Hultgren Reintroduces Encouraging Employee Ownership Act
Washington, DC — U.S. Representative Randy Hultgren (R-IL-14) reintroduced bipartisan legislation to open up more opportunities for employees to share a stake in the companies they work for every day. The Encouraging Employee Ownership Act (EEOA), H.R. 1343, cuts through red tape and eases the ability of companies to offer ownership to their hardworking employees. Rep. Hultgren was joined by original cosponsors Reps. John Delaney (D-MD-06), Steve Stivers (R-OH-15), Kyrsten Sinema (D-AZ-09), Brian Higgins (D-NY-26) and Tom MacArthur (R-NJ-03).
The bill previously passed the House in the 114th Congress as part of H.R. 1675, the Capital Markets Improvement Act of 2016.
“Employees who own a stake in the company they work hard for every day want to see it do well and will work hard to make that happen. When the company succeeds, the employee succeeds. Employee-owned companies in my district have shown me first-hand how important ownership is to boosting a company’s performance and attracting top talent,” said Rep. Hultgren. “Unfortunately, high compliance costs and red tape limit how much ownership these companies can safely offer to their deserving employees. Forcing a company to make confidential disclosures that could easily fall into the wrong hands and harm the company discourages ownership. We should be applauding employee ownership in businesses from the board room to the shop floor. This bill would open up more opportunities for employees to be rewarded for pouring sweat into their jobs every day.”
Warren Ribley, 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 economic development for most of my career, I know that offering an ownership stake to employees is a critical tool in 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.
“[EEOA] promises to aid in job creation in Illinois’ growing technology sector, especially for the many early stage companies with whom we assist along their commercialization path.”
Currently, SEC Rule 701 mandates various disclosures for privately held companies that sell more than $5 million worth of securities for employee compensation over a twelve month period. 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 $10 million and adjust the threshold for inflation every five years. Issuers that are exempt from disclosure would still have to comply with all pertinent antifraud and civil liability requirements.
Rep. Hultgren is the Vice-Chairman of the Financial Services Subcommittee on Capital Markets, Securities and Investment.