-ups can follow the limited executive pay disclosure rules for 'smaller reporting companies.' The act also eases registration triggers for private companies issuing equity awards under employee pay plans." (Mercer)

Bipartisan JOBS Act Provides Significant Reforms to Public and Private Securities Offerings
"Some provisions, such as the IPO-related ones, are effective immediately upon signing into law, and some, such as the elimination of general solicitation in Rule 506 offerings, crowdfunding and the new small issue exemption, will require adoption of related SEC rules." (Faegre Baker Daniels)

Repercussions for Stock Plans in the JOBS Act
"The JOBS Act [Section 501] now greatly expands the exception for private companies and stock plan awards by amending [a section of the 1934 Act] to read as follows: (A) within 120 days after the last day of its first fiscal year ended on which the issuer has total assets exceeding $10,000,000 and a class of equity security (other than an exempted security) held of record by either -- (i) 2,000 persons, or (ii) 500 persons who are not accredited investors (as such term is defined by the Commission)[.]" (Winston & Strawn LLP)

Employee Ownership Update for April 2, 2012
NCEO Executive Director Loren Rodgers discusses new initiatives from the Mondragon Cooperative Corporation, the Secretary of Labor"s comments on re-proposing the DOL's fiduciary rule, UK proposals on options and employee ownership, Deloitte's global share plan survey, low awareness of company facts among U.S. workers, and new employee ownership fellowships at Rutgers. (National Center for Employee Ownership)

BP Workers Can't Sue Retirement Plan Over Spill Loss
"[The judge threw out] eight employee lawsuits that sought to recover millions of dollars in losses that BP's employee retirement plans allegedly suffered from the largest offshore oil spill in U.S. history. The suits questioned plan managers' investments in BP's shares." (Bloomberg)

The Evolution of Company Stock in Defined Contribution Plans
"Since 2005, the incidence of company stock in DC plans has declined. Employer-directed contributions remain the dominant factor associated with participants holding a concentrated position in company stock. Participants in plans that direct employer matching contributions to company stock are more than twice as likely to hold a concentrated position (defined as more than 20% invested in employer stock) than plans without employer-directed holdings." (Vanguard)

The New ESOP Executive Compensation and Private Company Equity Compensation Surveys
For ESOP companies and private companies with equity plans, relevant, affordable compensation data is often difficult to find, and it may be available only for particular industries. Such industry surveys may not address the unique issues that employee ownership companies face. The NCEO 2011 surveys of executive compensation in ESOP companies and of equity compensation in private companies fill this gap. This issue brief summarizes the results, including illustrative graphs and tables. (National Center for Employee Ownership)

[Guidance Overview] Pfeil v. State Street Bank and Trust Company: Sixth Circuit Holds that "Moench" Presumption of Prudence Does Not Apply at Pleading Stage
"The Sixth Circuit also held that (1) plaintiffs adequately pled the element of causation, (2) ERISA [section] 404(c) is an affirmative defense that could not be asserted in response to a motion to dismiss, and (3) State Street did not establish that plaintiffs' claims were collaterally estopped by the Second Circuit's decision in Young v. General Motors Investment Management Corp.[.]" (Sidley)

[Guidance Overview] FATCA Creates New Issues for Cross-Border Stock and Other Incentive Compensation Plans (PDF)
"When a multinational company implements product deployment, research, sales expansion and manufacturing on an international basis, it may want a unified approach to compensation incentives covering both U.S. and other foreign executives. This means a U.S. citizen or resident who works outside the U.S. and is in an incentive program designed by a non-U.S. employer can face surprising, often serious tax problems. A non-U.S. citizen who is assigned to the U.S. but stays in their home country incentive plan may also have U.S. tax problems. And now, new issues are arising from the U.S. Foreign Account Tax Compliance Act." (Pillsbury)

[Guidance Overview] Avoid Tax Return Mistakes with Stock Options and ESPPs: What You Need to Know in 2012
"This tax return season has the potential to be more confusing than most if you sold stock last year. You must now file the new IRS Form 8949 along with the revised Schedule D. This change stems from the expansion of the information that brokers must report on IRS Form 1099-B. This article from myStockOptions.com has tips on these and other crucial tax return topics." (myStockOptions)

Employee Ownership Update for March 1, 2012
NCEO Executive Director Loren Rodgers discusses a proposal to tax large S corporations as C corporations, an SEC no-action letter stating RSUs do not count under shareholder limits, a proposed pro-ESOP law in Iowa, and employee ownership in South Africa. (National Center for Employee Ownership)

[Opinion] The Pitfalls of Investing Retirement Funds in Your Employers' Stock
"According to data from the Employee Benefit Research Institute, only about 40% of 401(k) plans offer the company's stock as an option. But employees in those plans are still investing between 16% and 19% of their plan portfolios, on average, in their employer's stock. At the same time, they have been shrinking their overall equity exposure dramatically. One dollar in your employer for every two dollars spread across all the other companies out there? It makes no sense." (The Wall Street Journal)

[Guidance Overview] Sixth Circuit Rules that Presumption of Prudence Should Not Be Applied on a Motion to Dismiss
"The Sixth Circuit issued a ruling on February 22, 2012 in Pfeil v. State Street Bank and Trust Co. ... that distinguishes itself from other Circuit Courts concerning the application of the presumption of prudence that applies to an ERISA plan fiduciary's decision to invest in an employer stock fund." (Proskauer)

New Edition of Selected Issues in Equity Compensation
The NCEO has just released the ninth edition of Selected Issues in Equity Compensation, which discusses issues such as securities laws, IPOs, handing death and divorce, and more. The book has been revised for 2012 and features a new, updated chapter on repricing underwater options. (National Center for Employee Ownership (NCEO))

New Edition of Accounting for Equity Compensation
The NCEO has just released the ninth edition of Accounting for Equity Compensation, which has been updated for 2012. Written in plain English for non-accountants, this book is a survival guide for understanding the impact of stock compensation on corporate financial statements. (National Center for Employee Ownership (NCEO))

New Edition of Equity Alternatives: Restricted Stock, Performance Awards, Phantom Stock, Stock Appreciation Rights, and More
The NCEO has just released the 10th edition of Equity Alternatives: Restricted Stock, Performance Awards, Phantom Stock, SARs, and More (formerly titled Beyond Stock Options). The book has been updated for 2012 and combines a detailed discussion of each plan type with sample plans (included on the accompanying CD). (National Center for Employee Ownership (NCEO))

New Edition of Securities Sources for Equity Compensation
The NCEO has just released the 2012 edition of Securities Sources for Equity Compensation, which collects relevant source documents for the study of equity compensation. (National Center for Employee Ownership (NCEO))

Private Company Incentive Pay Practices Survey
"Respondents report increased usage of both short- and long-term incentive programs since 2007. Short-term incentive . . . usage has increased to 95% from 79%, while long-term incentive . . . usage has increased to 61% from 35%." (WorldatWork)

Should Employees Own More Company Stock or Less?
"In the Society for Human Resource Management's Employee Benefits Survey, for instance, only 10% of companies report having stock-purchase plans (which give staffers the opportunity to buy equity in the firm, usually at a significant discount like 15%). That's down almost half from 2008, when 19% of companies did so. And according to human resource consulting firm Aon Hewitt, 36% of employers offer company stock on the investment menu of their retirement plans, down from 47% just two years ago." (Employee Benefit News)

2011 Data on ESOP Executive Compensation (Employee Ownership Report excerpt)
The featured excerpt from the March-April 2012 Employee Ownership Report summarizes the results of the NCEO's 2011 ESOP Executive Compensation Survey. (National Center for Employee Ownership)

[Guidance Overview] The ERISA Decision of the Year?
"If you were going to read just one ERISA decision this year ? or were starting from scratch, with a blank slate, and wanted to know the law governing breach of fiduciary duty claims under ERISA ? I would read this one, Judge Holwell of the Southern District of New York's opinion in Prudential Retirement Insurance and Annuity Co. v. State Street Bank and Trust Company." (Boston ERISA & Insurance Litigation Blog)

[Guidance Overview] 2011 Decisions of Interest in ERISA Cases (PDF)
Pages 6-7 of 8 pages. Court Denies Plaintiffs' Attorneys' Claim for Fees in ERISA Action and Second Circuit Adopts Presumption of Prudence Standard in ERISA Stock Drop Litigation. (Schulte Roth & Zabel)

BofA Investor Lawsuit Wins Class-Action Status
"Investors suing Bank of America Corp won class-action status for their lawsuit accusing the bank of fraudulently misleading them about the 2008 takeover of Merrill Lynch & Co and the size of Merrill's losses and bonus payouts." (Reuters via The New York Times; free registration required)

2nd Circuit Should Rehear 401(k) 'Stock Drop' Cases,DOL Argues in Recent Brief
"Last fall, a divided three-judge panel of the 2nd Circuit ruled that fiduciary decisions to offer company stock as a 401(k) investment option are entitled to a presumption of prudence and should be reviewed only for an abuse of discretion ? not held to a stricter standard. Though the so-called 'Moench presumption' has been adopted by five appeals courts, it finds no support in ERISA and 'leads to absurd results,' DOL asserts." (Mercer)

ISS Issues FAQs on 2012 U.S. Voting Policies
"A new set of [FAQs] from Institutional Shareholder Services . . . clarifies its 2012 proxy-voting guidelines on pay-for-performance assessments, say-on-pay responsiveness and equity plans. The FAQs supplement ISS's white paper explaining the proxy adviser's quantitative and qualitative approach to identifying pay-for-performance disconnects. The updated guidelines apply for shareholder meetings on or after Feb. 1." (Mercer)

The State of Broad-Based Employee Ownership Plans 2012
This report details the extent and growth of employee ownership through ESOPs, 401(k) plans, stock options, ESPPs, and other vehicles; summarizes the leading research on employee ownership and corporate performance; and discusses current challenges and prospects. (National Center for Employee Ownership)

[Guidance Overview] In Re: Citigroup ERISA Litigation: Has The Death Knell Sounded for Stock Drop Cases?
"[The Court of Appeals for the Second Circuit] was not simply being asked to articulate the standard of review applicable to ERISA fiduciary conduct in the context of stock drop claims, but also to determine the pleading requirements sufficient to allow such complaints to proceed. . . . The decision is very favorable to the employer-fiduciary community." (The Metropolitan Corporate Counsel)

Using Employer Stock in Qualified Plans
"Unfortunately, in the worst of times, employer stock can be the focus of extra scrutiny, and even litigation, if plan fiduciaries aren't conscientious about fulfilling their fiduciary duty. The troubled economic conditions and turbulent markets of the past few years have generated a surge in lawsuits against plan fiduciaries when employer stock has dropped precipitously." (Investment News; free registration required)

2012 U.S. Proxy Voting Summary Guidelines (PDF)
"ISS' Benchmark proxy voting guidelines serve as a tool to assist institutional investors in meeting their fiduciary requirements with respect to voting by promoting shareholder value creation and risk mitigation at their portfolio firms." (Institutional Shareholder Services Inc.)

Results from the NCEO Private Company Equity Compensation Survey
In this featured article from the Employee Ownership Report (available through mid-February 2012, when it will be replaced by another excerpt), the NCEO discusses the results of its private company equity compensation survey. (National Center for Employee Ownership)

[Guidance Overview] ISS Issues Technical Paper on Evaluating Pay for Performance and Updated Burn Rate Tables (PDF)
"Under its Burn Rate Policy, ISS recommends against stock plan proposals if a company's three-year average burn rate exceeds its industry group's mean by more than one standard deviation or two percent of weighted common shares outstanding, if higher." (Frederic W. Cook & Co., Inc.)

[Guidance Overview] Second Circuit Adopts Presumption of Prudence for Holding of Employer Stock; Determines Fiduciaries Have No Affirmative Duty to Disclose Adverse Information
"In these decisions, the Second Circuit joins the Third, Fifth, Sixth and Ninth Circuits in adopting a presumption of prudence for the holding of employer stock in plans designed to hold such stock; to date, no circuit court has rejected this presumption." (Goodwin Procter LLP)

Ten Ideas for Year-End Tax Planning with Stock Compensation
"As part of your year-end and year-beginning tax planning, review your stock options and company stock holdings. Make investment objectives and personal financial needs, not tax considerations, the driver of your decisions. Here are 10 ideas to review before the end of the year to make sure you aren't paying more taxes than necessary." (myStockPlan.com, Inc.)

Walmart and Merrill Lynch Agree To Pay $13.5 Million To Settle 401(k) Fiduciary Lawsuit
"In papers filed in Kansas City federal court, the two corporate defendants admitted no wrongdoing. But Wal-Mart said it would 'further its goal to offer investment options with fees that are reasonable,' remove mutual funds that charge high fees and provide more financial education to employees." (Forbes.com LLC)

[Guidance Overview] Presumption of Prudence Shields Fiduciaries from Liability Following Decline in Value of Employer Stock
"Plan participants alleged that plan fiduciaries breached ERISA duties of prudence and loyalty by refusing to divest the plans of company stock, even though its exposure to the imploding subprime securities market made it an imprudent investment option." (Wolters Kluwer Law & Business / CCH)

[Guidance Overview] Equity Arrangements and Change in Control Agreements
"Young was a split decision, 2 to 1. A vigorous dissent concluded that the unambiguous terms of the plan made clear that the executive had good reason to resign in February 2009, and that the compensation committee's reading of the plan was based on an interpretation that was contrary to the plan's unambiguous terms and therefore arbitrary under New York law." (National Association of Stock Plan Professionals via Utz, Miller & Eickman, LLC)

[Guidance Overview] Another Circuit Court Adopts Presumption of Prudence for Investments in Employer Stock
"These two appeals were decided by a panel of three judges, one of whom mounted a vigorous dissent, finding the 'underpinnings of the Moench presumption to be fundamentally unsound.' The dissenting judge argued that public policy does not warrant a deferential standard of review for investment decisions made with respect to employer stock." (Thomson Reuters/EBIA)

Stock Ownership Guidelines Hard-Wired Into the Plan?
"I wanted to point out to readers a company that recently incorporated its stock ownership guidelines into its stock incentive plan document, which I had not seen previously. The amended Motricity, Inc. 2010 Long Term Incentive Plan, approved by stockholders on October 28, 2011, contains the following paragraph . . . ." (Michael S. Melbinger via Winston & Strawn LLP)

The Pension Protection Act of 2006 and Diversification of Employer Stock in Defined Contribution Plans
"This paper estimates the short-run impact of the Pension Protection Act of 2006 . . . on holdings of employer stock in defined contribution pension plans." (Center for Retirement Research at Boston College)

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