Encouraging Employee Ownership Act

By Stephen Barlas
June 2, 2017

Reducing the need for financial disclosure is one of the motivating factors propelling a piece of House-passed legislation being debated in the Senate. But the Encouraging Employee Ownership Act of 2017 doesn’t have the same overwhelming support as the Supporting America’s Innovators Act.


Nearly 90 Democrats voted against the bill on the House floor because they viewed the bill as relieving companies from too much financial disclosure. Currently, private companies that compensate their employees with more than $5 million in company stock in a 12-month period must provide those employees with relatively simple disclosures, including two years of financial statements that don’t need to be audited and information about the risks associated with investment in the securities. The disclosures include information such as income statements, shareholder lists, and other sensitive financial data that many private companies might not want to provide.


The House bill requires the SEC to increase that threshold from $5 million to $10 million and index the amount for inflation every five years. Identical legislation has been introduced by Sens. Pat Toomey (R.-Pa.) and Mark Warner (D.-Va.). It passed the Senate Banking, Housing, and Urban Affairs Committee on March 9, 2017, without any dissent, indicating that the Democratic opposition in the House may not transfer to the upper body.


Stephen Barlas has covered Washington, D.C., for trade and professional magazines since 1981 and since 1984 for Strategic Finance and its predecessor Management Accounting. You can reach him at sbarlas@verizon.net.
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