The ESOP Association Blog

Covering ESOPs and employee ownership

July 2014 Link Round-Up

SEL employee owners share experiences with Illinois Congressman

Congressional visits by ESOP Association members during this year’s Annual Conference

An article by Dr. Joseph Blasi: The Founding Fathers Feared a Powerful One Percent

A few ESOP articles of interest

July ESOP Report was posted

We talked about the Iowa Economic Development Authority’s ESOP Initiative Program

Some more ESOP news highlights

The 2014 Employee Owner Retreat is getting close

2014 Summer Advocacy Kits are available

Filed under: Government Affairs, Member Services, News Links, ,

ESOP Association Members Make Fortune’s 2014 100 Best Companies to Work For

Congratulations go out to four members of The ESOP Association that have been named to Fortune’s list of the 100 best Companies to Work For.

Burns & McDonnell Engineers-Architects, Kansas City, MO

W. L. Gore & Associates, Inc., Newark, DE

Publix Super Markets, Inc., Lakeland, FL

TDIndustries, Inc., Dallas, TX

“Congratulations to our members,” said ESOP Association President, J. Michael Keeling. “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.”

To view the complete list, click here.

Filed under: News Links, TEA Members, , , , , ,

AICPA Supports Bills to Block Change in DOL Fiduciary Rule for Appraisers of ESOPs

We received the following email from the American Institute of CPAs (AICPA) earlier this week and wanted to share. From their website, the AICPA is the world’s largest member association representing the accounting profession, with nearly 386,000 members in 128 countries and a 125-year heritage of serving the public interest. The email follows:

The American Institute of CPAs wrote Congress on July 10 in support of legislation (S. 273 and H.R. 2041) that would block the U.S. Department of Labor’s (DOL) 2010 proposal to change its definition of fiduciary under the Employee Retirement Income Security Act of 1974 to include appraisers of employee stock ownership plans (ESOPs).  The AICPA has repeatedly argued that, rather than expand the definition, as proposed by DOL, rules should be implemented to ensure that only qualified individuals prepare valuations for benefit plans and that individuals follow recognized valuation standards.

The AICPA’s letter to Congress is below.

 

July 10, 2013

 

The Honorable Tom Harkin

Chairman, Health Education Labor and

Pensions Committee

United States Senate

Washington, DC  20510

 

The Honorable Lamar Alexander

Ranking Member, Health Education Labor and Pensions Committee United States Senate Washington, DC  20510

 

The Honorable John Kline

Chairman, Education and Workforce Committee United States House of Representatives

Washington, DC  20515

 

The Honorable George Miller

Ranking Member, Education and Workforce Committee United States House of Representatives Washington, DC  20515

 

RE: S. 273 and H.R. 2041

 

Dear Chairman Harkin, Ranking Member Alexander, Chairman Kline and Ranking Member Miller:

On behalf of the nearly 386,000 members of the American Institute of Certified Public Accountants (AICPA), I am writing to encourage you to cosponsor S. 273/H.R. 2041, a bill that would prohibit the Department of Labor (DOL) from moving forward on its re-proposal to expand the definition of a fiduciary under the Employee Retirement Income Security Act (ERISA) to include independent appraisers of Employee Stock Ownership Plans (ESOPs).

Many CPAs perform business valuation services for ESOPs by providing an independent, third-party objective appraisal of the stock of employer companies that sponsor ESOPs.  Many of these appraisals are also used for other purposes including satisfying the Internal Revenue Service (IRS) requirements related to the ESOP’s tax-exempt status.  The Internal Revenue Code (IRC) requires that ESOP valuations be obtained from an independent appraiser at least annually.  If the DOL were to redefine an ERISA fiduciary to include ESOP appraisers an inherent conflict would arise between the DOL and IRS requirements for ESOP appraisers.  An ERISA fiduciary must act solely in the interest of plan participants and their beneficiaries and therefore cannot provide an independent, third-party objective perspective.

The DOL has not demonstrated a need for such a broad and far-reaching change from more than 35 years of established policy.  The DOL proposal is a draconian response to a very small number of deficient ESOP appraisals. In testimony before Congress and responses to Congressional inquiries and private requests from the AICPA, the DOL has provided only a few cases of deficient appraisals over the past 20 years out of tens of thousands of ESOP appraisals performed annually.  Further, our analysis of the DOL cases involving CPAs found that in the vast majority of these cases the courts found the appraisers’ work to be satisfactory but that the plan trustee improperly used the work of the appraiser.

The DOL has announced plans to re-issue its previous 2010 proposal later this year.  The AICPA is concerned that the new proposal will essentially mirror the previous proposal and, if finalized, will unnecessarily subject all ESOP appraisers to an increased legal liability and require them to purchase expensive fiduciary liability insurance.  This would, in turn, increase the costs to all ESOP plans and reduce the amount available for participants and beneficiaries.

The DOL’s concerns with the quality of ESOP appraisals could be addressed with a far more targeted solution. Unlike other federal agencies including the IRS and Small Business Administration (SBA), the DOL, does not have any minimum requirements or standards for appraisers.  The AICPA and other stakeholders have suggested in comment letters and testimony that the DOL implement rules to ensure that only properly qualified individuals perform ESOP valuations and those individuals follow recognized valuation standards. Requiring ESOP appraisers to have specialized training, credentials, and to adhere to professional standards would protect participants and beneficiaries in a cost effective manner.  This approach would be consistent with the IRS and SBA rules for appraisals and thus avoid the potential for conflicting requirements across federal agencies.

The AICPA fully supports the goal of protecting the interests of plan participants and beneficiaries of employee benefit plans.  Ensuring the quality of sponsor company valuations is critical to making prudent decisions regarding plan investments.

Thank you for considering cosponsorship of S.273/H.R. 2041.  Please feel free to contact Diana Huntress Deem, Director, Congressional and Political Affairs Team at 202.434.9276 if you have any questions.

Sincerely,

Barry C. Melancon, CPA, CGMA

President and CEO

cc:

Members of the Senate Health Education Labor and Pensions Committee Members of the House Education and Workforce Committee

Filed under: DOL Proposed Fiduciary Regulation, News Links, , , ,

Responsive Design & The ESOP Association’s Website

In late 2012, The ESOP Association released its newly re-designed website. As part of the re-design, the site is now accessible on smartphones and tablets through mobile and responsive design versions that make navigation easier. To see what we’re talking about, open the Association’s website on your smartphone or tablet.

And this is the bit where we brag a bit. In the ASAE’s (American Society for Association Executives) magazine, Associations Now, June 2013 Guide to Technology Solutions issue, The ESOP Association was featured in an article on responsive design. Go ahead, take a look.

Filed under: News Links, Uncategorized, ,

January 2013 Review

In case you missed a day in January, here’s a quick re-cap.

Do you know the ESOP advocates?

Information on the ESOP Fiduciary Handbook

ESOP Association members made Fortune’s 2013 Best Companies to Work For list

Events to add to your calendar

Foundation news: Rutgers Mid-Year Fellows Symposium

January 2013 ESOP Report was published

American Bar Association Section on Tax sent a letter to the DOL on the definition of a fiduciary

New research shows that ESOPs save the federal government billions

The Employee Ownership Month Poster Contest is now accepting submissions

Emerging Scholar Awards information

AACE Awards opened for entries

Filed under: AACE - Annual Awards for Communications Excellence, Conference Information, DOL Proposed Fiduciary Regulation, Economic Performance, Employee Ownership Message, Employee Ownership Month (EOM), Government Affairs, News Links, Publication, TEA Members,

ESOP Association Members Make Fortune’s 2013 100 Best Companies to Work For

Congratulations go out to four members of The ESOP Association that have been named to Fortune’s list of the 100 Best Companies to Work For:

Burns & McDonnell Engineers-Architects, Kansas City, MO

W. L. Gore & Associates, Inc., Newark, DE

Publix Super Markets, Inc., Lakeland, FL

TDIndustries, Inc., Dallas, TX

“ESOP companies create great place to work. Congratulations to our members,” said J. Michael Keeling, ESOP Association president. “An Employee Ownership Foundation survey conducted in 2012 showed that 93.3% of survey respondents reported that creating employee ownership through an ESOP was ‘a good business decision that has helped the company.’ In addition, 76% of respondents indicated the ESOP positively affected the overall productivity of the employees. It would be a shame if the Congressional bipartisan support for our modest national policy encouraging employee ownership was not enhanced as Congress looks for a ‘common’ ground policy encouraging U.S. based jobs.”

To view the complete list, click here and for information about the companies click here.

Filed under: Member Services, News Links, , ,

November 2012 Wrap-Up

It’s the last day of November; time for a re-cap.

Did you download the app for the Las Vegas Conference and Trade Show?

The ESOP Association launched its new website.

Did you stop by the Membership Booth in Las Vegas?

We highlighted the CEO Program at the Conference.

ESOP Association President, J. Michael Keeling, talked about the recent election and what ESOP advocates can expect.

We noted a few ESOP Association members that were featured in the Minneapolis Star-Tribune.

The November 2012 ESOP Report was released.

The ESOP Association’s Board of Governors is looking for a few good volunteers.

Members of Congress share thoughts on ESOPs by video.

We re-capped Employee Ownership Month 2012.

We highlighted Congressional visits.

Filed under: Chapter News, Conference Information, Employee Ownership Foundation, Employee Ownership Month (EOM), Government Affairs, Member Services, News Links, TEA Members,

Members Featured in the Star Tribune

In recent days, two corporate members of The ESOP Association have been featured in the Star Tribune: Border States Electric (Fargo, ND) and HLB Tautges Redpath (St. Paul, MN). We thought we’d take a minute to share the links with readers.

A quiet supply giant spreads the wealth

Article by: DAVID SHAFFER, Star Tribune

ESOP experts walk the talk

Article by: NEAL ST. ANTHONY, Star Tribune

 

Filed under: Member Services, News Links, TEA Members, , , ,

July 2012 Wrap-Up

Miss a post in July? Take a look below.

We talked about the ESOPs & YouTube library.

Employee ownership researcher, Dr. Joseph Blasi, talked about new employee ownership research.

We shared tips for winning an AACE Award.

We re-capped some Congressional visits.

And shared more Congressional visit pics.

Senator Ayotte’s pro-ESOP bill, S. 1232, needs co-sponsors.

An employee ownership summit was held in London.

Senator Sanders introduced pro-ESOP legislation.

The DOL had some choice words about ESOPs.

We remembered an unsung hero of the ESOP movement.

Filed under: AACE - Annual Awards for Communications Excellence, Conference Information, DOL Proposed Fiduciary Regulation, Economic Performance, Employee Ownership Message, Government Affairs, News Links, TEA Members,

Department of Labor’s ESOP Tune Isn’t Changing

The Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) has not yet released a new version of its proposed regulation on the definition of a fiduciary but officials at the EBSA are still focused on ESOPs. (See the June 25, 2012 blog post on reaction of U.S. Senator to indications DOL will not be altering its proposal to mandate all ESOP appraisers be ERISA fiduciaries.) According to an article in the June 12, 2012 edition of the Daily Tax Report, Assistant Secretary of Labor for EBSA, Phyllis C. Borzi, said the EBSA will be focusing on enforcement projects having to do with employee benefit plan contributions in the coming months.

There are several national enforcement projects EBSA will focus on in 2012, concerning ESOPs specifically though, the article states the following: “The Employee Stock Ownership Plans Project, which identifies and corrects violations of ERISA in connection with ESOPs, such as incorrect valuation of employer securities and refinancing of ESOP loans.”

“The fact that Ms. Borzi is naming ESOPs specifically in the list of enforcement projects for 2012 illustrates that there are dark clouds over ESOPs at DOL and its proposal to make all ESOP appraisers ERISA fiduciaries,” said ESOP Association President J. Michael Keeling.

Filed under: DOL Proposed Fiduciary Regulation, Government Affairs, News Links, , ,

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