WASHINGTON, D.C.—The House of Representative Subcommittee on Employer-Employee Relations today reached a bipartisan compromise in regard to the proposed changes to the Wealth Through the Workplace Act (H.R. 3462), a bill that would amend ERISA and the Internal Revenue Code to treat certain employer provided stock option programs as tax deferred employee benefit plans.   Last month, Congressman Rob Andrews (D-Haddon Heights), the ranking Democrat on the Subcommittee on Employer-Employee Relations, offered substitute language to broaden and improve H.R. 3462's employee involvement and protections but later withdrew the amendment on the condition that he have the opportunity to work with Chairman Boehner to negotiate these changes prior to Committee markup.   

"I am thankful that Chairman Boehner has agreed to work with the committee to produce a bipartisan stock option bill.  This is an excellent example of how government should work," said Rep. Andrews.  These changes will benefit hard working American men and women by encouraging employees to hold stock and become employee-owners as well as adding to their retirement savings."  
             
Under H.R. 3462, certain stock purchase arrangements would be tax-deferred provided: 

- The options may only be granted to employees to purchase stock in the employer or any other corporation; 
- The options may only be exercised by employees who remain employees at all times from the granting of the option until six months before the exercise of the option; 
- The Board of Directors must in writing approve the arrangement either 12 months before or after the arrangement is adopted; 
- The options may not be granted to employees possessing 5% or more of the total combined voting power or value of all classes of stock; 
- At least 70% of all eligible employees must be covered by the arrangement; 
- All employees shall have the same rights and privileges; 
- The option price may not be less than 85% of the fair market value of the stock at the time the stock is granted or exercised; 
- Applicability is limited to publicly traded stocks; 
- The arrangement cannot be linked to any reduction in regular compensation; and 
- employees shall be provided a summary of the plan terms and conditions and information about all SEC disclosure statements.. 

As a result of the bipartisan compromise the Andrews' substitute improves the original bill in three specific ways:

-Increases the number of employees required to be offered options (increased from 50% to 70%, and covers employees after 1 year of employment), 
-Ensures that lower paid workers receive a proportionate share of options and on equal terms to higher paid employees, and 
-Ensures that employees receive adequate information and legal protection.

The current bill will make it easier for employees who receive stock options from their company as part of their overall compensation package to use those options to build wealth and save for retirement as opposed to being required to "cash out" their options once they are exercised.  It is estimated that six to ten million workers, out of a labor force of 140 million, are receiving stock options.

The bill is scheduled to move to the House Ways and Means Committee prior to being scheduled for a vote on the floor of the House of Representatives.  

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