The ESOP Association Blog

Covering ESOPs and employee ownership

Reports are the Department of Labor Will Not Mandate ESOP Appraisers be ERISA Fiduciaries

On Monday, January 26, 2015, ESOP Association President, J. Michael Keeling, received a call from a senior official at the Department of Labor (DOL) regarding the proposed fiduciary rule noting it will not mandate that appraisers of private ESOP company stock be ERISA fiduciaries. (The rule was originally proposed in 2010.)

It’s generally known among DC groups that are following the DOL’s proposed fiduciary rule that the portion of the rule directed toward ESOPs will not be included in the re-proposed fiduciary proposal from 2010.

It should be noted, however, that the DOL will be looking for clarity and guidance on ESOP appraisals that are in accord with ERISA rules for private ESOP stock to be valued at fair market value, as defined by a ‘willing buyer/willing seller’ construct.

It should also be noted that while the above information on the re-proposal is now widely known, no specific proposed rule has been published yet. When published, we will let ESOP Association members know.

Filed under: DOL Proposed Fiduciary Regulation, Government Affairs

The ESOP Association Files Amicus in Supreme Court Case Tibble V. Edison Int’l

The ESOP Association sent out the following release today. We share it with readers here.

For Immediate Release: January 26, 2015

The ESOP Association Files Amicus in Supreme Court Case Tibble V. Edison Int’l

January 26, 2015 (Washington, DC) – On January 23, The ESOP Association filed an amicus curiae to the Supreme Court of the United States in the case Tibble v. Edison Int’l, No. 13-550.

President of The ESOP Association, J. Michael Keeling explains why the case is so important, “The Association is interested in the outcome of Tibble because it focuses on how the agencies that enforce laws and regulations governing ERISA plans, such as an ESOP (employee stock ownership plan), calculate the ERISA law that has a six year statute of limitation on when they, or plaintiff lawyers, can sue the sponsors and fiduciaries of an ERISA plan. If the Court sanctions the position of the petitioners, Tibble et. al, then any decision made at any time since the establishment of the ERISA plan can be deemed a violation of ERISA, even if the decision was made ten, fifteen, or even thirty years ago!”

In essence, petitioners are asking the Supreme Court to interpret an ERISA fiduciary’s duty to monitor prior decisions made more than six years ago, and decide if that long ago decision was not “right” in hindsight, or prudent to use the words of trustee law, and then, if the fiduciary does not unravel the long ago decision, s/he may be sued.

“Congress, in both ERISA and legislative history, in accordance with seven hundred years of common law principals, makes it clear that if a fiduciary’s decisions seemed prudent under the circumstances when made over six years earlier, is not to be second guessed,” President Keeling said. “To bring this into easily understood terms, in the Super Bowl several years ago, the referees maybe should have called pass interference on a reception in the end zone that resulted in Team A winning, and the NFL has decided to take the touchdown away, and declares Team B the winner,” he concluded.

The ESOP Association feels that if the Supreme Court negates the six year ERISA statute on limitations to sanction “Monday morning quarterbacking” by the regulatory agencies and/or plaintiff lawyers, many employers will back off establishing ESOPs and thus overall benefits for employee owners in their retirement years will be reduced.

Counsel for Amicus Curiae for The ESOP Association was Mayer Brown, LLP.


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 – and blog –

More Information:

Amy Gwiazdowski


amy AT


Filed under: Government Affairs, , ,

Secretary of Labor, Thomas E. Perez, Mentions ESOPs in Remarks

On October 20, Secretary Perez spoke at the National Press Club in Washington, DC, the topic: Shared Prosperity: Building an Economy that Works for Everyone. While the majority of the speech focused on private-sector job growth, shared prosperity, and B Corps, near the end of remarks he noted:

“Employee Stock Ownership Plans are another example of business leadership. In 2012, there were roughly 6,800 such plans, with nearly 14 million total participants and assets just over $1 trillion. When used as they were intended, ESOPs can contribute to the growth of a company while helping employees save for retirement.

The challenge moving forward for B Corps and ESOPs is to take these successful models to further scale.”

The Secretary’s full remarks can be found here.

ESOP Association President, J. Michael Keeling said, “I was pleased to read these remarks. As you know, the ESOP community has many concerns regarding a proposed regulation by the DOL regarding the definition of a fiduciary. We have been working with individuals at the DOL and we’re hopeful that this statement represents a change for the good.”

Filed under: Government Affairs, ,

The ESOP Association, Congressional Elections Update, November 2014

ESOP Association President, J. Michael Keeling, summarizes his presentation from the 2014 Las Vegas Conference & Trade Show on the Congressional elections and how ESOP champions fared.

Filed under: Conference Information, Government Affairs, Member Services, ,

How to Keep Up With Advocacy Updates

Want the latest government affairs news? We have it.

Website: all information is posted to The ESOP Association’s website. Check the ESOP Bulletin under Advocacy and the News section on the homepage.

ESOP Association Blog: government affairs information will be posted to The ESOP Association’s Blog as it happens. There is a subscription feature on the homepage of the blog. You’ll be notified by email when new information is posted. You can also subscribe to the RSS feed.

Facebook and LinkedIn: information and links to information are posted to the Association’s Facebook page and LinkedIn group for members to stay involved.

YouTube Channel: when important information is announced, additional commentary is posted to the Association’s YouTube Channel.

Email: emails to the membership will continue on important issues.

As always, as information breaks, you’ll be notified and the Association will continue to share information in several forms and places to reach members.


Filed under: Government Affairs, Member Services,

Use Time Wisely: Think Elections

The following article originally ran as the Washington Report column in the October 2014 issue of the ESOP Report, the newsletter of The ESOP Association.

If you’re joining The ESOP Association at the 2014 Las Vegas Conference & Trade Show at Caesars Palace this November 13th and 14th, there will be an election wrap-up by ESOP Association President, J. Michal Keeling, at the Friday Lunch: November 14, 12:15 pm – 1:45 pm, Palace Ballroom.

Use Time Wisely: Think Elections

It is a waste of time to talk about what Congress may do in its lame duck session after the November Mid-term elections. Who knows, as crisis after crisis is exploding, and what next week will require is unknown, much less what will be the focus of Congress in November and December.

But, with members of Congress, the vast majority running for re-election, some in tough races, some not, moving around their districts and states, it is a perfect time to have your Congressperson, or her/his staff, or Senator, or his/her staff, come visit, or to interact at a local event, or to send a letter, or if you have contacts in her or his office, an email, asking that s/he co-sponsors H.R. 4837, the House pro-ESOP tax bill, or S. 742, the Senate pro-ESOP tax bill.

The track record is clear: Since 1990, on advice of the then leading champion for ESOPs on the House Ways and Means Committee, as the ESOP community came out of the 80s with a tax bill nearly every year, often reducing ESOP tax benefits, said to ESOP leaders: “You people need an offense; remember the best defense is an offense. I will introduce each Congress a pro-ESOP tax bill, bi-partisan, so we get members to say that they are “for” ESOPs, sending a message to those in the government and on Congressional professional staffs that are ESOP cynics, that if you want to hurt ESOPs, you will have a tough fight on your hands.”

So, each Congress, since 1990, the ESOP community has been able to go to members of Congress to get them to declare that s/he is for employee ownership through the ESOP model, and it is clear that when literally 100 and sometimes more, many on the tax committees of Congress, make it clear before the tax committees begin work on reducing tax benefits in order to lower tax rates, those with a knife out for ESOPs say, “Why take on a task and lose?”

A more colorful comment by a member of Congress some years ago who still serves on the House Ways and Means Committee when S ESOP advocates protested the proposal in 2001 to apply a corporate income tax on the ESOP’s share of its S sponsor’s taxable income, he said, “I learned a long time ago not to step on that ESOP snake!”

His remark was basically saying that the pain from other members not liking any negative action against ESOPs was not worth the amount of new tax revenue gained by squeezing ESOP companies and employees to pay more money.

“Stay with it” is the motto for now, and for the next two months, if your member of Congress is not a co-sponsor of H.R. 4837, or S. 742, ask; do not be bashful.

And the Election: For years the holy grail goal for ESOP advocates has been that some day, just some day, there would be ESOP voters, who would vote, or at least have a major reason for their vote, on how the candidates stood on ESOPs. The ESOP community is not there yet, but….

There is growing evidence from Association members that they do care how candidates stand on pro-ESOP policy — not big evidence but evidence. Take a look at the list of pro-ESOP men and women on the Association’s website: First, see if your Congressperson or Senator is on the list. Then take note if s/he is in a tough re-election fight. Then think about how you will vote, in accord with your values, and your personal and company’s benefits from the ESOP, and put that into your calculation about how you will vote.

Your vote is your business; the Association respects how you vote, but thinking ESOP when you vote is not wrong; it is right.

Filed under: Government Affairs, , ,

New Jersey State Legislation to Encourage ESOPs

The state of New Jersey has joined several other states in encouraging the creation of ESOPs. Recently, the New Jersey State Senate advanced bill S. 945, which provides for gross income tax exclusion for capital gains from the sale of certain employer securities, if at least 30% of the company is sold to the employees. The bill was introduced in January 2014 by New Jersey State Senator Donald Norcross (D-5th District).

This new bill is very similar to one introduced in December 2012 by New Jersey Deputy Speaker of the State Assemblyman, Upendra J. Chivukula (D-17th District) to help motivate small businesses, with 500 or fewer employees, to create ESOPs.

“It’s encouraging to see states introducing bills to encourage ESOP creation,” said ESOP Association President, J. Michael Keeling. “Clearly more state officers are seeing the benefits that employee-owned companies bring to the local economy.”

Similar legislation was also introduced in Missouri earlier this year. In 2012, Iowa’s Governor, Terry Branstad, signed into law an ESOP Initiative, and in addition to the Iowa law encouraging ESOP creation, Iowa’s Economic Development Authority has also put together a new ESOP initiative program to assist companies interested in creating an ESOP.

Filed under: Government Affairs,

The ESOP Association Signs on to Coalition Letters in Support of Retirement Policy

Recently, The ESOP Association joined colleagues in the retirement community in signing on to two letters in support of issues important to the retirement savings community.

The first, as part of the Retirement Savings Network, of which the Association is a member, was a letter celebrating the 40th birthday of ERISA that included 40 facts about the legislation and the benefits brought to millions in this country that have retirement savings. The letter was sent to all Capital Hill offices.

The second was a statement to the members of the Senate Finance Committee regarding the hearing on retirement savings held on September 16, 2014. The statement was made on behalf of the Coalition to Protect Retirement of which the Association is a member. The ESOP Association also submitted comments on behalf of Association members.

Filed under: Government Affairs, , ,

The ESOP Association Submits Statement to Senate Committee on Finance in Regard to Retirement Savings

On September 16, 2014, the Senate Committee on Finance held a hearing on the state of retirement savings in the U.S. The ESOP Association submitted a statement for the record highlighting the prosperity of ESOP companies and the value employee ownership can bring to a company.

In the statement, ESOP Association President, J. Michael Keeling noted, “The Senate Finance Committee has a long history of supporting laws that encourage the creation and operation of ESOPs because in the vast majority of instances, ESOP companies are more productive, more profitable, with sustainable jobs for their employees that are locally-controlled, while providing retirement benefits that are greater than most U.S. conventionally-owned companies.”

The full statement can be found on the Association’s website.

Filed under: Government Affairs,

Upcoming Congressional Elections: Important

The following article originally ran as the Washington Report column in the September 2014 issue of the ESOP Report, the newsletter of The ESOP Association.

There is no doubt, no question, that The ESOP Association, from day one of its existence, is all about ESOPs. And with regard to the Association’s focus on its advocacy mission, or its ‘lobbying’ mission if you like, it is all about ESOP laws and regulations.

No matter what you, or anyone may think of the women and men who are elected by voters to serve in the Congress, the bottom line is this — what these people do, or don’t do about ESOP laws and regulations can aid, can improve, or can be the demise of your ESOP, your company’s ESOP, or your clients’ ESOPs.

So while the ESOP community will be the only ones in America who will pay very, very close attention to what is done to impact your ESOP, or not, by the Congress in passing new laws, repealing old laws, and overseeing the implementation of the laws by the regulatory agencies, it is important to be aware of the ‘big’ picture as defined by who will be re-elected in the upcoming 2014 Congressional elections.

As said time and time again by the Association and its leadership, the Association does not presume to tell ESOP advocates and participants in ESOPs how to vote. How a person votes is the prerogative of the individual.

At the same time, the Association has a fiduciary obligation to inform its members who in Congress is ‘for’ ESOPs, and who is openly showing through their actions that s/he is for ESOPs. The Association does hope that each ESOP advocate and participant will weigh how he or she decides to vote based on whether the person seeking re-election has become an advocate for ESOPs by her or his public actions while serving in Congress.

[Good news, as of this day, there is no evidence that any member of Congress is ‘against’ ESOPs and positive ESOP law. This was not always the case as recently as 2010, and in the late 70s until the late 80s, there were probably 10 or so members of Congress in that era that felt current ESOP law was a waste of taxpayer money, or the laws governing ESOPs did not result in ‘real’ employee ownership, and thus needed to be drastically altered. If a member of the current Congress feels this way, s/he has not openly said so, or proposed legislation to do so.]

There are many members of Congress seeking re-election, and in all fairness, are not to be condemned just because they are not on the ESOP Advocates list posted at; it is just that we do not have any public evidence that they have any position with regard to ESOPs because they have not done anything publicly to indicate favoring current ESOP law, or expanding current ESOP law, or opposing an agency’s position that would be detrimental to ESOP creation and operation. Please note, to be an ESOP advocate, the member of Congress must have taken a pro-ESOP position that is public — such as being a co-sponsor of a pro-ESOP legislative proposal, offering a pro-ESOP amendment in a Committee, and making a statement that is part of the permanent Congressional Record that is pro-ESOP. It takes more than being nice to ESOP advocates when they visit a Congressional office.

If any member of The ESOP Association wants details about an ESOP Congressional Champion who is seeking re-election, do not hesitate to contact Association President Michael Keeling, michael AT esopassociation DOT org

For example, he would share what Senator seeking re-election he thinks would single handedly try to stop negative ESOP tax law proposals by filibustering on the Senate floor. He would share what member of the House is serving on the key committees that handle ESOP legislation and ESOP oversight duties. He would help you weigh what you might do, and what you might share with your fellow ESOP participants, in terms of the question, “Does this member of Congress deserve my/our vote because s/he can protect and enhance our ESOP?”

Sure the elections coming in November are ‘big picture’ stuff that the left-wing and right-wing TV cable shows like to bloviate about ad nauseam; but understanding the part of the big picture important to the ESOP community is as important to each ESOP advocate and her/his family.

Filed under: Government Affairs, , ,

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