In recent years, many employers have begun offering employees stock ownership in the company either in lieu of bonuses, or as deferred compensation—often called Employee Stock Ownership Plans (ESOPs).
Once such employer is Citigroup, which offers a voluntary employee incentive compensation plan that provides employees with shares of restricted company stock at a reduced price as a portion of that employee’s annual cash compensation. In selecting this voluntary compensation plan, employees agreed in writing that if they resigned or were terminated before the end of the two year period in which the stock ownership vested, the stock would be forfeited.
Are you offering employees the right benefits to meet their needs and yours? Get expert guidance on how to pick the right benefit options by joining us on November 16 for the 90-minute webinar: Employee Benefits in 2010: Proven Strategies for Improving Your Benefits and Controlling the Costs
David Schachter was employed as a stockbroker by Smith Barney, Inc., a subsidiary of Citigroup, in the company’s Los Angeles office. Schachter chose to participate in Citigroup’s ESOP, taking 5 percent of his annual compensation in the form of restricted stock. Sixteen months later, Schacter resigned—just eight month’s before his stock was scheduled to vest.
Schachter then brought a class action lawsuit, claiming that Citigroup’s ESOP terms violated the California Labor Code. In California, employers are prohibited from retaining any portion of an employee’s earned compensation, and must pay resigning employees all earned wages within 72-hours of the employee’s last day of work. Thus, Schachter asserted that the ESOP agreement’s forfeiture provision was unlawful.
The California Supreme Court disagreed. Specifically, the court found that because Schachter’s ownership rights to the compensation hadn’t yet vested, and because Schachter voluntarily elected to take part of his compensation as stock knowing when it would vest, the employer’s ESOP terms do not violate California law.
We’ll have more on this case, and provide an overview of the rules of ESOPs, in an upcoming issue of California Employer Advisor (www.employeradvice.com).
Manage Your Benefits Better in 2010
You can count on two things when it comes to employee benefits:
- How much your key employee benefits costs will rise in 2010—and what you can do to curb those price hikes
- What you can do now to rein in your health benefits costs, from introducing wellness programs to switching to consumer-driven health plans
- The newest non-health benefits options that you can roll out next year without breaking your budget
- How to audit your existing benefits and find benchmarks to see how you stack up against your peers and your competitors
- Best practices for soliciting honest, candid feedback from your employees about their benefits
- The steps you should follow in shopping around to identify the best benefits programs—and, when you find them, how to negotiate the best deals
- How to monitor the ongoing costs of your benefits programs and guard against surprises at renewal time
Your costs will probably go up year after year—and your employees will never understand how much you spend on them. Many workers take their benefits for granted, and some even mistakenly believe they’re required by law to get them.
One recent national survey says the cost of benefits is one of the top three factors affecting the bottom lines of U.S. employers. Because benefits can be critical for attracting and retaining talent, you’re always searching for ways to preserve (and even expand) your offerings to keep your workers happy. But you can’t master what you don’t measure, and many employers have no idea which benefits their employees truly want or value.
Join us on Nov. 16 for this practical 90-minute webinar on employee benefits trends in 2010, where you’ll learn:
