The July 1, 2008 Employee Ownership Update is online and discusses the following:
- Florida Agrees to Buy U.S. Sugar; Employees Will Get Windfall
- California Offers Settlement for Taxpayers in Abusive ESOPs
- NASPP Survey Shows ESPPs Somewhat More Conservative
The Update discusses how Florida is Purchasing U.S. Sugar Land and the latest news related to the U.S. Sugar ESOP Issues:
Laid-off hourly employees will get one year's severance pay, and salaried employees will get two years. Employees will receive incentives to stay on during the transition.
The price offered by the state, which amounts to about $350 per share, is a considerable premium over a previous bid of $293 per share. The approximately 3,800 U.S. Sugar ESOP participants (about 1,700 of which are current employees) own about 35% of the company through an ESOP, so they will divide approximately $650 million among them.
The Update also notes that ESOP valuation practices would have required that participants be paid at a non-control price:
They now say the current offer just proves their point, but ESOP valuation practices would have required these former employees to be paid out at a non-control price, whereas the offers all included a premium for control. The circumstances of the sale to the state, which clearly only had an interest if it could take full control, suggest that a substantial control premium could have been in order.
The Update also covers California's Franchise Tax Board (FTB) Notice 2008-4 – Resolution of Certain ESOP Transactions and notes that taxpayers seeking resolution need to file before September 13, 2008. It also discusses a 2007 equity compensation survey that shows that employee stock purchase plans (ESPPs) have become more conservative since accounting rule changes became fully effective in 2006.
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