Demutualization

[schaden]

When the recent life companies demutualized, how much did the employees get in stock, both entry level and VPs?

I guess what I'm getting at, are the procedes worth the change in culture?

[aces219]

The culture shifted even prior to the demutualization. Entry-level people got some options that took three years to vest. Executives got rich(er). I think it was worth it.

[TwistedMentat]

Why did employees get anything? Shouldn't the proceeds have gone to the owners of the mutual, the policyholders?

[aces219]

Some employees owned life insurance through the benefits program, so I suppose they would be eligible for stock. Most companies give employees stock options when they first go public. Since right now they don't have to expense stock options, it essentially costs them nothing.

[Don Quijote]

Why did employees get anything? Shouldn't the proceeds have gone to the owners of the mutual, the policyholders?

In one case I´m familiar with, the existing surplus of the mutual was converted entirely to stock and that stock distributed to the policyholders. Concurrently the company held an IPO, selling more shares on the open market to new shareholders, and about a year later made a small option grant to almost all employees. The shares that will be used to satisfy those grants will be new issues at the time, diluting all the other shareholders. Since then, the company has continued issuing stock options in more significant quantities to the upper level of officers, but not to the rest of the employees.

[Numbers Nerd]

Canadian companies that demutualize are required to distribute 100% of the stock to the policyholders, and cannot grant any stock or options to employees for one year.

In the U.S., the rules vary by state, and by how greedy top management is.