The ESOP Association Blog

Covering ESOPs and employee ownership

Iowa Economic Development Authority’s ESOP Initiative Program

The Iowa Economic Development Authority (IEDA) has a new ESOP initiative program. According to the IEDA website:

“In addition to the general economic benefits, the IEDA believes that ESOPs are a promising tool for retaining businesses in Iowa communities. Across the state, there are businesses that have been operated in local communities for many years by owners committed to the welfare of the community. But when those owners wish to retire or to start a new business, they often need to sell the business. It can be a great thing for the community if the business is sold to the employees, through an ESOP, rather than to an out-of-state buyer that may shift jobs and profits out of the community. For these reasons, the State of Iowa recently passed two pieces of ESOP-related legislation.”

The ESOP Association’s Iowa/Nebraska Chapter recently hosted an ESOP Professional Roundtable where this initiative was a topic of discussion. Additional information can be found on the IEDA website including information about the ESOP formation assistance program which will help Iowa companies interested in ESOPs to defray the costs of the feasibility study.

“This is very positive evidence of a cost effective state program to promote ESOPs,” said ESOP Association President, J. Michael Keeling. “It’s very encouraging to see states considering programs to facilitate ESOP creation; clearly more state officers are seeing the benefits that employee-owned companies bring to the local economy. Iowa is certainly a leader on the local ESOP front — kudos to our Iowa Chapter leaders.”

Filed under: Chapter News, Economic Performance, Employee Ownership Message, , , ,

NEWS: ESOP Companies Report Economic Growth in 2012

The Employee Ownership Foundation sent out the following release today on the results of the 22nd Annual Economic Performance Survey.

For Immediate Release: September 10, 2013

For More Information: Amy Gwiazdowski, 202/293-2971, amy AT esopassociation.org

ESOP Companies Report Economic Growth in 2012

September 10, 2013 (Washington, DC) – Results from the Employee Ownership Foundation’s 22nd Annual Economic Performance Survey of ESOP (employee stock ownership plan) companies show that ESOPs saw increased economic growth over the past year. Additionally, ESOP companies continue to have increased share value, report high productivity, and overwhelming support among leaders of the companies, according to the results of this survey which was conducted among members of The ESOP Association.

Since the annual survey began 22 years ago, a very large majority, 94% of survey respondents, reported that creating employee ownership through an ESOP was “a good business decision that has helped the company.” It should be noted this figure has consistently been over 85% since 2000. In addition, 77% of respondents indicated the ESOP positively affected the overall productivity of the employees. In terms of profitability and revenue, both were up from previous years — 70% of respondents reported profitability increased and 78% of respondents noted revenue increased. In terms of stock value, the majority of respondents, 83%, stated the company’s stock value increased as determined by outside independent valuations; 14% of the respondents reported a decline in share value, and 3% reported no change. The survey also asked respondents what year the ESOP was established. Among those responding to this survey, the average age of the ESOP was 16 years with the average year for establishment being 1997.

“Employees with employee stock ownership, including those with ESOPs, in general, have more sustainable employment. Our national leaders need to take note and understand that we need national policies to encourage employee stock ownership among working Americans. It’s the best jobs policy we have,” said Employee Ownership Foundation President, J. Michael Keeling.

The survey asked companies to indicate their performance in 2012 relative to 2011:

  • 71% indicated a better performance; 17% indicated a worse performance; and 12% indicated a nearly identical performance to the previous year
  • 78% indicated revenue increased; 22% indicated revenue decreased
  • 70% indicated profitability increased; 30% indicated profitability decreased
  • 64% of companies have created an ESOP education program or ESOP advisory committee since establishing the ESOP

The 2013 Economic Performance Survey was distributed to The ESOP Association’s over 1,500 members in June 2013. The results are based on 495 responses, a 35% response rate.

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The Employee Ownership Foundation is The ESOP Association’s affiliated 501 (c)(3) organization dedicated to promoting employee ownership – www.employeeownershipfoundation.org.

The ESOP Association is the national trade association for companies with employee stock ownership plans (ESOPs) and the leading voice in America for employee ownership. The core cause of The ESOP Association is the belief that employee ownership will improve American competitiveness, increase productivity through greater employee participation, and strengthen our free enterprise economy. More information: website – www.esopassociation.org and blog – www.esopassociationblog.org.

Filed under: Economic Performance, Employee Ownership Foundation, , ,

A look ahead this month

It’s hard to believe it is September already. We thought we’d get out the crystal ball and see what the future holds for ESOP Association members this month.

The 2013 Las Vegas Conference & Trade Show app will be released in the coming weeks. Keep an eye on this space for links. Also, speaking of Vegas, the early bird registration ends on September 20th. If you’re joining us, or planning to, here’s where you’ll find information including: online registration (conference and hotel), trade show booth signup form, and a preliminary agenda which includes info on the new educational track for in-house ESOP trustees.

October is Employee Ownership Month! We’ll be starting off the celebration early on the blog with some re-caps of 2012 celebrations. If your company is planning an event this year, let us know and we’ll highlight your event here. Drop us an email at media AT esopassociation.org with details. Don’t forget the photos!

The Economic Performance Survey results are being tabulated. We’ll have the results from the 22nd Annual Survey soon and report back on the economic performance of employee owned companies in 2012.

Tax reform — we’re doing our best to keep members up-to-date on a monthly basis. We’ll have another report very soon. Stay tuned. If you’d like to catch-up, our YouTube page has the most recent updates.

Have questions? Something you’re curious about? Let us know.

Filed under: Conference Information, Economic Performance, Employee Ownership Message, Employee Ownership Month (EOM), Government Affairs, TEA Members, , , , ,

ESOP Company News

Carl Warren & Company Honored as 2013 ESOP Company of the Year

And the accolades keep pouring in for the 2013 ESOP Company of the Year, Carl Warren & Company, headquartered in Placentia, CA. The company has received letters from Senator Saxby Chambliss (R-GA) and Senator Johnny Isakson (R-GA) congratulating the employee owners in the Georgia location; a certificate of recognition from Placentia Mayor, Scott Nelson; and a letter of congratulations from Senator Jerry Moran (R-KS) to the employee owners in the Kansas location. Below are links to the letters and certificate.

Senator Saxby Chambliss Recognition

Senator Johnny Isakson Recognition

City of Placentia, CA Mayor Scott Nelson Certificate Recognition

Senator Jerry Moran Recognition

Founded in 1944, Carl Warren & Company has provided claim and litigation management services to clients for almost 70 years. The employee-owned company employs approximately 350 individuals with 35 offices across the United States. In 1975, the company established the ESOP, and 38 years later, the company and employee owners are even more dedicated to the ESOP. The employee owners of Carl Warren have built a culture they are proud of and devote time to the ESOP community and share the idea of employee ownership with companies in their area. For more information, please visit: www.carlwarren.com.

Thanks to Carl Warren’s Caryn Siebert for sharing this information with The ESOP Association and congratulations to the employee owners of Carl Warren & Company.

Filed under: Economic Performance, Employee Ownership Message, Government Affairs, Member Services, , ,

ESOP Association President to Participate in Senate Small Business Committee Tax Roundtable

JMK Small Business Comm RoundtableToday, ESOP Association President J. Michael Keeling, will participate in the Senate Small Business Committee Tax Roundtable which will review key provisions of current tax law that impact small businesses. In particular, Mr. Keeling will be responding to the Committee’s specific inquiry as to what current tax laws that encourage the creation and operation of employee ownership through the ESOP model should be retained.

Mr. Keeling will emphasize that the modest incentives for ESOP creation and operation have resulted in employee owned companies that, as research has consistently shown, are more productive, more profitable, and provide locally-controlled, sustainable jobs in the United States. In particular, he will bring to the Committee members’ attention the General Social Survey of 2010 which evidenced that employee stock owned companies laid off employees during the Great Recession at a rate of 2.6% whereas conventionally-owned companies laid off employees are a rate of 12.1%. He will note that the evidence shows that encouraging employee ownership is a successful jobs policy, and Congress should enhance these modest policies to boost employee ownership, which can also address the growing income gap between the working men and woman and the super-rich.

He will conclude his formal remarks with the comment that the growing income inequality is creating an us versus them atmosphere in the United States, which is not good for a democratic society with a republican form of government.

To read Mr. Keeling full statement, please visit The ESOP Association’s website. You can also read it here: Statement to Senate Small Business Committee Tax Roundtable.

Filed under: Economic Performance, Employee Ownership Message, Government Affairs, , ,

Center for American Progress Report Cites Need for More Inclusive Capitalism

In a new report, the Center for American Progress discusses the idea of inclusive capitalism and how its proven track record has helped companies and employees grow wealth in the U.S. It also notes the necessity for greater dialogue among policy makers and ways to promote inclusive capitalism.

The Center for American Progress defines inclusive capitalism as “…granting workers ownership stakes in the company or a share of its profits based on workers’ collective performance…” The report names ESOPs as one of the effective financial incentives used to reward employees and generate wealth.

“When employees have stakes in the companies they work for, studies show that productivity and profitability increase, the companies experience less employee turnover, and jobs stay in the community,” said ESOP Association President, J. Michael Keeling. “We agree. Policy makers need to step up and encourage broad-based inclusive capitalism and increased employee ownership to ensure sustainable employment for U.S. workers.”

This new Center for American Progress report, Growing the Wealth: How Government Encourages Broad-Based Inclusive Capitalism, was authored by David Madland and Karla Walter. It was released on April 2, 2013. The report, and additional information, is available on the Center for American Progress’s website.

Filed under: Economic Performance, Employee Ownership Message, , , ,

June 2013 Wrap Up

We’re half way through 2013 which means a June re-cap.

We highlighted some Chapter and member news.

Publications Highlight: ESOP – The Concept.

FASB approved indefinite deferral for ESOPs.

A note about responsive design and The ESOP Association’s website.

Senator Kelly Ayotte spoke to New England Chapter members.

The June 2013 ESOP Report was published.

Rutgers University announced Fellowship winners.

Golden Artist Colors’ ESOP company president testified on the importance of employee ownership to the House Committee on Small Business.

The Employee Ownership Foundation’s 2013 Employee Owner Retreat.

Pigs? Make that capitalist pigs!

Filed under: Chapter News, DOL Proposed Fiduciary Regulation, Economic Performance, Employee Ownership Foundation, Employee Ownership Message, Government Affairs, Member Services, Publication, TEA Members, , ,

ESOP Company President Testifies to Importance of Employee Ownership

ESOP company leader Barbara Schindler, President and COO, tells House Committee on Small Business that the employee ownership through an ESOP is Golden Artist Colors, Inc.’s New Berlin, New York, key to its recent success, because “When employees are treated like owners they tend to act like owners.” (click to read entire testimony) “Ms. Schindler’s testimony fly’s in the face of the Administration’s position that ESOPs are too risky for employees in companies with more than 10 or so employees because the employees can’t impact the performance of the company where they work,” said Michael Keeling, ESOP Association President.

Filed under: Economic Performance, Government Affairs, TEA Members, , , , ,

NEWS: Senator Kelly Ayotte Renews Work to Protect Employee Ownership: Introduces Pro-ESOP Bill, S. 273

The following press release was sent out by The ESOP Association on Wednesday, February 13, 2013. We wanted to share the information with readers.

For Immediate Release: February 13, 2013

For More Information: Amy Gwiazdowski, amy AT esopassociation.org

Senator Kelly Ayotte Renews Work to Protect Employee Ownership: Introduces Pro-ESOP Bill, S. 273 

February 13, 2013 (Washington, DC) – Senator Kelly Ayotte (R-NH) introduced S. 273, a bill to modify the definition of fiduciary under the Employee Retirement Income Security Act of 1974 to exclude appraisers of employee stock ownership plans (ESOPs). The bill is co-sponsored by Senators Roy Blunt (R-MO), Mary L. Landrieu (D-LA), and Mitch McConnell (R-KY).

This bill is a response to the Department of Labor’s (DOL) proposed anti-ESOP regulation mandating all private ESOP company appraisers be ERISA fiduciaries.

While the original proposal was withdrawn, if any regulation was finalized to make appraisers ERISA fiduciaries there would be extreme confusion over whether the appraiser or the trustee[s], and other current fiduciaries, make the decisions about acquisition of shares on behalf of average pay employees. More troubling, it would leave private ESOP companies open to lawsuits by aggressive class action trial lawyers. Leaders at the DOL say a new proposal will be issued in July 2013. It is expected DOL will not alter the proposed regulation’s mandate that all appraisers of ESOP stock be ERISA fiduciaries.

“We’re very pleased to see Senator Ayotte not back down from protecting the best jobs policy, and the best deficit reduction policy, in Federal law,” said ESOP Association President, J. Michael Keeling. “The DOL needs to wake up to the fact that private company ESOPs have tremendous positive records of sustaining jobs as evidenced during the Great Recession. According to the General Social Survey of 2010, employer stock owned companies laid off employees at a rate of less than 3% whereas conventionally-owned companies laid off employees at a rate of more than 12% during the Great Recession. Bottom-line, ESOP companies’ employees, in the aggregate, were saving Uncle Sam $7 for every dollar Uncle Sam spent promoting employee ownership.”

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The ESOP Association is the national trade association for companies with employee stock ownership plans (ESOPs) and the leading voice in America for employee ownership. The core cause of The ESOP Association is the belief that employee ownership will improve American competitiveness, increase productivity through greater employee participation, and strengthen our free enterprise economy. More information: website – www.esopassociation.org and blog – www.esopassociationblog.org.

Filed under: DOL Proposed Fiduciary Regulation, Economic Performance, Government Affairs, , , ,

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