Benefits August 11, 2005

Whirlpool Reaches Settlement On Discrimination Claims

August 11, 2005 (PLANSPONSOR.com) - Whirlpool Corp. has agreed to a settlement on claims that a test it used in its hiring process discriminated against about 800 African-American applicants.
Reported by

In the settlement, Whirlpool will pay $850,000 in back wages and will hire 48 of the rejected applicants, the Department of Labor reports, according to HR.BLR.com. Whirlpool denies any wrongdoing.

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During a routine compliance evaluation, the DoL’s Office of Federal Contract Compliance Programs determined that the Test of Adult Basic Education the company used in its process of hiring entry level assembler positions at a Tulsa facility disproportionately eliminated African-American applicants.

The DoL claimed that the company, which has contracts with the federal government, engaged in hiring discrimination from March 1, 1997 to February 28, 1998.

Administration August 10, 2005

FASB Alters Volatility Valuation Rules for Private Companies

October 20, 2004 (PLANSPONSOR.com) - The Financial Accounting Standards Board (FASB) has decided to offer private companies some flexibility in the way they value stock options.
Reported by

The easing of rules for valuing stock compensation awards for private companies is aimed partially at arriving at appropriate figures regarding ‘expected volatility’. Traditionally hard to measure for private companies, expected volatility is essential to calculating share value (see  Expensing Proposition ). As a stand in for fair valuation, FASB will now allow private companies to use an alternative method that calculates share volatility by applying historical volatility of an appropriate index as an input to the valuation model.

Companies would be allowed to use this caveat to the pending rules if a lack of predictability makes a reasonable estimate of fair value impossible. If a company meets this requirement, it will be allowed to us the calculated value model, which is expected to cut the cost and complexity of stock option valuations.  FASB members said that the move is expected to bring share valuations somewhere in between fair and minimum value. Volatility will most likely be undervalued, however.

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Current rules allow private companies to assume a volatility of zero in calculating share value.

The forthcoming rules are to be applied by private companies for all stock compensation awards granted, modified, or settled beginning after December 15 of next year.

The new rules will go into effect for public companies on June 15 following a wide scale and successful push to have the deadline moved back six months in order for companies to have more time in which to comply with the new rules (see  Pressure on FASB Produces Options Expensing Delay ). The push by FASB to create stricter stock options expensing rules follows on the heels of the tech boom and subsequent bust, as well as accounting scandals like Enron and WorldCom, that have rocked Wall Street since then.

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