WASHINGTON --The U.S. Senate unanimously passed bipartisan legislation introduced by Sens. Mark R. Warner (D-VA) and Pat Toomey (R-PA), members of the Senate Banking and Finance Committees, which would make it easier for private companies to award stock as part of an employee's compensation. The Encouraging Employee Ownership Act will entice private corporations to give their employees larger equity stakes in their companies and promote longer-term investing.

“Giving employees the opportunity to acquire stock provides them with a greater sense of ownership in their companies and has a positive impact in workplace culture,” said Sen. Warner, a former technology executive. “Allowing employees to have a stake in the success of where they work will help promote greater productivity and wealth creation and get this economy working better for more people.”

Established nearly two decades ago, current Securities and Exchange Commission rules force companies that wish to issue more than $5 million in stock to employees to comply with onerous reporting and disclosure requirements. For new and fast-growing companies, stock compensation is a valuable tool, but many privately-held companies are reluctant to cross this threshold due to the mandatory reporting requirement. 

Under the Warner-Toomey bill, this threshold would increase to $10 million and would automatically index to account for inflation every five years.

The bill has been endorsed by the private supermarket chain Wegmans, and the company BIO.  

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