Stock Options

[Guidance Overview] A $327 Million Stock Option Mistake
Excerpt:"A case decide[d] this week by the U.S. Court of Appeals . . . demonstrates the high sta[k]es of stock plan miscommunications. In Bell v. Pfizer Inc. . . ., a 2-1 majority of the Court held that Pfizer did not breach its fiduciary duties under [ERISA] by making potentially misleading statements, albeit unintentional, to an employee about her ability to exercise millions of dollars in stock options."(Michael Melbinger via Winston&Strawn LLP)

Employee Ownership Update for August 31, 2010
NCEO Executive Director Corey Rosen discusses the following: The report of the President's Economic Recovery Advisory Board mentions the possibility of eliminating ESOP'special provisions.'The 2010 NASPP/Deloitte stock plan survey found some decline in broad-based plans, but they are still alive and well. A massive worldwide survey by Kelley Services found that most workers say profit sharing or ownership would motivate them to perform at a higher level. (National Center for Employee Ownership)

[Opinion] Should Companies Grant Nonqualified Stock Options or Incentive Stock Options to Their Employees?
The writer generally recommends that private companies issue NQOs rather than ISOs for a variety of reasons and explains why. (Davis Wright Tremaine LLP)

Employee Ownership Update for July 29, 2010
NCEO Executive Director Corey Rosen discusses the following: Research shows it's a myth that employees don't stay with employers as long as they used to. An examiner for a bankruptcy court found the solvency opinion in the Tribune ESOP transaction may have involved fraud. It is uncertain whether the new executive compensation rules will really change things. The NCEO is seeking'Don't Do That'stories in the equity compensation field. (National Center for Employee Ownership)

[Guidance Overview] Option Vesting on Change in Control: Timely Constructive Termination Notice
Excerpt:"The federal Court of Appeals for the Ninth Circuit recently held that an executive was not required to give notice of constructive termination until the executive had sufficient detail about a promised position to determine whether that position would involve a substantial reduction in responsibilities."(Utz, Miller&Eickman, LLC)

[Guidance Overview] House Passes Financial System Regulatory Reform Package
Excerpt:"Executive compensation provisions include: 1) shareholder votes on executive compensation, or'say on pay'; 2) shareholder votes on executives''golden parachutes'; 3) requirements for public companies to disclose in their proxies the relationship between executive compensation actually paid and the financial performance of the company; 4) requirements for companies to adopt clawback provisions that would recoup incentive-based compensation, including stock options as awarded compensation, for current and former executive officers when the company is required to restate its financial statements."(Hewitt)

Disappearing Perk: Employee Stock Options
Excerpt:"Last year, a little more than three-quarters of the companies in the S&P 1500, which tracks small- and mid-cap stocks as well as the conventional S&P 500 index, relied upon stock options to pay their CEOs. Compare that to five years prior, when that figure stood at nearly 93%."(CNNMoney.com)

DC Participant Sues BP Over Stock Option Losses
Excerpt:"The suit [filed Thursday by] a participant in the BP Employee Savings Plan, a 401(k) plan, in U.S. District Court in New York. . . . calls the continued offering of the company stock option imprudent."(Pensions&Investments)

[Guidance Overview] The Accounting and Economics of Executive Stock Options: Fair Value vs. Compensation Value (PDF)
3 pages. Excerpt:"This article addresses another frequent practice thatcontributes to common misperceptions of ESOs: interpreting the Fair Value reported for accounting purposes as the compensation value executives derive from ESOs."(Buck Consultants)

The Accounting and Economics of Executive Stock Options: How Risky are They? (PDF)
4 pages. Excerpt:"We use two common approaches to analyze the risk and rewards of ESOs to show that ESOs can be perceived as riskier for executives than restricted stock units (RSUs)."(Buck Consultants)

[Opinion] Deconstructing Stock Options
Excerpt:"In'The Non-Option,'David Walker expertly dissects one of the puzzles of employee stock option compensation: why stock options are always granted at the then-current market price for the stock, resulting in'at-the-money'options. If parties could tailor their compensation packages to individual needs and desires, one would expect that at least some firms would agree to give their employees stock options that had an exercise price lower than market price (known as'in-the money'options)."(Jotwell)

Updated Issue Brief on the State of Employee Ownership
The NCEO has posted excerpts from its updated issue brief on the state of employee ownership in the U.S. 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)

Updated Issue Brief on the State of Broad-Based Equity Plans
The NCEO has posted excerpts from its newly updated issue brief on the state of broad-based equity plans. It provides an overview of the prevalence of various kinds of broad-based equity plans (stock options, ESPPs, etc.), who is eligible for them, and what impact they have on corporate performance. (National Center for Employee Ownership)

[Guidance Overview] Former Brocade CEO Found Guilty in Options Backdating Suit Retrial
Excerpt:"A federal jury on Friday convicted former Brocade CEO Gregory Reyes on nine out of 10 felony counts relating to the backdating of stock options."(PLANSPONSOR.com)

[Guidance Overview] Ninth Circuit Reverses Course in New Xilinx Opinion, Grants Significant Victory to Taxpayer
Excerpt:"A three-judge panel of the Ninth Circuit Court of Appeals by a 2-1 vote has affirmed the opinion of the Tax Court in Xilinx, Inc. v. Commissioner that employee-stock-option (ESO) expenses should not be taken into account in the context of cost-sharing arrangements. The decision, which effectively reverses a prior withdrawn opinion by the same three-judge panel, stands as a reaffirmation of the arm's-length standard and another example of transfer-pricing litigation being decided on the basis of evidence of actual arm's-length dealings rather than economic theories."(Miller&Chevalier Chartered)

Stock Options: Project Delay Results in Vesting, to Company's Chagrin
Excerpt:"It's hard to predict the future. Which makes it especially hard to describe the future in a legal document. One company's inability to anticipate the degree to which a project might be scaled back has apparently allowed an executive to vest in more options than the company intended. This was the result in Lewitton v. ITA Software, Inc., 585 F.3d 377 (7th Cir. 2009)."(Utz, Miller&Eickman, LLC)

ESPP and Other Broad-Based Equity Plan List
Through a painstaking process of checking company Web sites and corporate filings, the NCEO has compiled a list of the largest 1500 U.S. companies, as well as corporate NASPP members, that have broad-based equity plans. Of the 1,821 companies that we researched, we could confirm that 131 offer options to most or all employees, 22 offer other kinds of broad-based equity (of these, six offer options as well), and 498 have employee stock purchase plans (ESPPs). (National Center for Employee Ownership (NCEO))

Employee Ownership Update for March 1, 2010
NCEO Executive Director Corey Rosen discusses the following: The UK's Conservative Party is proposing that employees in any public service organization be able to reorganize as an employee-owned company. The NCEO is preparing data on options, ESPPs, etc., in large public companies. ABC News ran a moving story on a new ESOP at Bob's Red Mill. The FED is sponsoring an essay contest on employee ownership. Dan Janich and Elizabeth Dodge have been appointed to the NCEO board. (National Center for Employee Ownership)

New edition of Accounting for Equity Compensation
Accounting for equity compensation is one of the most challenging and complex areas of stock plan administration. Written in plain English for non-accountants by leading expert Barbara Baksa, this book is a survival guide for understanding the impact of stock compensation (such as stock options, ESPPs, restricted stock, and SARs) on corporate financial statements. (National Center for Employee Ownership)

GPS (Guidance, Procedures, Systems): Global Stock Plans book now available
The NCEO has now made available the GPS (Guidance, Procedures, Systems): Global Stock Plans book from the Certified Equity Professional Institute of Santa Clara University. The publication discusses issues and considerations, including grant processes, transactions, and tax and payroll issues, for public companies that grant equity compensation in non-U.S. locations. (National Center for Employee Ownership)

[Guidance Overview] New Rules for ESPPs and Reporting ISO and ESPP Share Transactions
Excerpt:"In response to comments, the final regulations include an exception to the reporting and return requirements for certain nonresident aliens. Neither an information report nor a return is required for employees for whom the employer is not required to file a Form W-2 for certain specified periods."(McGuireWoods LLP)

New edition of Selected Issues in Equity Compensation
The NCEO presents excerpts from the newly released 7th edition of Selected Issues in Equity Compensation, an in-depth discussion of some of the main topics related to stock options, employee stock purchase plans, and other equity compensation plans. (National Center for Employee Ownership (NCEO))

[Guidance Overview] Annual Information Statements and Returns for Incentive Stock Options and Employee Stock Purchase Plans and Other Reporting Requirements
Excerpt:"These statements must include specific information, which is included in our sample ISO statement and our sample ESPP statement. Information statements may either be mailed to the recipient's last known address or, if the recipient has given his or her consent to receive the statement electronically, provided in electronic format."(Orrick, Herrington&Sutcliffe LLP)

Employee Ownership Update for January 15, 2010
Corey Rosen discusses the following: Promoters are offering to install ERSOPs (employee retirement stock ownership plans) at a low cost, but you should get a second opinion. A bill would exclude from gross income compensation received by employees in the form of employer stock held for at least 10 years. Some object to recent stock option repricings. The change in basis step-up rules for 2010 has implications for the estates of those who sold to an ESOP and elected the Section 1042 tax deferral. (National Center for Employee Ownership)

[Guidance Overview] Accounting for Stock Compensation Under FASB ASC Topic 718 (PDF)
13 pages. Excerpt:"Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, Stock Compensation (formerly, FASB Statement 123R), requires generally that all equity awards granted to employees be accounted for at'fair value.'This fair value is measured at grant for stock-settled awards, and at subsequent exercise or settlement for cash-settled awards."(Frederic W. Cook&Co., Inc.)

Dealing With Underwater Stock Options: Some New Twists on a Timeless Quandary (PDF)
3 pages. Excerpt:"Many of the issues companies face with regard to underwater options are timeless. Most companies feel they must take action to: restore the options'ability to provide a meaningful performance and retention incentive to holders who view out-of-the-money options quite negatively; promote fairness between holders of underwater options and new hires who receive at-the-money options with far lower exercise prices; limit the negative effect of underwater options when there are low levels of share reserves available under shareholder-approved plans."(Towers Watson)

[Guidance Overview] February 1, 2010 Deadline and Final Regulations on Return and Information Statement Requirements for ISOs and ESPPs
Excerpt:"This Update summarizes key highlights from the existing and new final regulations and offers practical guidance."(Perkins Coie LLP)

Former Comverse Executives to Pay $62M to Settle Suits on Alleged Stock Option Backdating
Excerpt:"Former executives of Comverse Technology Inc. will pay $62 million to partially fund a class action settlement stemming from alleged stock option backdating. Most of the money will come from the voicemail software maker's former CEO, who fled the country to avoid prosecution in the backdating scheme."(The Washington Post; free registration required)

[Guidance Overview] Reporting of Stock and Option Awards in the Summary Compensation and Other Tables under SEC's New Executive Compensation Disclosure and Governance Rules
Excerpt:"The SEC considered several specific changes in connection with the reporting of stock and option awards in the Summary Compensation Table ('SCT'), Director Compensation Table ('DCT') and the Grants of Plan-Based Awards Table."(Michael Melbinger via Winston&Strawn LLP)

[Guidance Overview] IRS Final Regulations Governing Options Granted Under Employee Stock Purchase Plans (PDF)
Excerpt:"The final regulations are effective as of November 17, 2009, and will apply to any options granted under an ESPP on or after January 1, 2010. Employers may apply these rules retroactively to options grantedprior to January 1, 2010."(Morgan, Lewis&Bockius LLP)

Key Studies on Employee Ownership and Corporate Performance
In this article, the NCEO presents a concise table-based summary of the main research on the relationship between employee ownership and corporate performance. (National Center for Employee Ownership)

[Guidance Overview] Comverse Technology Agrees to Settlement of Stock Options Backdating Charges
Excerpt:"Comverse Technology has agreed to pay $225 million to settle a securities class action over backdated stock options. According to The American Lawyer, the settlement agreement still has to be approved in federal court. Under the agreement, Comverse will pay $165 million by selling auction rate securities back to UBS, or if that doesn't work, the company will pay with a mixture of cash and stock."(PLANSPONSOR.com)

2009 Equity Compensation Update now available
The NCEO's 2009 Equity Compensation Update, covering recent developments in the equity compensation field, is now available. It provides 15 hours of continuing education credit for CEP designees. (National Center for Employee Ownership (NCEO))

[Guidance Overview] Broadcom Options Backdating Defendants Cleared by Federal Judge
Excerpt:"A federal judge has cleared two former executives of an Irvine, California-based telecommunications firm of charges related to backdating stock options. The Wall Street Journal reported that U.S. District Judge Cormac Carney threw out criminal fraud charges against Henry Nicholas III, the co-founder of Broadcom, and William Ruehle, the company's former chief financial officer."(PLANSPONSOR.com)

A Brief Overview of Employee Ownership in the U.S.
NCEO Executive Director Corey Rosen discusses the main approaches to employee ownership in the U.S. (ESOPs, stock options, etc.); employee ownership and corporate performance; and current estimates of the extent of broad-based employee ownership in the U.S. (National Center for Employee Ownership)

[Guidance Overview] IRS Issues Final Regulations on ESPPs and Reporting Requirements for Statutory Stock Options (PDF)
Excerpt:"In view of the updated ESPP regulations, employers should review their existing plans to ensure that they will continue to qualify as ESPPs, and are designed to maximize opportunities for participation and tax benefits for all eligible employees. To preserve their favorable tax treatment for employees, some plans may have to be amended prior to January 1, 2010. Although employers have another year to prepare for the new reporting requirements, the release of the final regulations suggests that there may notbe any further extensions."(Buck Consultants)

Employee Ownership Update for December 1, 2009
NCEO Executive Director Corey Rosen discusses a new study of 200 large corporations showing that companies retain a strong commitment to stock options and other forms of equity compensation at all levels; a lack of resolution on the IRS's stance toward ESOP account segregation and rebalancing; 11 Beyster, Kelso, and Smiley fellowships offered by Rutgers to PhD candidates; and nominations for the NCEO's board elections. (National Center for Employee Ownership)

[Guidance Overview] Revisions to Incentive Plans of Public Companies May be Required by December 31, 2009, to Avoid Section 162(m) Deduction Limitations
Excerpt:"As a result of the position taken by the Internal Revenue Service (IRS) in Rev. Rul. 2008-13, public companies may need to amend their employment agreements, as well as their equity and other incentive plans, by December 31, 2009, to preserve the deductibility of performance-based awards for 2010 under Section 162(m) of the Internal Revenue Code."(Greenberg Traurig)

FAS 123(R) Option Assumptions: The 2008 Results
Excerpt:"Watson Wyatt recently completed its third annual analysis of stock option valuation assumptions and results under Statement of Financial Accounting Standards (SFAS) 123(R).1 From 2007 to 2008, the percentage of companies disclosing option fair values decreased from 73 percent to 72 percent. The median percentage increase in stock compensation expense from 2007 to 2008 was 2.4 percent."(Watson Wyatt Worldwide)

[Guidance Overview] New IRS Final Rules on Employee Stock Plans: New Reporting Requirements for ESPPs and ISOs to Begin in 2010
Excerpt:"The new reporting rules apply to an ESPP only if the purchase price is set at a discount from the fair market value of the stock. In addition, the reporting requirement does not apply to the year in which the stock is transferred from the company to the employee, but when the stock is transferred from the employee to a third party. In recognition of the fact that most companies no longer issue certificates to employees who purchase stock through an ESPP, the final regulations provide that the stock will be considered to have been transferred by the employee when the stock is deposited into a brokerage account for the employee's benefit. However, if the company does still issue certificates -- either automatically or upon the employee's request -- the company will need to have its transfer agent monitor when the employee transfers the stock."(Seyfarth Shaw LLP)

[Opinion] It's Time to Kill Stock Options
Excerpt:"With Silicon Valley clawing its way back from the great recession, I want to make a radical proposal. It's time to kill the stock option. I know such a notion seems unthinkable. Even mild criticism of them in these parts gets labeled as heresy. The stock option is so deeply embedded in the culture and mythology of Silicon Valley that it seems hard to imagine how the world's leading hub of innovation could exist, much less thrive, without it. But hear me out. The evidence is clear to me that stock options have outlived their purpose, and have actually become a liability to the valley's innovation economy. At a moment when the economy stands at a crossroads, the time feels right to fundamentally rethink the incentives the valley offers to employees for their risk-taking and inventiveness."(San Jose Mercury News)

[Guidance Overview] Section 409A Reporting Required This Year for Plan Document Violations, Including Outstanding Discounted Options
Excerpt:"We expect there to continue to be very little code Z reporting in 2009 due, in part, to the IRS's correction program in Notice 2008-113 for operational violations. However, one type of Code section 409A income that will need to be reported this year is the section 409A income from any outstanding discounted options. While most discounted options were corrected or exercised during transition, there may still be some outstanding. The spread on any such options outstanding as of the end of 2009 will need to be reported as code Z income. This will require a careful review of Notice 2008-113, as well as the more detailed guidance in the proposed regulations, and consideration of whether and how the employer will obtain the associated withholding taxes in connection with the Code section 409A income."(Miller&Chevalier Chartered)

[Official Guidance] Text of Final IRS Section 6039 Regs Affecting Information Reporting Requirements for Statutory Stock Options
6 pages. Excerpt:"These final regulations will apply as of January 1, 2007. However, taxpayers are not required to comply with the return requirements of Sec. 1.6039-1(a) and (b) of these final regulations for stock transfers that occur during the 2007, 2008 and 2009 calendar years. Notwithstanding the waiver of the return requirements for 2007, 2008 and 2009 stock transfers, taxpayers must furnish information statements to employees for such stock transfers."(Internal Revenue Service)

[Official Guidance] Text of IRS Final Regs on Options Under Section 423 Employee Stock Purchase Plans (PDF)
14 pages. Excerpt:"Commenters requested clarification of whether options with terms that are inconsistent with the terms of the plan will be eligible for the special tax treatment of section 421. As provided in . . . the proposed regulations, . . . these final regulations [provide] that, if the terms of an option are inconsistent with the terms of the employee stock purchase plan or an offering under the plan, then the option will not be treated as granted under an employee stock purchase plan. However, an option may still qualify for the special tax treatment of section 421, even if the terms of the plan are inconsistent with any of the requirements . . . of these final regulations, if the option is granted under an offering with terms that comply with the requirements of Sec. 1.423-2(a)(3)."(Internal Revenue Service)

[Guidance Overview] IRS's Final Regulations on Return and Information Statement Requirements for Stock Transfers
Excerpt:"The Internal Revenue Service (IRS) has issued final regulations relating to the return and information statement requirements under section 6039 of the Internal Revenue Code (Code). These regulations reflect changes to section 6039 made by section 403 of the Tax Relief and Health Care Act of 2006. These regulations affect corporations that issue statutory stock options and provide guidance to assist corporations in complying with the return and information statement requirements under section 6039."(International Foundation of Employee Benefit Plans)

To Retain Its Bankers, Citigroup Offers Stock Option Plan
Excerpt:"Hoping to encourage bankers and managers to stay, Citigroup began dispensing several million stock options this week to more than a quarter of its workers in a way that could result in a sizable gain for them. . . . As an extra incentive to stay and help with the turnaround, Citigroup said it would grant one stock option at just above the current market price for each unvested share employees had accumulated. If the share price rebounds, as it has at Goldman Sachs and JPMorgan Chase, Citigroup employees could see a sharp increase in their 2009 compensation."(The New York Times; free registration required)

[Guidance Overview] Federal Reserve Board Enters Executive Pay Debate with Proposal for Oversight of Incentive Compensation
Excerpt:"The proposal does not create specific compensation guidelines or impose specific limits on executive pay. Rather, the Fed has advanced a series of principles for supervisory review of incentive pay programs. Under the proposal, incentive compensation arrangements must (i) provide incentives that do not encourage excessive risk-taking beyond the organization's ability to effectively identify and manage the risk, (ii) be compatible with effective controls and risk management and (iii) be support by strong corporate governance, including active and effective board oversight."(Kilpatrick Stockton)

Employee Ownership Update for November 2, 2009
NCEO Executive Director Corey Rosen discusses the following: defined contribution plan limits will remain unchanged in 2010; House Concurrent Resolution 204, expressing continued support for employee stock ownership plans (ESOPs), has been introduced; NCEO board nominations are now open; and SARs may be better than stock options in closely held companies. (National Center for Employee Ownership)

NCEO provides new data on employee ownership in S&P 900
The NCEO has completed an analysis of employee ownership in the S&P 900 index of large- and mid-cap publicly traded companies. Based on Form 5500 filings, we found 196 of the companies in the index had ESOPs or KSOPs (401(k)-ESOP combinations). Of these, 36 owned 5% or more of the company's outstanding shares. 19 companies had 401(k) plans that owned 5% or more of company shares out of 199 companies that had some company stock in their retirement plans. The data is available for purchase. (National Center for Employee Ownership)

Employee Ownership Update for October 1, 2009
NCEO Executive Director Corey Rosen discusses: 5 of the 15 winners of the Wall Street Journal and Winning Workplaces Best Small Workplaces Award are employee ownership companies; the Department of Labor's Phyllis Borzi says ESOPs are a priority; there is a new directory of professionals to help employees deal with stock option and other equity grants; a new definition of efficient markets; the NCEO has started a search for a new executive director; and personal notes on his change of roles. (National Center for Employee Ownership)

Executive Pay Overshadows Pension Funding
Excerpt:"More details are out on which companies spent more in 2008 on executive stock grants than on employee pensions, and other important expenses. The study in The Analyst's Accounting Observer . . . has now been released to the press, and with it much more detail on the companies which prioritize options and restricted stock grants over other promises. The idea behind the report, its author writes, is partly to shed light on what is being put into stock compensation versus other obligations (like pensions) and opportunities."(BusinessWeek)

IRS Memo Considers Backdated Stock Options Under 162(m)
Excerpt:"A recent IRS internal memo on backdated and misdated nonqualified stock options discusses how to determine the grant date when assessing whether options were discounted under Section 162(m). Besides analyzing the use of related accounting and tax standards to define the grant date, the memo concludes that discounted options can never qualify for exemption from 162(m)'s $1 million cap on deductible compensation. This disqualification applies even if the employee reimburses the discount or the option exercise price is reset to eliminate the discount. Some practitioners are criticizing the memo."(Mercer LLC)

Court Approval Ends Last Backdating Suit Against UnitedHealth
Excerpt:"Among other charges, the suit settled by the last order had included allegations the backdating practices left the company's stock artificially inflated and that the retirement plan lost significant assets when the UnitedHealth share price declined."(PLANSPONSOR)

Stock Option Backdating Likely More Widespread, According to Study
Excerpt:"The majority of companies that improperly backdated stock options never were caught by regulators or confessed to the practice, according to a new academic study. Researchers at the University of Houston's C.T. Bauer College of Business used a sophisticated statistical test to sift through more than 4,000 publicly traded companies for those with patterns of granting options at abnormally favorable times, often at low points for their share prices. The study identified 141 companies with such advantageous options-granting practices that the researchers concluded they were highly likely to have been involved in backdating. Ninety-two of those companies never were publicly linked to investigations or announced earnings restatements related to backdating."(The Wall Street Journal)

IRS Internal Memo on 162(m) and Backdated Options
Excerpt:"In Internal Memo, AM 2009-006, the IRS concluded that a stock option whose exercise price was less than the fair market value of the stock at the date of grant ('discounted stock option') does not, and could not be modified to, qualify as performance-based compensation under Code Sec. 162(m)(4)(C), where the executive reimburses the employer for the excess of the fair market value on the date of grant over the exercise price (or the parties otherwise agree to an increased exercise price)."(Michael Melbinger via Winston&Strawn LLP)

Judge Approves $925M UnitedHealth Backdating Options Suit Settlement
Excerpt:"UnitedHealth Group Inc. and its former chief executive William McGuire will pay $925 million to resolve an investor class-action lawsuit accusing the health insurer of improperly backdating stock options, Reuters reports. . . . Given that there was'significant risk'to the plaintiffs recovering nothing had the case been fully tried,'the $925.5 million settlement amount is substantial,'U.S. District Court Judge James Rosenbaum wrote in his 26-page order dated August 10, according to Reuters."(PLANSPONSOR.com; free registration required)

[Guidance Overview] Employees Using Vested Stock Options as Collateral for Writing Exchange-Listed Calls
Excerpt:"This will follow-up on my July 1 blog titled'Stock Options Opened for'Call Writing''issue. On June 17, 2009, the Securities and Exchange Commission (SEC) approved a rule that would permit a public company to allow its employees to use vested stock options as collateral for writing exchange-listed calls. (SEC Release No. 34-60127) This blog will discuss: 1. Why did the SEC eliminate the margin requirements when an employee utilizes his or her employee stock option as collateral for a call option? 2. Why would an employee sell a call option when the employee owns a vested employee stock option? 3. Whether a company should allow its employees to sell a call option in the company's stock."(Michael Melbinger via Winston&Strawn LLP)

Some Employers Allowing Employees to Exchange Their Underwater Options for Cash, Restricted Stock or Repriced Options
Excerpt:"Seventy-one companies have executed stock options exchange programs so far this year, up from 50 that offered such programs in 2008, according to Underwaterexchange.com, a Web site created by San Jose, California-based Radford, an Aon Consulting company. On top of that, an additional 70 companies have made public their intentions to conduct such programs this year, says Brett Harsen, a vice president at Radford.'We are tracking to triple the number of exchanges in 2009 than we saw in 2008,'Harsen says."(Workforce Management; free registration required)

[Guidance Overview] Focus on Employee Benefits Newsletter, August 5, 2009 (PDF)
6 pages. This edition covers the following issues: Play or Pay Proposals in Health Reform Legislation, Maintaining Plan Administrative Documents, Tax Treatment of Employment Settlements, and Discounted Options and Section 162(m). (Miller&Chevalier Chartered)

Employee Ownership Update for August 4, 2009
NCEO Executive Director Corey Rosen discusses ESOP valuations in the downturn; how 11 of the 35 Winning Workplaces Awards finalists are NCEO members; statements in a new papal encyclical that could relate to employee ownership; whether it is taxable if employees monetize stock options with call options; and a new ESPP survey showing few changes to plans. (National Center for Employee Ownership)