Talk inside the beltway says that tax reform is to be developed and enacted in 2013. And, of course, 2013 is around the corner.

While it is absolutely foolish to ever predict with assuredness what the U.S. Congress will do, or not do, many Congressional leaders and their top staff aides who work on the tax committees, repeat to press, and at conferences, that 2013 is the year.

While relying on the past is not fool proof, the past is prologue; as the Association’s YouTube post on tax reform set forth (http://youtu.be/SxxyMf_Zjvs) looking at the last time Congress did tax reform, and the time line of that tax reform process, can be indicative of what to expect.

One, it is somewhat irrelevant that while the goal might be to have on the President’s desk by year-end 2013 a tax reform bill, it probably will not be finished until mid-year 2014.

The 1986 Tax Reform Act actually was developed by the House Ways and Means Committee in 1985.

Two, what the House Ways and Means Committee does with a big tax bill in terms of specific provisions is the primary changes in law that the President signs.

Ergo, what is done in the House Ways and Means Committee with regard to ESOP tax laws is very, very important. There are opportunities, and some precedent to alter a House Ways and Means approved tax bill, but they are not great — at best, a 20% chance.

Allies of ESOPs in Congress, as evidenced by Senator Mitch McConnell’s message to the 35^th Annual Conference (You can watch Senator McConnell’s remarks here http://youtu.be/OKycW_BGrSc.), and remarks made by Congressman Peter Roskam [R-IL] to an ESOP PAC breakfast, may be met with cynicism by most ESOP fans these days with their recommendation that protecting ESOPs means telling the ESOP companies’ stories, Congressional district by Congressional district, in an old fashioned one on one style. But, no matter what national news says, or political opponents say, engaged, sincere voices still have impact on an elected official. [Sadly, TV commentators and others have led many Americans, on which our democracy depends, to think only big money, even in the form of bribes, is the way to “win” in DC. If that were true, ESOPs would have been dead long ago, as the primary ESOP voice in DC for the past 30 plus years is not big money, nor does it ever, ever think about nefarious activities.]

So, ESOP advocates need to lace up their shoes, as yesterday was too late to make the case for ESOPs with your elected officials, but today can suffice.

All the tools, including macro data proving ESOPs are good for employees, companies, local communities and America are on The ESOP Association’s website.

Indiana Senate Race and ESOPs: With the win of Indiana State Treasurer Richard Mourdock, a former executive with an Indiana ESOP company, in the Republican primary, there is a proven friend of ESOPs in the running for a seat in the U.S. Senate. There is no question that as of this moment in the U.S., there is really no noticeable ESOP voter. [See, reprinted on the Association’s website the pamphlet, “Why We Do Not Win Every Time: It’s Us, Not Them” for fuller review of impact of no ESOP voters.]

Many ESOP advocates in Indiana have heard Treasurer Mourdock say to general audiences that his belief in ESOPs embodies the epitome of free enterprise that can benefit many, many more Americans. And, he developed a program in Indiana that was instrumental in ESOP creation in eight Indiana companies.

The ESOP community’s interest in this Senate race is not about being against anyone, or being negative towards anyone; it is about being loyal to someone who is extremely pro-ESOP.

June 6, 2012
Wisconsin Chapter
CEO & CFO Roundtable
Event Hosts CC&N and NEXT
Pewaukee, WI
Contact Donna Walseth @ dwalseth@esopexec.org or 763-785-4122

June 6, 2012
New Jersey / New York Chapter
New York City CEO / CFO ESOP Roundtable
Grand Central Oyster Bar
New York, NY  10017
Contact:  Karrie Imbrogno at 440.989.1552 or karrie@esopchapters.com

June 7, 2012
Indiana Chapter
Corporate Governance Workshop
Ritz Charles Carmel
Carmel, IN   46032
Contact:  Karrie Imbrogno at 440.989.1552 or karrie@esopchapters.com

June 7, 2012
Illinois Chapter
Annual Golf Outing
Bloomingdale’s Golf Club
Bloomingdale, IL
Contact Donna Walseth @ dwalseth@esopexec.org or 763-785-4122

June 8, 2012
Iowa / Nebraska Chapter
Lunch & Learn Roundtable
Team Software, Inc.
Omaha, NE
Contact Donna Walseth @ dwalseth@esopexec.org or 763-785-4122

June 11, 2012
California / Western States Chapter
Senior Manager Retreat
San Francisco, CA
Contact Jenifer McDonald at jenifer@caws-esop.org or (916) 333-3280
Online Registration

June 12, 2012
California / Western States Chapter
Fiduciary Issues Workshop
San Francisco, CA
Contact Jenifer McDonald at jenifer@caws-esop.org or (916) 333-3280
Online Registration

June 13, 2012
New Jersey / New York Chapter
CEO / CFO ESOP Roundtable
Synergy Global Solutions
600 Fishers Station Drive
Victor, NY 14564
Contact:  Karrie Imbrogno at 440.989.1552 or karrie@esopchapters.com

June 14, 2012
Minnesota / Dakotas Chapter
Understanding and Communicating the Technical Elements of an ESOP
Doublewood Inn
Fargo, ND
Contact Sue Crockett @ scrockett@mndak-esop.org or 612-872-4375
Online Registration

June 14, 2012
Company Visit – Salem Distributing Company, Inc.
5901 Gun Club Rd.
Winston-Salem, NC 27103
Contact Deb Tompkins @ carolinasesop@comcast.net or call (978) 779-0199
Online Registration

June 20, 2012
Hawaii Chapter
ESOP Meeting
Contact Teri Takamura @ teri.takamura@robertshawaii.com or 808-539-9491

June 20, 2012
Wisconsin Chapter
Human Resources Roundtable
Especially for ESOP Companies
Event Host Total Water Treatment Systems, Inc.
Madison, WI
Contact Donna Walseth @ dwalseth@esopexec.org or 763-785-4122

June 24 – 29, 2012
CEO Leadership Program
Leading in an Ownership Setting: The Program for CEOs
Session I
University of Pennsylvania & Employee Ownership Foundation
Philadelphia, PA
Contact Rosemary Clements or Maya Van Buren @ meetings@esopassociation.org or (202) 293-2971

July 18, 2012
Iowa / Nebraska Chapter
CFO Roundtable Event
Wright Tree Service
West Des Moines, IA
Contact Donna Walseth @ dwalseth@esopexec.org or 763-785-4122

July 19, 2012
Iowa / Nebraska Chapter
Annual Summer Meeting & Golf Outing
The Legacy Golf Club
Norwalk, IA
Contact Donna Walseth @ dwalseth@esopexec.org or 763-785-4122
Sponsorship Opportunities

August 9, 2012
Wisconsin Chapter
Summer Meeting & Social
Chula Vista Resort
Wisconsin Dells, WI
Contact Donna Walseth @ dwalseth@esopexec.org or 763-785-4122

August 22, 2012
Heart of America Chapter
13th Annual Fall ESOP Conference
The Kauffman Conference Center
Kansas City, MO   64110
Contact:  Karrie Imbrogno at 440.989.1552 or karrie@esopchapters.com

September 5, 2012 (Tentative)
Hawaii Chapter
ESOP Meeting
Contact Teri Takamura @ teri.takamura@robertshawaii.com or 808-539-9491

September 13 & 14, 2012
Southwest Chapter
Fall Conference
Hotel Contessa Luxury Suites on the Riverwalk
San Antonio, TX
Contact Jim Schranz @ jschranz7@gmail.com or (903) 575-7345

September 19-20, 2012
New Jersey / New York and
Pennsylvania Delaware Chapters
17TH Annual Multi-State ESOP Conference
Hilton Scranton & Conference Center
Scranton, PA  18503
Contact:  Karrie Imbrogno at 440.989.1552 or karrie@esopchapters.com

September 19 – 21, 2012
Illinois, Iowa / Nebraska, Minnesota / Dakotas & Wisconsin Chapters
Midwest ESOP Regional Conference
Des Moines Marriott Hotel
Downtown Des Moines, IA
Contact Donna Walseth @ dwalseth@esopexec.org or 763-785-4122
Sponsorship Form

September 30 – October 3, 2012
CEO Leadership Program
Leading in an Ownership Setting: The Program for CEOs
Session II
University of Pennsylvania & Employee Ownership Foundation
Philadelphia, PA
Contact Rosemary Clements or Maya Van Buren @ meetings@esopassociation.org or (202) 293-2971

October 3 – 5, 2012
California / Western States ESOP Chapter
2012 Annual Chapter Conference
Sheraton Wild Horse Pass Resort
Phoenix, AZ
Contact Jenifer McDonald @ jenifer@caws-esop.org or (916) 333-3280

October 4, 2012
Ohio / Kentucky Chapter
23rd Annual Fall ESOP Conference
Bridgewater Banquet & Conference Center
Powell, OH  43065
Contact:  Karrie Imbrogno at 440.989.1552 or karrie@esopchapters.com

October 11, 2012
Hawaii Chapter
Annual Conference
Contact Teri Takamura @ teri.takamura@robertshawaii.com or 808-539-9491

October 11 & 12, 2012
New England Chapter
Annual Conference
Killington Grand Hotel
228 E. Mountain Rd.
Killington VT 05751
Contact Deb Tompkins newenglandesop@comcast.net

October 18, 2012
Southwest Chapter
5th Annual ESOP BBQ Cook-off
Contact Jim Schranz @ jschranz7@gmail.com or (903) 575-7345

October 18, 2012
New South Chapter
Fall ESOP Conference
Orlando, FL
Contact Donna Walseth @ dwalseth@esopexec.org or 763-785-4122
Sponsorship Opportunities

November 8 & 9, 2012
Las Vegas ESOP Technical Conference & Trade Show
Caesars Palace
Las Vegas, NV
Contact Rosemary Clements or Maya Van Buren @ meetings@esopassociation.org or (202) 293-2971

Each year, the Employee Ownership Foundation honors the memory of Charles Edmunson, a leader of the employee-ownership community, by awarding scholarships for the training of non-management employees of employee-owned companies. Charles Edmunson dedicated his life to the belief that all employees should be provided an opportunity to own a piece of the company where they work and that each employee owner should be offered the respect and dignity of an owner. Charles believed that education was the cornerstone of this vision. The Charles R. Edmunson Scholarship helps to fulfill his goal by offering non-management employees of employee-owned companies the opportunity to attend motivational and education programs that promote employee ownership and educate about the rights, responsibilities, risks and rewards of employee ownership. For additional information visit: http://www.employeeownershipfoundation.org/edmunson.html.

The 2012 Edmunson Scholarship winners:

Erin L. Higgins, Environmental Health & Engineering, Inc., Needham, MA

Jodi Lamb, Big G Express, Inc., Shelbyville, TN

Mike Root, Karmak, Inc., Carlinville, IL

Damon Jones, The Palmer-Donavin Mfg., Co., Columbus, OH

John Glover, The Palmer-Donavin Mfg., Co., Columbus, OH

Matt Williams, QG Holding Inc., Cincinnati, OH

Steve Nolan, QG Holding Inc., Cincinnati, OH

Kip Crabbe, Salem Distributing Company, Inc., Winston Salem, NC

Marty Duran, Salem Distributing Company, Inc., Winston Salem, NC

Emilio Ballejos, The Sleep Train, Inc., Rocklin, CA

Andrew Freyholz, Douglas Machine, Inc., Alexandria, MN

Susan Yoshiba-Manzon, LeFiell Manufacturing Company, Santa Fe Springs, CA

Heather Norris, Mountain Hardware & Sports, Truckee, CA

Melanie Forrest, Worm’s Way, Inc., Bloomington, IN

Today we welcome our guest, Jeffrey S. Gelburd, CPCU, ARM, Vice President of Murray Risk Management and Insurance to talk about The ESOP Association’s Executive Liability Insurance Program. Jeff developed The ESOP Association’s endorsed Executive Liability Insurance Program in 1989. If you would like additional information about the program, please visit The ESOP Association’s website

Since 1989, The ESOP Association has endorsed The Executive Liability Insurance Program allowing its members to purchase Directors & Officers (D&O), Fiduciary and Employment Practices Liability (EPL) and Crime insurance on a group discount basis. Interestingly enough, members have been purchasing this coverage primarily to obtain the Fiduciary Liability insurance covering their exposures as set forth under ERISA. However, as this article points out liability exposure to the Board to the Directors of these ESOP companies are increasing as claims are being filed from new sources such as ESOP trustees (both outside and inside)  customers, competitors, minority shareholders, Merger & Acquisition  activity, lenders, government agencies, foreign entities and fellow D&O’s.

Claims from competitors for example, have risen as competing firms accuse executives and board members of slander, defamation of character and disparaging comments of their products or services. Litigation from customers that triggers the D&O insurance stems from allegations of price fixing or unfair trade practices.

In a recent survey of directors and officers of privately held companies conducted recently by Business Insurance, state over 50% named lawsuits filed by customers and competitors being their biggest concern. This was followed by regulatory litigation and employment practices.  Indeed, Employment Practices litigation has skyrocketed as a result of the downturn in the economy and layoffs experienced since 2008.

Regulatory litigation is perhaps the most troublesome liability exposure as there has been a rise in claims from federal investigations and enforcement actions, reforms in health care as well as banking and consumer protection that are likely to generate new liabilities.  Laws that affect Executive Liability insurance include Americans with Disabilities Act, the Foreign Corrupt Practices Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act and antitrust laws to name a few.

Litigation over the theft or infringement of intellectual property, trademarks and patents is also a concern. This type of litigation often occurs when one employee leaves a firm for a competitor. The employee has proprietary insight, trade secrets, customer lists or other inside information about the prior organization that is passed onto the new firm.

A Transitioning  Insurance Marketplace

Over the last several months the insurance marketplace for Executive Liability insurance has been transitioning from a “soft” to a “firm” marketplace.

Although for most privately held and ESOP companies, Executive Liability insurance is likely to remain affordable and broad in terms of covered risks, premium reductions on renewal policies will seldom be seen for most purchasers in 2012. While firming of premium rate is occurring for other lines of commercial insurance, this trend affecting the Executive Liability insurance is the result of the increase in claims filed against these policies as described above. It should be no surprise that increases in deductibles may also be proposed in an effort to further remove the insurer from the rise in claim activity.

Don’t Just Buy on Price

Too often we see decisions being made on which insurance proposal to accept made solely on price and not coverage terms or how proposed endorsements can impact the breadth of coverage.

Although price is an important aspect of the decision, a true coverage comparison listing out all the endorsements of the proposed policies and how these exclusions match up is often a useful tool when making a decision on what option to select. A coverage comparison should be performed by the insurance agent or broker. Or alternatively, samples of these coverage comparisons can be obtain by contacting Murray Risk Management and Insurance. Contact information is found below.

This article is authored by Jeffrey S. Gelburd, CPCU, ARM, Vice President of Murray Risk Management and Insurance. Jeff developed The ESOP Association endorsed Executive Liability Insurance Program in 1989. He can be reached by calling 1-800-533-5271, extension 381 or by email jgelburdATmurrayins.com.

Owner Revolution Inc. is a 100% employee-owned ESOP company with plants in Adair and Atlantic, Iowa. The company manufactures a wide variety of plastic products for the lottery, consumer, marine, OEM (Original Equipment Manufacturer) and point of purchase markets.

“Ours is a company that many have probably never heard of,” said Don Hudak, President and CEO of Owner Revolution. “Yet, we make a wide variety of terrific products, do business in all 50 states and 70 countries and are vital to the economic vitality of rural Iowa. As an ESOP, we are particularly proud of our employee owners who through their hard work and dedication give us a competitive advantage that helps us differentiate ourselves and serve customers better.”

“I hope that our visit will draw attention to this growing and successful Iowa company,” said Gov. Branstad. “We need to spread the message to all Iowa industries to learn more about and consider our own Iowa companies first when seeking plastic OEM parts and other plastic supplies.”

“We must share the urgency of Iowans to revitalize our economy,” said Lt. Gov. Reynolds. “Owner Revolution, Inc. is a wonderful example of an employee-owned Iowa company that is growing and creating jobs for today and careers for the future.”

Some useful links to start off with:

2012 ESOP Award Winners

2012 AACE Award Winners

2012 Silver ESOP Award Recipients

More Annual Conference photos on Flickr

Senator Mitch McConnell’s address to attendees of the 2012 Annual Conference

This year’s AACE Awards on display.

The AACE Awards display at the 35th Annual Conference. This year 50 companies entered AACE.

Libby Perszyk Kathman, Inc., located in Cincinnati, Ohio, has been selected by The ESOP Association as its 2012 Employee Ownership Month Poster Contest Winner. The winning poster design was unveiled at the Association’s 35th Annual Conference in Washington, DC.

A full room for the Employee Ownership Foundation Luncheon. Guest speaker was Professor Joseph R. Blasi from the School of Management and Labor Relations at Rutgers University. He spoke about the results of the 2010 General Social Survey.

The Employee Ownership Foundation held its first ever silent auction at the 35th Annual Conference. The event was a hit with attendees.

We joined the world of apps.

A long-time advocate for ESOP companies in Kentucky, Senator McConnell’s message to Association members encouraged everyone to talk to their member of Congress about ESOPs and employee ownership. He specifically cited figures from the 2010 General Social Survey proving employee stock ownership companies were more than four times less likely to lay off employees than conventionally owned firms during the 2009 recession. The Employee Ownership Foundation is the primary funding source for questions on the survey about employee ownership in the U.S.

“We thank Senator McConnell for taping this message to members of The ESOP Association,” said ESOP Association J. Michael Keeling. “It’s important for us, as a community, to remember how vital it is to share information with members of Congress that proves employee stock ownership is good for America.”

The video of the Senator’s remarks is now available on The ESOP Association’s YouTube Channel. You can also watch the video below.

Did you take photos at the Annual Conference last week? Don’t forget to share those photos through the Annual Conference app.

We’ll be posting photos here as well so check back, and if you have anything to share — stories or photos — send them our way – media@esopassociation.org. We look forward to hearing from you.

We love to hear stories from our members. We may even share a few here and in the ESOP Report newsletter. Drop us a note at media@esopassociation.org.

We look forward to hearing from you.