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Re: EFES: FW: ESOPs and Regulation
Dan,
I agree that some of these matters should not be regulated. However, factional ownership is essential to advance any kind of advanced agenda, as is an equal distribution of shares regardless of wage level. If social security privatization occurs and ESOPs are an option, both of these are essential features.
Mike
Dan Bell <dbell@kent.edu> wrote:
Dear Daryl and others on the EFES list,
I think it is best to avoid extremes when it comes to whether or not to
regulate
ESOPs and other forms of employee ownership.
Yes, there should be regulations that set forth a general framework intended to
protect employees from fraudulent behavior.
At the same time, within that framework, there should be a great deal of
flexibility for each company to develop its own model.
Employee ownership can range from nothing more than a few shares of stock
in a retirement account, to a fully developed democratically owned and operated
company.
While the democratic enterprise is my preference, it is not a bad thing if an
employee has shares of stock that he or she might not otherwise receive.
My experience over the past 18 years in working with traditional owners setting
up ESOPs, is that
many of them start out rather conservative, but over time,
discover that building a participative ownership culture makes good business
sense. I would not want to deter conservative traditional owners from starting
down the path of employee ownership, because they found it too restrictive.
A series of progressive incentives like tax benefits that become more
attractive
as a company chooses to implement more democratic practices is fine.
For example, in the US, if the owner sells less than 30% of the stock to the
ESOP, the owner still has to pay capital gains tax on the sale. This encourages
many owners to start with a significant transfer of capital, while at the same
time allowing the original owner to retain a controlling share of the
equity. For
sellers who want to transition out over 5 or 10 years, this allows the company
to avoid taking on too much debt all at once.
Just a few thoughts.
Cheers,
Dan
Bell
At 05:08 PM 4/4/2005 +0100, you wrote:
>-----Original Message-----
>From: Marc Mathieu [mailto:marcmathieu@marcmathieu.be]
>Sent: 31 March 2005 17:48
>To: Daryl.DArt
>Subject: Re: ESOPs and Regulation
>
>
>Dear Daryl,
>Thank you very much for this.
>Would you please send it to efes@cog.kent.edu, I think it is of interest for
>all.
>With best regards
>Marc
>
>----- Original Message -----
>From: "Daryl.DArt"
>To:
>Sent: Thursday, March 31, 2005 6:56 PM
>Subject: ESOPs and Regulation
>
>
> > Dear Marc
> > I have read with interest the ongoing debate on regulation versus self
> > regulation or laissez faire regarding employee stock ownership plans. I
>have
> > to admit it find it some what depressing that there should be any debate
>at
> >
all concerning state regulation of these schemes. The long history of
> > employee ownership and profit sharing schemes points to the neccessity for
> > regulation if the participants in these schemes are to enjoy any real
> > participation, empowerment or security. There have been numerous
>historical
> > examples, particularly in the US where these schemes were used primarily
>to
> > benefit the company rather than employees. (General Accounting Office
>Report
> > see page 115 in my book). The most recent example was ENRON. The ESOP
> > association claims it favours participation and empowerment for employees
> > yet to my knowledge may still oppose any obligation to pass on voting
>rights
> > to employees. The argument of government regulation versus self
>regulation
> > is an old one but was heard again in the aftermath of ENRON - same old
>self
>
> serving stuff.
> > Finally many schemes in the US are not additional benefits for employees
>but
> > subsitutes for standard wages or pensions - and as pensions are a very
> > uncertain benefit. It is likely that the European Trade Union movement
>will
> > not support these schemes in the absence of fairly strict regulation to
> > protect employee interests. In the US of course trade unions are of
>little
> > account due to their weakness and can be safely ignored.
> > A brief glance at Chapter 3 Employee Stock Ownership in the US - Worker
> > Capitalism would not go amiss and indeed might clarify the arguments
> > regarding regulation. See D.D'Art 'Economic Democracy and Financial
> > Participation; A comparative Study Routledge London 1992.
> > Regards
> > Daryl D'Art
> >
> >
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