Administration October 12, 2003

Employee Stock Options Grants at Life Sciences Companies Reduced by 30%

December 10, 2003 (PLANSPONSOR.com)— On average, in the last fiscal year, stock options at life sciences companies equaled 2.6% of the company's total shares outstanding, a decrease from the 3.3% average recorded for the previous three years, according to the Presidio Pay Advisors - Life Sciences Industry Compensation study.
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Possible reasons cited for this decrease are because legislation has been discussed to expense stock options, companies are finding other equity incentives to offer to employees, as only 27% of executives included in the study received equity incentives in the form of restricted stock.

The study also includes information on:

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  • equity compensation
  • overhang and run rates
  • non-shareholder-approved plans
  • evergreen plans and additional share requests   
  • ownership levels for executives and outside directors      
  • executive compensation
  • Top Six Positions: Median Pay Levels and Prevalence         
  • CEO compensation: by revenue size and industry sector
  • board of director compensation
  • director compensation
  • committee compensation

Presidio Pay Advisors – Life Sciences Industry Compensation study included data on stock option and equity incentive practices and Executive and Board of Director compensation levels in over 60 companies within the Dow Jones Biotechnology Index.

Compliance October 11, 2003

DoL Puts Out Last Tax Exemptions Under VFC Program

November 22, 2002 (PLANSPONSOR.com) - US Department of Labor officials (DoL) have announced the last set of exemptions to excise taxes imposed on prohibited transactions corrected under the DoL's Voluntary Fiduciary Correction (VFC) program.
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The final set of exemptions cover four transactions correctable by the VFC Program. According to the DoL, the transactions include:

  • late transmittal of employee contributions and participant loan repayments to plans
  • loans between plans and related parties at fair market interest rates
  • purchases or sales of assets between plans and related parties at fair market value
  • the sale and leaseback of property between plans and employers for fair market value and fair market rental value.

“By expanding the scope of relief from excise taxes in the final exemption, more employers and service providers will be encouraged to bring their plans into compliance with federal employee benefits law,” Assistant Secretary of Labor Ann Combs said in a statement. “Increased compliance with the law means more security for workers’ health and retirement benefits.”

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On March 28, 2002, the DoL included the proposed class exemption in its expanded VFC program to allow applicants to avoid the excise taxes, which officials say otherwise discourage voluntary compliance.

Several Changes Made

Based on public comments, the DoL made several changes to the proposal.   One change expands the transaction relating to employee contributions to cover delinquent transmittal of participant loan repayments to plans.  

The other changes allow service providers to use the exemption more frequently than once every three years and let certain VFC applicants give the required notice to an unrelated plan fiduciary as a representative of plan participants and beneficiaries, a DoL announcement said.

The VFC Program allows plan officials, sponsoring employers, or parties to affected transactions to voluntarily correct ERISA violations.

The DoL said in order to comply, applicants must fully correct any prohibited transactions, calculate any losses and restore those losses with interest or profits, and distribute any supplemental benefits owed to eligible participants and beneficiaries.

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