CONTENTS ADMINISTRATION WITNESSES Page Evans, Stuart J., Director of Procurement, National Aeronautics and Lubick, Hon. Donald, Deputy Secretary of the Treasury for Tax Policy. 170 271 164 Trask, John M., Jr., Associate Administrator for Finance and Investment, 286 PUBLIC WITNESSES Dow Chemical Co., Glenn W. White, director of tax department____ Employee Stock Ownership Council of America, Ronald L. Ludwig, Esq., Lowe's Cos., Inc., Robert L. Strickland. 72 Ludwig, Ronald L., Esq., counsel for the Employee Stock Ownership Coun- 122 National Dividend Foundation, Joseph T. Buxton III, executive director___ Personette, David, executive vice president, Metropolitan Contract Serv- White, Glenn W., director of tax department, Dow Chemical Co.- Page 102 270 COMMUNICATIONS Allied Plywood Corp., Edward H. Sanders, president. 480 Altman, Frank. 478 American Gas Association___. 500 AMTROL, Inc., A. N. D'Amico, vice chairman of the board. 504 Auerbach, Boris, Federated Department Stores, Inc.. 539 Central Hudson Gas & Electric Corp. 519 Committee To Reform Taxation of Investment, George A. Strichman, chairman 503 Conrad, Jonathan M.. 540 Culp, Charles W., of Cadick, Burns, Duck & Peterson. 483 D'Amico, A. N., vice chairman of the board, AMTROL, Inc.. 504 Davis, O. C., chairman, Peoples Gas Co--- 528 Dunlap, J. E., vice president, human relations, TRW, Inc____ 503 Employee Stock Ownership Council of America, Ronald L. Ludwig, general counsel 521 Federated Department Stores, Inc., Boris Auerbach. 539 477 Gulf Oil Corp., John J. Ross, general manager, taxes.. 475 Hatfield, Hon. Mark O., a U.S. Senator from the State of Oregon. 473 499 Local 1722, United Steelworkers of America, Gerald F. Vogel, vice president 477 Ludwig, Ronald L., general counsel, Employee Stock Ownership Council of 521 Metzger, Bert L., president, Profit Sharing Research Foundation___ Profit Sharing Research Foundation, Bert L. Metzger, president. 531 Rashman, Richard M., trust counsel, Union Bank, Los Angeles, Calif. 501 Ross, John J., general manager, taxes, Gulf Oil Corp. 475 480 Seibert, Donald V., chairman of the board, J. C. Penny Co. 499 520 503 TRW, Inc., J. E. Dunlap, vice president, human relations_ 503 Union Bank, Los Angeles, Calif., Richard M. Rashman, trust counsel__. 501 477 Walgren, Hon. Doug, a Representative in Congress from the State of Table Sears Profit-sharing Fund-Sears stock investments_ 67 177 Letter from Senator Long to Mr. Lubick, and his answer to it.. 200 APPENDIXES Appendix A.-Material submitted for the record by Senator Long: ESOPS-An explanation for employees__ Employee ownership___. Page 289 309 The expanded Employee Stock Ownership Act of 1978-A summary and analysis___. 468 Appendix B.-Communications received by the committee expressing an interest in these hearings__ 473 EMPLOYEE STOCK OWNERSHIP PLANS AND WEDNESDAY, JULY 19, 1978 U.S. SENATE, COMMITTEE ON FINANCE, Washington, D.C. The committee met, pursuant to notice, at 9 a.m. in room 2221, Dirksen Senate Office Building, Hon. Russell B. Long (chairman of the committee) presiding. Present: Senators Long, Byrd, Jr., of Virginia, Gravel, Packwood, Roth, Jr., Laxalt, and Danforth. [The committee press releases announcing these hearings and the bills S. 3241, S. 3223, H.R. 13882 follow:] [U.S. Senate, Committee on Finance Press Release, June 26, 1978] SENATOR LONG ANNOUNCES HEARINGS ON EMPLOYEE STOCK OWNERSHIP PLANS Senator Russell B. Long (D.-La.), Chairman of the Senate Committee on Finance, announced that hearings have been scheduled on Employee Stock Ownership Plans (ESOPs) on Wednesday, July 19, 1978 and Thursday, July 20, 1978. The hearings will be held in Room 2221, Dirksen Senate Office Building and will begin at 9:00 A.M. on both days. In announcing the Committee hearings on ESOP, Senator Long stated, "Since 1973, Congress has passed five pieces of legislation which broaden the access of employees to stock ownership: The 'Regional Rail Reorganization Act of 1973' (P.L. 93-236), The 'Employee Retirment Income Security Act of 1974' (P.L. 93-406), The "Trade Act of 1974' (P.L. 93-618), The "Tax Reduction Act of 1975' (P.L. 94-12, and The "Tax Reform Act of 1976' (P.L. 94-455). "In addition, earlier this year, the Senate Committee on Commerce, Science and Transportation reported out S. 2788, the 'Regional Rail Reorganization Act of 1978'; this bill contains extensive provisions regarding the adoption of an ESOP by the Consolidated Rail Corporation (Conrail)." Senator Long pointed out that "Another topic of the hearings will be an examination of Senator Mike Gravel's S. 3223, a bill to establish the first general stock ownership plan, a concept which goes beyond ESOP in broadening the access of individuals to stock ownership, and S. 3241, the 'Expanded Employee Stock Ownership Act of 1978,' which I introduced last week. "We will be using these hearings as the basis for setting new and more comprehensive legislative goals for further expansion of the ESOP concept as a means of getting our stagnating economy going again and of giving a piece of the action to millions of America's working men and women." Senator Long explained that "The ESOP hearings will cover three major topics. At the outset, we will try to determine the value, both intrinsically and monetarily, of the benefits which stock ownership provides for employees and employers. In addition, we will attempt to determine what legislation is needed to promote the broadening of stock ownership and prevent its abuse. "Finally, we will try to ascertain whether the various Federal agencies have complied with the clear statement of Congressional intent regarding ESOP which |