Hultgren Introduces the Encouraging Employee Ownership Act of 2014

Washington, DC – U.S. Representative Randy Hultgren (IL-14) today introduced the Encouraging Employee Ownership Act (EEOA) of 2014, a bill which makes it easier for companies to let hardworking employees have a stake in their company. Rep. Hultgren is a member of the Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises.

“Employee-owned companies in my district have shown me first-hand how important ownership is to boosting a company’s performance,” said Rep. Hultgren. “Ownership encourages employees to put in extra effort to achieve great success, so they can earn the large upside that comes when they perform well. This benefit also helps companies attract top talent, even if the company is just starting out.

“Unfortunately, some companies are shying away from offering employee ownership because of regulations that limit how much ownership they can safely offer. This red tape forces them to make confidential disclosures that could be greatly damaging to future innovations if they fell into the wrong hands. The Encouraging Employee Ownership Act of 2014 would address this problem and open up more opportunities for employees to share a stake in the companies they work for every day.”

David Miller, President and CEO of the Illinois Biotechnology Industry Organization, which represents companies that employ thousands of residents in the 14th Congressional District, believes that making it easier for companies to offer employee ownership helps Illinois businesses expand and hire more workers:

“As someone who has worked in technology for most of my career, I know that affording an ownership stake to employees is critical to recruiting top talent to job-generating companies. And there is no doubt that an equity stake encourages employees to drive hard for success of the enterprise.”

Currently, SEC Rule 701 mandates various disclosures for privately held companies that sell more than $5 million worth of securities for employee compensation. These disclosures include risk factors, copies of the plans under which the offerings are made and certain financial statements.

The EEOA amends SEC Rule 701 to raise this disclosure threshold from $5 million to $20 million and adjust the threshold for inflation every 5 years. Issuers that are exempt from disclosure would still have to comply with all pertinent antifraud and civil liability requirements.

Original cosponsors include Reps. Spencer Bachus (AL-06), Michael Fitzpatrick (PA-08), Scott Garrett (NJ-05), Robert Hurt (VA-05), Mick Mulvaney (SC-05), Dennis Ross (FL-15) and Steve Stivers (OH-15).

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