Bills
| 3.23.22

Making It Easier for Growing Companies to Offer Employees Stock (H.R. 1675)

Do you support or oppose this bill?

What is H.R. 1675?

(Updated July 21, 2017)

This bill would direct the Securities and Exchange Commission to revise regulations to require an issuer to provide investors with additional disclosures regarding compensatory benefit plans if the total value of securities issued during the last 12 months exceeds $10 million.

The value of the securities sales that triggers the disclosure would be raised from $5 million to its new level of $10 million, and would be indexed to inflation every five years then rounded to the nearest $1 million going forward.

This change would take effect within 60 days of the enactment of this legislation.

Argument in favor

Many companies use stock compensation as a tool to incentivize their workers, but reporting requirements for issuing stock beyond a certain level can act as a deterrent. Raising the threshold from $5 million to $10 million will make it easier to do so.

Argument opposed

Lower thresholds and the reporting requirements that go with them help ensure proper oversight and avoid questionable business practices. Besides, a company shouldn’t be issuing stock if its not willing to open its books and be forthright.

Impact

Investors, companies issuing securities, and the SEC.

Cost of H.R. 1675

A CBO cost estimate is unavailable.

Additional Info

In-Depth: The sponsor of a related bill in the Senate, Sen. Pat Toomey (R-PA), said that: 

“As a former small business owner, I know that workers who really feel like part of the company can be the most efficient, effective, and loyal employees. It is time that Congress makes it easier for workers to get an ownership. Let’s get rid of unnecessary government red tape which inhibits this goal.”

This bill was passed by the House Financial Services Committee on a vote of 45 to 15.

During the previous session of Congress, a similar version of this legislation passed the House by a vote of 320 to 102, but stalled in the Senate.


Media:

Summary by Eric Revell
(Photo Credit: Flickr user andreas_poike)