The ESOP Association Blog

Covering ESOPs and employee ownership

May 17, 2013 • 4:00 pm 0

News: Pro-ESOP Bill Introduced in the House; Bill Aims to Protect ESOPs

ESOP Association News

The ESOP Association sent out the following press release this afternoon. We are sharing with readers here.

For Immediate Release: May 17, 2013

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

Pro-ESOP Bill Introduced in the House; Bill Aims to Protect ESOPs 

May 17, 2013 (Washington, DC) – Congressmen Brett S. Guthrie (R-KY), David Loebsack (D-IA), and Congresswoman Lynn Jenkins (R-KS) introduced H.R. 2041, a bill to modify the definition of fiduciary under the Employee Retirement Income Security Act of 1974 to make clear appraisers of employee stock ownership plans (ESOPs) are not ERISA fiduciaries.

H.R. 2041 is the companion bill to S. 273 introduced by Senator Kelly Ayotte in February 2013. 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While the original proposal was withdrawn, if any regulation was finalized to make appraisers ERISA fiduciaries, there would be extreme confusion over whether the appraiser or the trustee[s], and other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 sometime in 2013. It is expected DOL will not alter the proposed regulation’s mandate that all appraisers of ESOP stock be ERISA fiduciaries.

“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. As we’ve said before, research proves that ESOPs, and companies with other forms of employee stock ownership, provide more sustainable employment. According to the 2010 General Social Survey, employee stock owned companies laid off employees at a rate of 2.6% in 2010, whereas the rate for conventionally-owned companies was 12.1%. Bottom-line, ESOP companies’ employees, in the aggregate, save Uncle Sam $7 for every dollar Uncle Sam spent promoting employee ownership,” stated ESOP Association President, J. Michael Keeling.

###

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, Government Affairs, , , ,

May 7, 2013 • 10:00 am 0

36th Annual Conference – Legislative Information

If you’re attending the Association’s 36th Annual Conference this week in Washington, DC, and will be meeting with your member of Congress, below are a few highlights on recent pro-ESOP legislation and information concerning a negative ESOP proposal in the President’s 2014 FY Budget.

You can find additional information in the Lobbying Kit which will be available at the Conference and in the 2013 Spring Advocacy Kit which is available on the website.

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

Press release here.

On February 13, 2013, 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).

Co-Sponsors

Senator Roy Blunt, R-MO

Senator Amy Klobuchar, D-MN

Senator Mary L. Landrieu, D-LA

Senator 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.

Pro-ESOP Bill Introduced in Senate, S. 742

Press release here.

The ESOP Association expresses strong support for S.742, the Promotion and Expansion of Private Employee Ownership Act of 2013, introduced April 17, 2013 by Senator Ben Cardin (D-MD) and co-sponsored by a bi-partisan group of Senators. Co-sponsors include:

Original Co-Sponsors

Senator Ben Cardin (D-MD)

Senator Roy Blunt (R-MO)

Senator Amy Klobuchar (D-MN)

Senator Mary Landrieu (D-LA)

Senator Pat Roberts (R-KS)

Senator Debbie Stabenow (D-MI)

Senator John Thune (R-SD)

Joined as Co-Sponsors as of April 23

Senator Mike Crapo (R-ID)

Senator Sherrod Brown (D- OH)

S. 742 would amend the Internal Revenue Code of 1986 and the Small Business Act to expand the availability of employee stock ownership plans (ESOPs) in S corporations and expand opportunities for existing S ESOP corporations.

The ESOP Association Disappointed with ESOP Proposal in President Obama’s Budget

Press release here.  Additional information here and here.

Today, The ESOP Association expressed disappointment over a provision in the President’s Fiscal Year 2014 budget that pertains to employee stock ownership plans (ESOPs). Included in the budget document is a provision to eliminate Internal Revenue Code section 404(k). This incentive for ESOP creation and operation permits a C corporation to deduct the value of dividends paid on ESOP stock passed through to employees in cash, deductions used to pay the ESOP acquisition loan, or when the employee reinvests in more company stock in his/her ESOP account balance.

“This is a major proposal to reduce an incentive to create and operate an ESOP; we are disappointed it has been included in the President’s budget,” said ESOP Association President, J. Michael Keeling. “It is counter-intuitive to eliminate an incentive for a policy that resulted in fewer layoffs during the Great Recession. According to the 2010 General Social Survey, employee stock owned companies laid off employees at a rate of 2.6% in 2010, whereas the rate for conventionally-owned companies was 12.1%.  It’s baffling to hear the Administration preach about creating jobs and then take away a proven policy that sustains jobs.”

Filed under: Conference Information, DOL Proposed Fiduciary Regulation, Government Affairs, , , , ,

May 6, 2013 • 10:00 am 0

2013 Annual Conference Lobbying Kit

If you’re joining us for the 2013 Annual Conference in Washington, DC on May 9 – 10, and are planning to meet with your member of Congress while in town, download a copy of the Lobbying Kit. It’s a shortened version of the general Advocacy Kit and contains all the information you need for a successful meeting.

2013 Annual Conference Lobbying Kit

Copies will be available at the Conference. Visit the registration desk or the membership services booth to pick up a copy.

Filed under: Conference Information, Government Affairs, , ,

May 2, 2013 • 12:28 pm 0

2013 Spring Advocacy Kit Now Available

The 2013 Spring Advocacy Kit is now available on The ESOP Association’s website.  It can be found under Advocate on the main navigation at the top of the page.

If you would like to download a copy use this link: Spring 2013 Advocacy Kit .

Filed under: Government Affairs, , ,

April 26, 2013 • 11:00 am 0

Keep Up With Advocacy Updates

With tax reform and the President’s budget provision in circulation (more information here), we wanted to share several options for staying on top of Association news.

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

ESOP Association Blog – government affairs information is posted here as it happens. There is an email subscription feature on the homepage. You’ll be notified by email when new information is posted. The RSS feed is another option for updates.

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 information breaks, the Association will share information in several forms and in several places to reach members.

Got questions? Let us know.

Filed under: Government Affairs, Member Services, ,

April 25, 2013 • 11:00 am 0

ESOP Company Congressional Visits – Part 2

Part 2 of the Congressional visits story. Remember, if you’d like information on how to schedule a Congressional visit at your company, download a copy of The ESOP Association’s Congressional Company Visit Kit.

Don’t forget to share your stories with us, media AT esopassociation.org

Senator Amy Klobuchar Visits Douglas Machine, Inc.

On February 22, 2013, Douglas Machine had the honor of hosting Senator Amy Klobuchar for the purpose of ESOP awareness and education.

After a short meet and greet, CFO, Tom Wosepka, gave a presentation on Douglas’s history, products, and ESOP. The presentation led into a discussion on some of the regulatory hurdles Douglas and other ESOPs have been encountering in recent years. The Senator acknowledged these challenges and understood how they impact Douglas’s business. There was also discussion of S. 273, which would keep the DOL from redefining the term fiduciary as it relates to ESOPs. Senator Klobuchar’s staff indicated that they would work with her to consider co-sponsorship of the bill and the Senator co-sponsored the bill on March 6, 2013.

The Senator took a tour of a portion of the Douglas manufacturing facility and was able to discuss what it means to work at an ESOP company with employee owners, Julie Rubner and Andrew Freyholtz. Along the way she had brief discussions with numerous employee owners and saw some of Douglas’s equipment being tested prior to shipment. During this time the MN/Dakotas Chapter’s Government Relations Committee Co-Chair, Steve Storkan, gave the Senator’s aides a more in-depth understanding of the legislative activity surrounding ESOPs.

As the tour came to a close, the Senator was provided with detailed information on ESOPs and exchanged contact information for future dialogue with high hopes that the Senator will use her influence on Capitol Hill to advocate on behalf of ESOPs.

Senator Klobuchar meets with the employee owners of Douglas Machine, Inc.

Senator Klobuchar meets with the employee owners of Douglas Machine, Inc.

Thanks to MN/Dakotas Chapter Administrator Sue Crockett for sharing information with the Association.

Congressman Raul Labrador Visits Pacific Steel & Recycling

The following was forwarded to the Association by Dana Friede, Director of Marketing for Pacific Steel & Recycling in Great Falls, MT: “I wanted to let you know that Pacific Steel & Recycling hosted Congressman Raul Labrador as a visitor to its new steel sales and steel processing facility in Nampa, Idaho yesterday. Congressman Labrador toured our office and steel warehouse, observing our employee owners at work and asking them questions. He was interested in the concept of an ESOP and was familiar with the way it works. From what I’ve been told, he seemed very pro-business.”

An article about the visit appeared in the Idaho Press-Tribune.

Congressman Raul Labrador meets with the employee owners of Pacific Steel & Recycling.

Congressman Raul Labrador meets with the employee owners of Pacific Steel & Recycling.

Thanks to Northwest Chapter Administrator Donna Walseth for sharing information with the Association.

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

April 24, 2013 • 11:06 am 0

ESOP Company Congressional Visits – Part 1

The best way to show your member of Congress what your ESOP means to employee owners and the company is to have your member of Congress visit your company. Several ESOP Association members have done just that and we’re going to be sharing their stories over the next two days.

If you’d like information on how to schedule a Congressional visit at your company, download a copy of The ESOP Association’s Congressional Company Visit Kit.

If your member of Congress met with employee owners at your company, or if a meeting was scheduled with a member of Congress in the Washington or District office, please share it with us at media AT esopassociation.org.

Senator Amy Klobuchar Visits WASP Inc.

Senator Amy Klobuchar (D-MN) visited WASP Inc., located in Glenwood, MN, on February 19, 2013.

During her tour with WASP employees, President and CEO, Dane Anderson, stressed to the Senator that statistics show that a large percentage of all workers and Americans nearing retirement age have less than $30,000 saved for retirement. An employee at WASP, with 15 years of participation, already has approximately $300,000 in their ESOP account.

Senator Klobuchar was asked to reintroduce the Promotion and Expansion of Private Employee Ownership Act, which she co-sponsored in the 112th Congress. She was also urged to consider support for Senator Ayotte’s bill (S. 273) to block the DOL’s ill-advised efforts to treat ESOP appraisers as fiduciaries and, most importantly, to protect ESOPs from becoming a victim of tax reform. As this posting, Senator Klobuchar has co-sponsored S. 273.

Klobucher at WASP

Senator Klobuchar with employee owners of WASP Inc.

Thanks to MN/Dakotas Chapter Administrator Sue Crockett for sharing photos and information with the Association.

Congressman Danny K. Davis Visits Burwood Group, Inc.

Rachel Gibson, Director of Finance and Operations at Burwood Group, Inc., located in Chicago, IL, reported that Congressman Danny Davis (D-IL) visited the company on February 21, 2013. Ms. Gibson said of the visit: “The meeting was very positive. Congressman Davis provided an overview of his roll leading one of the most diverse districts in the U.S., along with comments on the general concerns that our nation is facing related to the Sequester. Congressman Davis is a strong supporter of ESOPs and has been for many years. We were honored to share our passion for ESOPs with him and are encouraged to have a strong supporter of our cause on the Ways and Means Committee.”

Employee owners of Burwood Group, Inc. and Congressman Danny Davis.

Employee owners of Burwood Group, Inc. and Congressman Danny Davis.

Burwood Group CEO Mark Theoharous, Congressman Danny Davis, and Burwood Group President, Jim Hart.

Burwood Group CEO Mark Theoharous, Congressman Danny Davis, and Burwood Group President, Jim Hart.

David Solomon, Congressman Danny Davis, and Rachel Gibson.

David Solomon, Congressman Danny Davis, and Rachel Gibson.

Thanks to Illinois Chapter Administrator Donna Walseth for sharing photos with the Association.

Iowa Chapter Members Step Up in Des Moines, IA for ESOP Day at the State Capitol

A group of 10 Iowa ESOP Association members participated in an ESOP Day at the state capitol in Des Moines on February 27, 2013. The purpose of the visit was to share their support of the Iowa Partners for Economic Progress proposed budget that includes a request for $1 million to establish a program to encourage the formation of ESOPs in Iowa.

Chapter members met with five House members and five Senators presenting a background statement and ownership census flyer (link below photo) asking for their support.  Members felt bipartisan support of the proposal was favorable. Another day at the Capitol may be scheduled prior to a vote on the legislation.

Left to right: Wayne Hansen, CI3; Debbie Williams and Scot Storjohann, BTC ESOP Services; Al Ryerson and Greg Weber, BCC Advisers; Terry McGonegle, Wright Tree Service; Don Brown, Van Meter Inc.

Left to right: Wayne Hansen, CI3; Debbie Williams and Scot Storjohann, BTC ESOP Services; Al Ryerson and Greg Weber, BCC Advisers; Terry McGonegle, Wright Tree Service; Don Brown, Van Meter Inc.

Background statement and ESOP census information leave behind – Iowa Nebraska Chapter – Day at the Capital – ESOP Census

Thanks to Iowa/Nebraska Chapter Administrator Donna Walseth for sharing information with the Association.

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

April 22, 2013 • 1:22 pm 0

Senator Sanders Questions Treasury Secretary Regarding ESOP Proposal in the President’s 2014 Budget

On April 15, 2013, The ESOP Association shared information with members about President Obama’s FY2014 Budget containing a condemnation of employee ownership through an ESOP in any company with over $5 million in revenue. Such a view of ESOPs is a reversal of Executive Branch support of ESOPs, both Democratic and Republican, since 1975!

(This blanket condemnation of ESOPs in companies with over $5 million in annual revenues is set forth as a justification in the FY2014 Administration budget proposal’s Greenbook for the repeal of a 1984 law permitting C corporations to take a tax deduction for the value of dividends paid on ESOP stock under certain terms and conditions. More information here.)

Senator Bernard Sanders (I-VT), a long-time ESOP advocate and a member of the Senate Budget Committee, recently questioned the Treasury Secretary, Jacob J. Lew, regarding the Administration’s view of ESOPs. He sent the question in writing on April 17, 2013 to Treasury Secretary Lew and has gone on the record asking the Administration to justify its position that only companies with 10 to 20 employees can benefit from employee ownership. This position disagrees with over 35 years of research that show ESOP companies, no matter what size, in the vast majority of instances, are more productive, more profitable, and provide locally-controlled, sustainable jobs. You can read Senator Sanders’s question for the record here - Sanders ESOP Question.

“The ESOP community should find the Administration’s ESOP position shocking,” said ESOP Association President, J. Michael Keeling. “Not only does it reverse almost 40 years of support for ESOPs, but also, it’s counter-intuitive to eliminate an incentive for a policy that resulted in fewer layoffs during the Great Recession. It’s baffling to hear the Administration preach about creating jobs and then off-handedly dismiss a proven policy that sustains jobs.”

Filed under: Government Affairs, , , , ,

April 18, 2013 • 10:36 am 0

ESOP Association News: Pro-ESOP Bill Introduced in Senate

ESOP Association News

The ESOP Association sent out the following press release today. We’re sharing with our blog readers.

For immediate release: April 18, 2013

 Pro-ESOP Bill Introduced in Senate

April 18, 2013 (Washington, DC) – The ESOP Association expresses strong support for S.742, the Promotion and Expansion of Private Employee Ownership Act of 2013, introduced April 17, 2013 by Senator Ben Cardin (D-MD) and co-sponsored by a bi-partisan group of Senators including, Roy Blunt (R-MO), Amy Klobuchar (D-MN), Mary L. Landrieu (D-LA), Pat Roberts (R-KS), Debbie Stabenow (D-MI), and John Thune (R-SD).

S. 742 would amend the Internal Revenue Code of 1986 and the Small Business Act to expand the availability of employee stock ownership plans (ESOPs) in S corporations and expand opportunities for existing S ESOP corporations.

“Needless to say, it is extremely pleasing to see these Senate leaders, representing bi-partisanship, stand up for employee stock ownership through ESOPs, in contrast to the Administration’s position that ESOPs do not benefit employees, their companies, and our nation if a company has more than $5 million in revenue per year,” said ESOP Association President, J. Michael Keeling. “Research proves that ESOPs, and companies with other forms of employee stock ownership, provide more sustainable employment. For example, according to the 2010 General Social Survey, employee stock owned companies laid off employees at a rate of 2.6% in 2010, whereas the rate for conventionally-owned companies was 12.1%. We need policies to encourage employee stock ownership, and new policies, such as S. 742, to increase ownership among more working Americans.”

###

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: Employee Ownership Message, Government Affairs, , , , ,

April 15, 2013 • 12:49 pm 0

ESOP Association – Advocacy Update

ESOP Association News

President’s Budget Says ESOPs Too Risky and Bad for Employees!

Reverses 39 Years of Executive Branch Support of ESOPs

In justifying a repeal of a tax incentive Congress enacted in 1984 permitting C corporations to have a tax deduction for dividends on ESOP stock paid to employee accounts, the President’s budget says that ESOPs are too risky and employees working in corporations with more than $5 million in gross revenue a year cannot understand how their work “impacts” the company where they work.

Such a statement is ridiculous.

The pages and pages of research that prove ESOP companies are more profitable, more productive, provide more sustainable jobs, with better retirement benefits, in the vast majority of instances, were never based on little companies with less than $5 million annual revenue. (For evidence, click here.)

99.5% of The ESOP Association’s corporate members have more than $5 million in revenue.

While the ESOP community has had debates over tax law details promoting ESOPs with the Administrations of Presidents Ford, Carter, Reagan, Bush I, Clinton, and Bush II, never ever has an Administration said ESOPs were no good. (See the following pages from the Department of Treasury’s Green Book which provides an explanation for President Obama’s Administration’s justification for repeal of the dividend deduction provision. Note the highlighted text under the Reasons for Change section – Green Book Explanation)

The ESOP community cannot sit by and let this characterization stand. It is wrong; it is dangerous to the future of your ESOP, and your clients ESOPs.

Please be alert to suggested communications to Congress as the work on tax reform proceeds.

Or just send a message NOW to your Senators and Representatives that you are dismayed, shocked, and flabbergasted with the Administration’s view of ESOPs being bad for employees.

Filed under: Government Affairs, ,

Welcome to the employee ownership blog of The ESOP Association.
The place where you'll find the latest information on ESOPs and employee ownership news.
Serving the entire ESOP community.

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 41 other followers

Flickr Stream

36th Annual Conference

More Photos
Follow

Get every new post delivered to your Inbox.

Join 41 other followers