The September 30, 2009 Employee Ownership Update is online and discusses the following:

Two members of The ESOP Association have been named among the Top Small Workplaces. Congratulations to Heavy Construction Systems Specialists, Inc. (HCSS) of Houston, TX and Skyline Construction, Inc. of San Francisco, CA.

Last month we discussed six items to consider when selecting Directors' and Officers' (D&O) Insurance. Big backdating settlement hits D&O insurers discusses Side A excess coverage and how D&O Insurers Funded the $118 Million Partial Settlement of the Broadcom Options Backdating Derivative Suit:

The Wall Street Journal announced the Top Small Workplaces 2009:

Chapter members lined up and visited with the offices of 11 of their 15 active members of Congress (At the time of these visits, MN was still trying to decide who their second Senator should be.) for a success rate of 73%. More impressive is the fact that during those 11 visits, 9 of them included the actual member of Congress. Members visited included the following: Senator Tim Johnson (D-SD); Senator John Thune (R-SD); Congresswoman Stephanie Herseth Sandlin (D-SD-at large); Senator Byron Dorgan (D-ND); Senator Kent Conrad (D-ND); Congressman Earl Pomeroy (D-ND-at large); Congressman John Kline (R-MN-2nd); Congressman Erik Paulsen (R-MN-3rd); Congresswoman Betty McCollum (D-MN-4th); Congressman Keith Ellison (D-MN-5th); Congresswoman Michele Bachmann (R-MN-6th).

I will be attending and presenting at the Midwest Conference of ESOP Champions at the Ramada Mall of America in Bloomington, MN this Thursday and Friday. The sold out event is a joint effort by the Illinois, Iowa/Nebraska, Minnesota/Dakotas, and Wisconsin state chapters of the ESOP Association and has registered over 300 attendees. I will be moderating a panel on Friday at 10:30:

In May we discussed how the United Auto Workers union would eventually Get a Stake in Chrysler and General Motors and compared the differences between VEBA Ownership and Employee Ownership. The DOL has announced a proposed Individual Exemption Involving General Motors that would allow a General Motors health plan for retirees to acquire company securities. Normally a large transfer of employer securities to a non-ESOP retirement plans would violate ERISA. This exemption allows GM and its health plans to reimburse each other and for GM to recover mistaken deposits. As part of the exemption, an independent fiduciary will be appointed to represent the plan to ensure that all actions are taken in the interests of the plan participants and beneficiaries. An independent third party administrator and an auditor will also be involved in the process.

The September 15, 2009 Employee Ownership Update is online and discusses the following:

Leadership Tip: Create Employee Group to Foster Greater Communication discusses a way to solicit feedback and ideas from your employees, creating an employee committee to informally improve communication:

Employers Struggle With Communicating Benefits Cuts discusses how to communicate a cuts in benefits. Your communication should be transparent, straightforward, and empathetic and should be delivered by key members of the leadership team. You should make sure to take time to prepare a plan on how to communicate the news, in phases when possible. The article shares an example of a company that planned for months, disclosed the changes in phases, and used newsletters and town hall-style meetings to highlight the changes:

The mandatory amendment deadline is generally the later of (1) the last day of the plan year of the plan amendment effective date and (2) the extended deadline of the employer's tax return for the fiscal year of the plan amendment effective date.

We have recently provided some ESOP legislative updates when discussing the Impact of Health Care Debate on Upcoming ESOP Legislation and the Coming Push to Eliminate "Loopholes", The ESOP Promotion and Improvement Act of 2009 (S. 1612), and CBO Option 22: End the Preferential Treatment of Dividends Paid on Stock Held in Employee Stock Ownership Plans. Here are some additional articles on the latter two items:

Section 105 – Treatment of Differential Military Pay as Wages of the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act) discusses the treatment of differential military pay as wages. It defines a differential wage payment as a payment made by an employer to an individual performing military service that represents the pay they would have received if they were working for the employer. Effective after December 31, 2008, differential pay is treated as compensation, subject to withholding, reported on IRS Form W-2, and treated as compensation for qualified plan purposes (eligible for 401(k), matching, and other contributions). Differential Pay as Plan Compensation discusses the qualified plan implications:

All ESOPs have investments. While we know that by definition an ESOP is "designed to invest primarily in qualifying employer securities", that doesn't mean that you are off the hook for managing the investments of the plan. This is especially true if your plan has a cash balance. Do you have an investment committee? If so, how does your committee function? If not, is your trustee committee satisfying their fiduciary responsibility to manage the investments of the plan?

Questions and Proposed Answers for the Department of Labor Staff for the 2009 Joint Committee of Employee Benefits Technical Session contains questions and answers based on informal discussions between the American Bar Association's Joint Committee on Employee Benefits (JCEB) and Department of Labor (DoL) staff:

The August 31, 2009 Employee Ownership Update is online and discusses the following: