The ESOP Association Blog

Covering ESOPs and employee ownership

February 2015 Wrap-Up

Miss something? We’ve got you covered.

We shared a list of upcoming Chapter events for March.

Don’t forget — the Edmunson Scholarship deadline is March 6!

Find your ESOP Chapter.

ESOP Association President, J. Michael Keeling, talked about the importance of inviting your member of Congress to visit your ESOP company.

The ESOP Association submitted comments to the Senate Committee on Finance Tax Reform Working Group regarding tax reform.

Déjà Vu? Tax Reform in the Senate?

Download your copy of the February 2015 ESOP Report.

Edmunson Scholarships are open for applications.

We shared some ESOP company news.

Updated publication –> Your ESOP: It’s for all of us.

A thank you to Chapter leader, Gale Marett

The Employee Ownership Month Poster Contest opened for submissions.

The ESOP Association submitted comments to the House Ways and Means Committee regarding the state of the U.S. economy and policies that can promote job creation and economic growth.

We shared some tips for winning AACE.

The ESOP Association expressed disappointment once more over a provision in President Obama’s Fiscal Year 2016 budget that pertains to ESOPs.

Filed under: Chapter News, Employee Ownership Foundation, Employee Ownership Message, Employee Ownership Month (EOM), Government Affairs, Publication, TEA Members,

Congressional Visits & ESOP Companies

ESOP Association President, J. Michael Keeling, discusses the importance of inviting your member of Congress to visit your ESOP company.

 

Filed under: Government Affairs, ,

RELEASE: The ESOP Association Submits Comments to the Senate Committee on Finance’s Tax Reform Working Group Regarding Comprehensive Tax Reform

The ESOP Association sent out the following release this morning.

For Immediate Release: February 19, 2015

The ESOP Association Submits Comments to the Senate Committee on Finance’s Tax Reform Working Group Regarding Comprehensive Tax Reform

February 19, 2015 (Washington, DC) – On February 18, 2015, The ESOP Association submitted comments to the Senate Committee on Finance regarding tax reform, specifically stating how employee stock ownership plans (ESOPs) are spot on with the first six principles outlined by Finance Committee Chair Orrin Hatch (R-UT) for comprehensive tax reform, and arguably exceeding the seventh principle. The statement was directed to Senator Mike Crapo (R-ID) and Senator Sherrod Brown (D-OH), Chair and Ranking member of the Tax Reform Working Group on Savings & Investment.

As noted by ESOP Association President, J. Michael Keeling: “I ask only two things of the Committee members — for current ESOP tax policy to be viewed with objectivity and to be considered fairly during the process. As ESOPs meet, and exceed, the seven principles outlined by Senator Hatch for comprehensive tax reform (Economic Growth, Fairness, Simplicity, Permanence, Competitiveness, Promoting Savings and Investments, and Revenue Neutrality) we feel it is reasonable to ask that ESOP laws to promote the creation and operation of employee-owned companies be preserved.”

Read the full statement on The ESOP Association’s website: http://www.esopassociation.org/advocate/esop-bulletin.

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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.

 

More Information:

Amy Gwiazdowski

202/293-2971

amy AT esopassociation.org

@ESOPAssociation

Filed under: Government Affairs, ,

Déjà Vu? Tax Reform in the Senate?

The following article originally ran as the Washington Report column in the February 2015 issue of the ESOP Report, the newsletter of The ESOP Association.

Déjà Vu? Tax Reform in the Senate?

Beginning with the results of the November mid-term elections, talk about the now Republican controlled tax committees new Chairs, Senator Orrin Hatch [R-UT] and Congressman Paul Ryan [R-WI] about re-writing the Federal tax code to lower the top rates and to get rid of tax “loopholes” was common. [By the way, a sidebar — never forget that the late Senator Russell Long [D-LA], the legislative godfather of ESOP tax benefits used to say that when it came to tax reform, the common refrain could be summed up as follows: Don’t tax me, don’t tax thee; tax that fellow behind the tree.]

Most so-called inside the beltway experts that appear on TV news cable shows opined, it will never hap­pen, and who cares?

Well, maybe it is time to wake up to what Chair Hatch is doing in the Senate on an expedited schedule.

Some history for the reader: During the first quarter of 2013, the first session of the 113th Congress, the Chair of the House Ways and Means Committee, now retired Dave Camp [R-MI], began a process where members of the Committee, both Republicans and Democrats, were divided into “working” groups, or what one might call “ad hoc task forces” to study in depth certain generic areas of the huge Federal Income Tax Code — energy, retirement savings, foreign, etc. — and to develop recommendations to eliminate tax loop­holes in the areas that task force was studying.

By late 2013, the task forces’ bi-partisan co-operation evaporated, as Democrats saw that increasing rev­enues was not part of the Republican agenda, as the Democrats wanted the higher income to pay enough to offset cuts in rates for the lower income plus add some money to the Federal basket to offset national debt, and to pay for more infrastructure funded by the Federal government, among other things.

Most of the inside the beltway cable TV pundits, left and right, proclaimed the tax reform effort dead. [Note: the effort came to a halt in the Senate when then Chair Senator Max Baucus announced his retire­ment to be Ambassador to China.]

Clearly Chair Camp had different ideas, and kept his Republican members at work, and from each task force, came up with recommendations, and in private meetings with Chair Camp and Republican members, developed the “Camp tax reform” proposal, which by the way, left ESOP tax benefits untouched.

Fast forward to right now. Chair Hatch, with some seemingly minor adjustments, has announced ad hoc task forces of his members of the Committee on Finance, with both Republican and Democrat members to develop recommendations in their areas, including one that will review all laws related to ERISA plans.

But here is the big difference; Chair Hatch intends his task forces not to study for 12 to 14 months and to make recommendations in 2016. He has instructed the leaders of each task force to make recommendations by March 2015 — which is just around the corner.

What is the word for ESOP advocates? Well, just because the Camp proposal did not diminish ESOP tax benefits, ESOP advocates should not assume that the Senate Finance Committee will not touch ESOP tax benefits. Over a 10 year period, under tactics for revenue estimates used in the past, getting rid of ESOP tax benefits would give the Committee around $14 billion over 10 years to put in the Federal Treasury and lower tax rates by that amount.

Here are the Senators that are on the task force that will decide initially what to say about ESOP tax ben­efits: Chairing the group is Senator Michael Crapo [R-ID], and his Republican members are Richard Burr [R-NC], Johnny Isakson [R-GA], Dean Heller [R-NV], and Tim Scott [R-SC]; the Democrat leader is Sherrod Brown [D-OH], and the other Democrats are Ben Cardin [D-MD], Bob Casey [D-PA], Mark Warner [D-VA], and Robert Menendez [D-NJ].

It is important that the positive ESOP message become front and center in these men’s minds as they do work on ERISA/ESOP issues, and that message must come from the ESOP advocates working in the ESOP companies in their states — i.e. their voters.

In due time, the Association will be reaching out to Idaho, North Carolina, Georgia, Nevada, South Carolina, Ohio, Maryland, Pennsylvania, Virginia, and New Jersey ESOP Association members refreshing memories about the macro evidence making the case for employee ownership through the ESOP model, while urging each ESOP company to tell their own story first and foremost.

As it often said: Stay alert, be motivated, and take action.

Filed under: Government Affairs, , ,

RELEASE: The ESOP Association Submits Comments to the House Ways and Means Committee on Moving America Forward

The ESOP Association sent out the following release today.

For Immediate Release: February 4, 2015

The ESOP Association Submits Comments to the House Ways and Means Committee on Moving America Forward

February 4, 2015 (Washington, DC) – January 30, 2015, The ESOP Association submitted comments to the House Ways and Means Committee regarding the state of the U.S. economy and policies that can promote job creation and economic growth. The hearing, ‘Moving America Forward: With a Focus on Economic Growth’ was held on January 13, 2015.

As noted from the statement by ESOP Association President, J. Michael Keeling: “Most relevant to the review of jobs and wealth creation for all who work is that shared ownership through the ESOP model is an excellent jobs policy. Having policies that increase the probability that people with jobs will stay employed is the most important jobs policy Congress can promote. Data indicates that during the Great Recession employee stock owned companies were four times less likely to lay off employees than conventionally-owned companies.”

He concluded, “Keeping and expanding a proven policy, more employee ownership via the ESOP model, can significantly address the questions reviewed with regard to jobs in our nation, and our nation’s economy.”

Read the full statement on The ESOP Association’s website: http://www.esopassociation.org/advocate/esop-bulletin.

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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.

 

More Information:

Amy Gwiazdowski

202/293-2971

amy AT esopassociation.org

@ESOPAssociation

Filed under: Government Affairs,

RELEASE: Once More, Administration Takes Aim at Employee Ownership

The ESOP Association sent out the following release today regarding President Obama’s Fiscal Year 2016 budget.

For Immediate Release: February 2, 2015

Once More, Administration Takes Aim at Employee Ownership

February 2, 2015 (Washington, DC) – Today, The ESOP Association expressed disappointment once more over a provision in President Obama’s Fiscal Year 2016 budget that pertains to employee stock ownership plans (ESOPs). Included in the budget document is a provision to ‘eliminate deduction for dividends on stock of publicly-traded corporations held in ESOPs’ paid to ESOP participants.

“The Administration’s proposal is puzzling to the ESOP community. On one hand, the Administration goes out of its way to tout the work it’s doing to benefit average income employees, yet, the one policy on the books that encourages employers to provide additional income to employees is slated to be cut,” said ESOP Association President, J. Michael Keeling. “The roots of the employee ownership movement position it squarely as a second income plan. It’s been retained by Congress since 1984 to address income inequality by encouraging employee owners to have more income from ownership. The Administration needs to step up and encourage broad-based, inclusive capitalism and increase employee ownership to ensure sustainable employment for U.S. workers, and more income for average pay employee owners, not decrease support.”

###

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.

 

More Information:

Amy Gwiazdowski

202/293-2971

amy AT esopassociation.org

@ESOPAssociation

Filed under: Government Affairs,

January 2015 Monthly Wrap-up

As it turns out, January was a busy month…

We noted some upcoming events for February

We reported that the Department of Labor will not mandate ESOP appraisers be ERISA fiduciaries

The ESOP Association filed an amicus in Supreme Court case Tibble V. Edison Int’l

ESOP Association members were named Great Places to Work!

The January 2015 ESOP Report was published

We shared a guest post from AACE Awards Volunteer Coordinator, Paul Horn – 2015 AACE Awards

We highlighted a new report from the Center for American Progress that discusses inclusive prosperity

2015 conference sponsorship were announced

We mentioned a few ways to keep up with Association updates

2015 AACE Awards category information was shared

The Two Day Professional ESOP Forum was announced

The ESOP Administration Handbook was highlighted

ESOP Experts 2015 – If you’re interested, more info here

2015 AACE Awards — we told you what you need to know to enter this year

Filed under: AACE - Annual Awards for Communications Excellence, Chapter News, Conference Information, DOL Proposed Fiduciary Regulation, Employee Ownership Message, Government Affairs, Member Services, Publication, Retirement Issues, TEA Members,

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.

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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.

More Information:

Amy Gwiazdowski

202/293-2971

amy AT esopassociation.org

@ESOPAssociation

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, ,

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