Among responses to the consultation is one that opposes the systematic encouragement of employee stock ownership. It "places asymmetric risk upon the employee", according to Charles Cronin, formerly of CFA Institute, and John Mellor, of the Foundation for Governance Research and Education.

 

They fear that "if the company fails, the employee not only loses his job, but could also lose his savings". They judge that, "on balance [such practice] should not be considered as an instrument to promote long-term-orientated investment". MORE

 

The Internal Revenue Service has issued proposed regulations with respect to the performance-based compensation exemption under Code Section 162(m). Generally, Section 162(m) disallows a deduction for annual compensation in excess of $1 million paid to certain "covered employees" (the principal executive officer and the three highest-paid executive officers other than the principal executive officer or the principal financial officer). Stock options or stock appreciation rights may qualify for an exemption from the deduction limit set forth in the current regulations under Section 162(m) for "performance-based compensation." The proposed regulations clarify that in order to qualify for the exemption (i) a plan must state a per-employee limitation on the number of shares that may be granted during a specified period; and (ii) the shareholder disclosure must include both the maximum number of shares for which grants may be made to each individual employee during a specified period and the exercise price of the options to satisfy the performance-based compensation exemption. MORE