Replace workplace wages with what global banking 1% will hold as a carrot while beating WE THE PEOPLE back to DARK AGES.
'Therefore Apple’s $10 billion dollar pledge is not only a commitment to shareholders that the dilution will be eliminated. It’s also a signal to employees: for at least three years, Apple will continue to offer shares as compensation and will do so in a ratio of 1:4 of wages'.
Apr 11, 2013 @ 12:02 AM 32,635 2 Free Issues of Forbes
Employee Stock Purchase Plans Are Making A Comeback
Ashlea Ebeling , Forbes Staff I write about how to build, manage and enjoy your family's wealth.
1892 Stock Certificate (Photo credit: Meredith Harris)
Does your employer offer an ESPP? If so you should be on the lookout for changes that could make it a better deal as a place to stash savings.
As the economy has recovered and the labor market has become more competitive, companies are enhancing their employee stock purchase plans in order to retain valued employees, attract new talent and improve morale, according to Fidelity Investments, which provides stock plan administration services to 250 employers, representing $125 billion in grant value.
Specifically, Fidelity found in a recent survey, employers are either introducing or increasing the employee discount on company stock—up to 15%. And they are adding a “look back” provision that lets employees buy shares at a lower purchase price—the lower of the price at the beginning or the end of an offering period.
ESPPs are broad-based plans offered to virtually all employees, not a perk just for the top brass. And they’re easy to fund—you just earmark payroll deductions to be used to buy shares. Yet to a certain extent employees don’t understand how they work, and in many companies they’re underutilized, says Emily Cervino, a vice president in Fidelity’s stock plan services group.
One Fidelity client, Hologic, a maker of women’s digital imaging equipment, boosted the terms of its employee stock purchase plan last year, embarked on an awareness and education campaign, and participation more than tripled. Now nearly half of its 4,000-strong U.S. workforce participates.
Hologic, like many employers, had moved to a safe harbor ESPP with reduced benefits after accounting rule changes in 2006 required companies to recognize a compensation expense for ESPPs. With a 5% discount and no look back provision, the Hologic ESPP fell out of favor with employees. The new Hologic ESPP boasts a 15% discount rate and a 6-month offering period with a look back provision. Employees can put in 1% to 10% of their salary (after tax) each year to buy up to 1,000 shares of company stock (or up to the $25,000 Internal Revenue Service limit, whichever is greater). During the first offering period under the new program, the stock opened at $18 and closed at $20, earning employees a double discount (the 15% plus the look back discount).
David Peterson, senior director of total rewards for Hologic, says that two factors drove the ESPP improvements: First and foremost, our being serious about wanting to attract and retain employees, and secondly, it’s the kind of old fashioned notion of alignment of employees as shareholders, the spirit of ‘We’re all in this together.’”
Companies design the plans and pick and choose among features, so you have to invest a little time in understanding how your plan works. The key things are: what’s the discount, is there a look back, and what’s the purchase period. “Once you have those three key pieces of information, it becomes very evident whether it makes sense to participate,” says Cervino.
You also have to consider the tax ramifications of your plan. Nine out of 10 plans are “qualified”—that means there is no tax hit until you sell your shares. But if your plan is “nonqualified,” your employer will withhold taxes at the time of purchase. (An advantage of a nonqualified plan is that it allows the employer to offer a discount greater than 15%.)
One reason Cervino is a fan of ESPPs is that unlike with a 401(k), there’s liquidity. “While employees may intend to use it for long term savings, they can use it for any need—buying a car, remodeling a home, college tuition payments,” she says. She speaks from personal experience. She and her husband used the savings in an ESPP she built up at her former employer to put a second story on their first house, and now they’re tapping his plan to do a rebuild of a fixer-upper in San Jose, Calif. “I always thought I should have a plaque at the top of the stairs, ‘Courtesy of my ESPP,’” she says.
'Trading salary for stock options
The person asking the question describes the employer he or she's considering as a "well-known privately held startup rumored to go public in the next year/year-and-a-half." There are two red flags in that assessment: startup and rumored'.
Obama and Clinton neo-liberals created the global investment firm ANGELS and VENTURE CAPITALISTS as the replacement of our US SMALL BUSINESS LOAN AGENCY. These guys now control what kind of economy and businesses will take root since they are the patronage funders and of course they are all SMART CITY TECHNOLOGY startups. These are the only economies we have in US cities deemed Foreign Economic Zones and as we shout all these ENTREPRENEUR technology small business start ups are flash in the pan businesses. These global investment firms are of course requiring now that all new start ups tie employees to STOCK OPTIONS -----knowing these startups are going to disappear or be folded into global corporations.
THESE EMPLOYEES THINKING THIS WILL LEAD TO A JOB NEED TO STOP TAKING CARROTS AND FIGHT FOR REAL LOCAL US CITY SMALL BUSINESS ECONOMIES, SMALL BUSINESS MANUFACTURING BY STOPPING MOVING FORWARD.
"As a former partner at Arthur Andersen, it was devastating to see nearly 100,000 professionals—people who started each day with Clients First as their top priority—lose their jobs'.
We can't wait to see this TAX CORPORATION and the next TAX CHEAT SCHEMES.
We want to return to ACCOUNTING PRINCIPLES corrupted by ARTHUR ANDERSON---we see this corporation was created at the time US FED was installed just before the massive ROARING 20s economic collapse from FRAUD. So, as an accounting auditing corporation as again in 2002 during today's ROBBER BARON few decades of CLINTON/BUSH/OBAMA we see the same activity.
'Arthur Andersen, which traces its history back to 1913, shredded Enron audit documents amid an investigation into covering up billions in losses at the energy firm. The accountant was subsequently found guilty of obstructing justice, effectively putting an end to all its audit activities in 2002'.
With all global corporations tied to hiding, lying, cheating, and stealing as in AIG/Bank of America------here comes ARTHUR ANDERSON back again. Whose US Justice Department sent Arthur Anderson into bankruptcy as ENRON had served global banking 1% fraud and corruption as long as it could?
THE BUSH ADMINISTRATION WHICH WAS TIED TO THIS ENRON ENERGY CORPORATION.
Arthur Anderson was allowed to become that accounting monopoly tied to auditing all big corporations under the guise of holding these corporations accountable. When this global accounting firm collapsed its monopoly wiped out all accounting audit structures in US......when? During BUSH era. Seems Bush and global banking 1% pols were finished pretending to hold corporations accountable with auditing just as today in our US city public agencies.
Arthur Andersen returns 12 years after Enron scandal
Former partners at accountant buy rights to name more than a decade after one of world's biggest corporate scandals
Enron collapsed in 2001 with Arthur Andersen doing so a year later Photo: AP
By James Titcomb
11:22AM BST 02 Sep 2014
One of the financial world's most infamous names is making a comeback, more than a decade after a major accounting scandal saw it vanish.
Former partners at Arthur Andersen, the accounting firm that once counted itself as one of the world's "big five" until its criminal handling of the energy company Enron led to its downfall, have bought the rights to the Andersen name.
They will rename their San Francisco consultancy WTAS as "Andersen Tax", resurrecting a century-old title that was one of the most respected in US financial history.
Arthur Andersen, which traces its history back to 1913, shredded Enron audit documents amid an investigation into covering up billions in losses at the energy firm. The accountant was subsequently found guilty of obstructing justice, effectively putting an end to all its audit activities in 2002.
It continued as a holding company with few operations while the Enron saga ranks as one of the biggest corporate scandals of all time, and led to substantial losses for shareholders and many thousands of job losses.
Arthur Andersen and 'culture of cover-up' 08 May 2002
The Enron blood-letting begins at Arthur Andersen 16 Jan 2002
Andersen guilty of shredding 16 Jun 2002
Enron fiasco could ruin Andersen 17 Jan 2002
WTAS, which was set up in the wake of Arthur Andersen's demise by more than 20 partners, is now one of America's biggest tax firms, and does not do any audit work.
Mark Vorsatz, its chief executive, attempted to distance the name from the Enron scandal.
"Many individuals and organisations were deeply affected by what happened at Enron. But Arthur Andersen, at its best, was a firm that was founded and managed on the basis of quality and objectivity by world-class people with world-class training," he said.
"As a former partner at Arthur Andersen, it was devastating to see nearly 100,000 professionals—people who started each day with Clients First as their top priority—lose their jobs.
"For Andersen Tax, independence and objectivity are critical. To be clear, we are not an audit firm and have no intention of providing audit services."
'We cannot say that BBSO plans are or are not worth the cost, and we do not suggest that retention is the only justification for employee stock options'.
Below we see an article written by far-right wing LIBERTARIAN global banking players------pretending all this EMPLOYEE STOCK OPTION is about EMPLOYEE RETENTION when it has a goal of loading corporate debt onto employees making them LOSERS.
We have discussed at length how SILICON VALLEY'S hiring of global labor pool 99% under the guise of BEST OF THE BEST IN THE WORLD is simply staging the filling of US FOREIGN ECONOMIC ZONES with global labor pool no better qualified then our US 99% of citizens black, white, and brown citizens. These global technology corporations have no intention of paying US quality wages and these attacks on wages and wealth with stealth FRAUDULENT FINANCIAL INSTRUMENTS------is just that. We do not want a SAN FRAN pretending to be SANCTUARY CITY IMMIGRANT FRIENDLY when it is GLOBAL BANKING 1% OLD WORLD MERCHANT OF VENICE enslaving -----to fleece our 99% immigrants any more then our own US 99% of citizens. These policies are equal opportunity FLEECERS.
Those writing these articles under the pretense of legitimate corporate policy actions are 5% PLAYERS------not REAL left social progressive academics.
Our 99% of WE THE PEOPLE will READ AND WEEP if these are the places we real for finance information. A 99% finance outlet would be shouting as we are
IT'S A TRAP!
The Option to Quit: The Effect of Employee Stock Options on Turnover
Posted by Serdar Aldatmaz (George Mason University), Paige Ouimet (University of North Carolina at Chapel Hill), and Edward Dickersin Van Wesep (University of Colorado at Boulder), on
Monday, January 22, 2018
Serdar Aldatmaz is Assistant Professor of Finance at the George Mason University School of Business; Paige Ouimet is Associate Professor of Finance at The University of North Carolina at Chapel Hill Kenan-Flagler Business School; and Edward Dickersin Van Wesep is an Associate Professor of Finance at the University of Colorado at Boulder Leeds School of Business. This post is based on their recent paper.
Firms employing highly skilled workers bear substantial direct and indirect costs when those workers quit. Hiring is expensive and departing workers can take institutional knowledge and intellectual property with them. These costs were high enough to induce Google, Apple, and other Silicon Valley firms to illegally collude not to hire each other’s workers, ultimately leading to a class-action lawsuit and a $415 million settlement in 2015. Turnover matters.
Theory suggests that broad-based employee stock option (BBSO) grants are a natural solution to turnover risk. These options typically vest in three years and an employee who departs before her options have vested forfeits their value. This is a clear incentive against quitting. In addition, an employee’s unvested options are worth more when the stock market is strong, which tends to correspond to periods of strong demand for workers. BBSOs therefore provide retention benefits that are stronger when the firm’s value from retaining employees is higher, and when the threat from other firms poaching employees is higher.
While the theory is clear, it is an open question as to what the actual effect of BBSOs on turnover is in practice. Our recently published paper, The Option to Quit: The Effect of Employee Stock Options on Turnover, aims to answer this question. We exploit a large panel of establishment-level data to show that BBSO grants delay turnover. Turnover falls during the vesting period of a BBSO grant, and rises by an approximately equal amount in the year following full vesting. We also find that BBSO plans are associated with a stronger reduction in turnover in up markets, when growth options are high and retaining key employees is likely to be especially valuable.
In the three years following a large BBSO grant (the year of the grant and the subsequent two years), during which the granted options are not fully vested, turnover falls at the granting firm. This does not appear to be merely a correlation: the association with BBSO grants and subsequent turnover is only present if the stock market has performed well since the grant. This suggests a causal interpretation of the correlation, because the value of the unvested BBSOs is small if the market has performed poorly since they were issued, so the effect on turnover should be small as well. Only if the market has performed relatively well since the grant date does the theory suggest that there should be an effect on turnover.
The reduction in turnover is approximately 0.005% of employment per quarter, which aggregates to 2% per year. If a typical firm experiences 20% turnover annually, and if approximately half of workers receive BBSOs, then the implementation of a BBSO plan reduces turnover by 20%, a substantial reduction. This estimate is robust across a wide variety of specifications, suggesting that it is not spurious.
In the fourth year following a large BBSO grant, when the options are probably fully vested, turnover is actually higher at granting firms. We find that, on average, 87% of the reduction in turnover observed in the first three years is reversed in the subsequent year. Furthermore, a number of firms issue multiple large BBSO grants. To the extent that a second large BBSO grant timed years after the first grant reduces future turnover, we are underestimating the reversal. This number suggests that, summing total turnover over the four years following a grant, the total effect is close to zero. This means that BBSOs are delaying turnover, not permanently reducing it. Executives estimating the value of a turnover reduction must account for its temporary nature.
We cannot say that BBSO plans are or are not worth the cost, and we do not suggest that retention is the only justification for employee stock options. They are very expensive and clearly can serve an incentive role, screen for optimistic employees, etc. Nonetheless, the effect on turnover is also important and should be considered a first-order benefit of employee stock options. Also, even though the effect on turnover is temporary, BBSOs could still be beneficial if implemented during a period when retaining existing human capital is particularly valuable, for example, a period of high demand and high anticipated turnover.
Here are those employees at the time of 2008 economic crash where the global corporation this being WELLPOINT suddenly reduced its value causing a collapse of employee stock options at the same time these global health corporations were making large employee CUTS.
One can tell by the numbers of CLASS ACTION LAWSUITS against corporations over stock options that problems have been growing these several years------soon to be a great big problem. Attacks on all our 99% savings accounts and retirements will include these employee stock options especially the new START UP ANGEL-FUNDED TECH BUSINESSES.
'If your company stock options have depleted your 401(k) plan, legal consultation will clarify your position and next step'.
Employees Bite Back in Stock Option Fraud
June 13, 2008, 1:45PM. By Julia Browne
San Diego, CATo lose one quarter of a retirement plan in one day sends shock waves through future plans and security. When WellPoint Inc. announced a sharp drop in its profits on March 10, 2008, and shares plunged 28 percent the following day, Lillian was not able to safeguard her stock option based 401(k) fast enough.
"My money was going into the company stock through a 401(k) plan at the rate of six percent of my income," says Lillian, a five-year employee responsible for retrospective reviews and authorizing health coverage for the largest U.S. health insurer by membership. Back injuries and an unsupportive work environment led to her dismissal from the company. "But although I had left the company four and a half months before, there was no reason to worry about the stocks.
401k PortfolioI had always followed WellPoint stock; I used to check in on the numbers on my account. I'd watch it, especially since I put in a certain amount every month and the company would match. The stock did well.
Then a colleague, who was still working there, told me about this announcement that WellPoint had just made to employees about a drop in the company's profit. That announcement came the day before the stocks dropped. The very next day, I moved my money out of the 401(k) and into an IRA but by then I'd lost 25 percent. Everyone did.
Due to the financial loss, I have less time and finances to start my own business as a psychotherapist, and I've suffered emotionally, mentally and psychologically as a result of the company shift (and from being let go).
I'm 58 year old though and I've learned to roll with the punches," concludes Lillian. "It's the young people with families I feel bad for, those who have bought into the stock options every three months and who were saving up for a vacation - if they lose that, it's devastating."
Few employees or former employees can take their losses in stride. According to the Indiana Business Journal website, four ex-WellPoint Inc. employees are suing the Indiana-based company for allegedly breaching its fiduciary duties by failing to warn its 401(k) participants of its alarmingly poor performance.
Indeed, on March 10 the giant health-insurer stunned Wall Street and its own employees by announcing a cut to its profit outlook, citing high costs, disappointing enrollment and worsening economic conditions. Stock value tumbled, costing stockholders over $115 million. These recent lawsuits were filed between March 15 and May 29 in a federal court in Indianapolis. An attorney representing one of the plaintiffs, a former claims processor and service clerk, alleges that WellPoint was fully aware of the stock's declining value.
Class action status is also being sought on behalf of the almost 49,000 present and former employees who participated in WellPoint's 401(k) plan. Furthermore, they are accused of knowledge that the inflated company stock made for an unwise investment for the ERISA fund. According to the 1974 ERISA law, under which WellPoint is being sued, a company becomes accountable if they are deemed to have knowingly put the employees' stock option investment at risk.
If your company stock options have depleted your 401(k) plan, legal consultation will clarify your position and next step.