The ESOP Association Blog

Covering ESOPs and employee ownership

The July ESOP Report is Available

The July 2014 ESOP Report is now available for members. To access this month’s issue, you’ll need to sign into The ESOP Association’s website. The Member Sign In button is located at the top of the page. To get to the ESOP Report, click Meet & Learn. A link to the ESOP Report is located on the left side menu.

July2014ESOPReportCOVERsmall

Filed under: Government Affairs, Member Services, Publication, ,

April 2014 ESOP Report

April 2014 ESOP Report is now available. To access this month’s issue, you’ll need to sign into the website. The Member Sign In button is located at the top of the page. To get to the ESOP Report, click Meet & Learn. A link to the ESOP Report is located on the left side menu.

April2014ESOPReportCOVER

Filed under: Member Services, Publication, ,

March 2013 ESOP Report Now Available

The March 2013 issue of the ESOP Report is now available for download on The ESOP Association’s website. To download this month’s issue, you’ll need to sign into the website. The Member Sign In button is located at the top of the page. To get to the ESOP Report, click on Meet & Learn. A link to the ESOP Report is located on the left side menu.

March2013ESOPReportCOVER

Filed under: Member Services, Publication, , , ,

February 2013 ESOP Report Newsletter

The February 2013 issue of the ESOP Report is now available for download on The ESOP Association’s website. To download this month’s issue, you’ll need to sign into the website. The Member Sign In button is located at the top of the page. To get to the ESOP Report, click on Meet & Learn. A link to the ESOP Report is located on the left side menu.

Feb2013ESOPReportCOVER

Filed under: Member Services, Publication, , , ,

New Jersey Assemblyman Introduces ESOP Bill

As reported in the January 2013, ESOP Report newsletter, Assemblyman and Deputy Speaker of the New Jersey State Legislature, Upendra J. Chivukula (D), introduced a bill to encourage small businesses to establish ESOPs in December 2012. The bill would provide “…a gross income tax exclusion for certain capital gains from the sale of employer securities to a non-publicly traded business with fewer than 500 employees, whose headquarters or base of operations is in this State, to an employee stock ownership plan, a New Jersey S corporation owned by an employee stock ownership plan…” The bill is very similar to Iowa Governor Terry Brandstad’s ESOP initiative program which passed the Iowa State Legislature in 2012. When additional information about the New Jersey bill becomes available, it will be shared with Association members.

“It’s encouraging to see states considering bills to facilitate ESOP creation,” said ESOP Association President, J. Michael Keeling. “Indiana and Iowa with their respective states’ ESOP Initiatives, and now New Jersey, are leading the way on a state level and clearly see the value employee ownership brings to a company.”

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

November 2012 ESOP Report

The November 2012 issue of the ESOP Report is now available for download on The ESOP Association’s website. To download this month’s issue, you’ll need to sign into the website. The Member Sign In button is located at the top of the page. To get to the ESOP Report, click on Meet & Learn. A link to the ESOP Report is located on the left side menu.

Filed under: Member Services, Publication, , , ,

April 2012 ESOP Report

The April 2012 issue of the ESOP Report newsletter is now available on The ESOP Association’s website. You’ll need to login to the members only section to access your copy. Go to www.esopassociation.org and click on the members only link at the top right corner of the page. The link for the ESOP Report is in the left side menu of the members only section.

Filed under: Member Services, Publication, , , , ,

Be Respectful: But Be Respected as Well

The following article originally ran in the September 2011 issue of the ESOP Report, the newsletter of The ESOP Association, as the Washington Report column. Archived issues of the ESOP Report can be found in the members only section of the Association’s website.

The ESOP brand among members of Congress who have visited with ESOP companies, or have welcomed ESOP delegations to their Washington offices, is ESOP people are hard working, good Americans, who are civil — in other words, the ESOP brand is just the opposite of the screamers and the insulters.  [Why people think salt is more effective than a little bit of sugar is hard to understand.]

But, in the ESOP community’s fight against the negative ESOP proposal from the Department of Labor (DOL) to make all appraisers of private company ERISA fiduciaries, many ESOP advocates are disappointed with the answers they are receiving from offices of both Senators and members of the House of Representatives in response to their respectful requests that their representative stand up for the pro-ESOP position and against the DOL position.

A brief note of explanation is needed for those not following this campaign closely before setting out what needs to be done by those who are disappointed with the answers they are receiving from their elected Federal officials.

The October 22, 2010, DOL announced a proposal that would redefine who is an ERISA fiduciary, not just appraisers of ESOPs, but anyone who gives advice about where to invest 401(k) money, including what investments to offer, where to put the money the employee invests, and what the employees do with the money, and anyone who does a similar task for those who are setting up, or investing in an Individual Retirement Account, or IRA.

Of the three areas of retirement savings — ESOPs, 401(k)s, and IRAs — the number of ESOPs, and the amount of money in ESOPs, and the number of persons who work in the ESOP service provider arena, is very small compared to the number of persons participating in 401(k)s and IRAs, the amount of money in 401(k) and IRAs, and the number of persons who provide services to 401(k) and IRA participants.

While it took the financial advisor firms, the k plan service providers, the banks holding IRAs, stock brokerage firms with thousands and thousands of people working with clients with IRAs and/or k plans, much longer to wake up to the danger of the DOL proposal than it did the ESOP community — being smaller means often leaner and more nimble — once awake, the k and IRA world have much heavier advocacy power than the ESOP community.

Plus the arguments for stopping the DOL proposal with regard to who is a fiduciary to k plans and IRAs are in several respects very different from the arguments for stopping the DOL ESOP appraiser proposal.  [In some respects they are the same: lack of data supporting the proposed regulation, increase service provider fees, and blatant ignoring of what other Federal agencies, such as the IRS in the ESOP arena, and SEC in the banking/financial arena, do in this area even though there is a Presidential order that agencies coordinate their regulations.]

So what is the point of this column?

In brief, many ESOP advocates have reported to the national office they wrote, or visited, with their elected officials about the DOL proposal, and the response from those officials was about the k and IRA issues, not the ESOP issues.  Some responses are very strong noting the member of Congress is doing all s/he can to stop the bad DOL “k and IRA” proposal.  It is easy to see that the ESOP advocate receiving such a response wants to scream, “I wrote about ESOPs; not k and IRAs!”

Most ESOP advocates have in turn passed along their disappointment with a statement that “what do you expect” from these do nothing, know nothing, silly members of Congress we have these days.

Well, while the cable news that leans to the left says that about Republican members of Congress, and the cable news channel that leans to the right says the same about Democratic members of Congress, the fact is that getting disgusted will not win for the ESOP position.

So, we are adding to our advocacy kit a suggested “second” communication for the ESOP advocates to the member of Congress who has not understood what the ESOP advocate wrote about in the first instance — the ESOP message.

The second letter will be respectful, but will make it clear: an ESOP advocate with an ESOP company deserves to have her/his concerns respectfully considered.

[Candidly, a letter or message from a member of Congress missing the mark is all about bad staff work, but we have to be respectful of staff people as well.]

In other words, the ESOP brand of being civil and respectful will be honored always; but by gosh, what ESOPs do for employees and their companies, and their communities, needs to be respected.

Filed under: Government Affairs, , , , ,

Balance: Good News for ESOP Advocates

The following article originally ran in the August 2011 issue of the ESOP Report, the newsletter of The ESOP Association, as the Washington Report column.  The ESOP Report newsletter can be found in the members only section of The ESOP Association’s website.

The general view of the U.S. Congress right now is supposedly dog eat dog between the two political parties — the TV cable news says it, the social media says it, the President says it, members of Congress say it, academics say it, and so on.

Well certainly on big picture issues, such as how to control the national debt, how to lower medical care costs, etc., what everyone is saying about Congress is more or less correct.

Some ESOP advocates have heard the big picture news, and express concern that The ESOP Association and the community it represents has gone over to the “Republican” side too much.  These advocates of course have values that trigger voting for Democratic candidates.

Whether one’s world view is more in line with the Democrats or the Republicans, on smaller public issues, and sadly ESOP policy is not a major public issue in the U.S., the general view of U.S. policy making is wrong — having supporters in both parties is the key to preserving a preferred small interest policy.

[For example, a positive signal from the hearing on the DOL appraiser regulation mentioned on page one, was criticism about the proposal was made by both Republican and Democratic members of the Subcommittee.  If the critics were only Republicans, any impact on DOL officials would have been muted.]

So, is it the case that ESOP advocates are tilting in a major way to the Republicans in Congress, so that when the fight over tax reform erupts, and it will sooner or later, a risk if the pendulum swings back in favor of the Democrats before serious tax reform legislation is considered by Congress?

Well, here is the positive news.  ESOP support is balanced in Congress — with an almost equal division between Republicans and Democrats, and even with equal division within the various factions of the two parties — with a good split between the newer Republicans who came to office with the strong backing of the Tea Party, and senior Republicans, and with a good split between the “moderate” Democrats and the “liberal” Democrats.

And there is data to back up this assertion.

Right now, there are 126 members of Congress who have publicly done something, such as co-sponsoring a bill, or writing a letter, in support of a pro-ESOP position.  Ninety-eight are members of the House, and 28 are members of the Senate.

Fifty-four of the House ESOP advocates are Republicans, and 44 are Democrats.  Since there are more Republicans in the House than Democrats, the ten person spread is not that off the mark of the overall percentage of House members divided between the two parties.

Among the 28 Senate ESOP advocates, 13 are Democrats, and 14 are Republicans, and one is an Independent, who caucuses with the Democrats, and has Committee assignments under the Democratic banner.  So the split is really 50-50, and the Senate is nearly evenly split between the two parties.

But set aside the party affiliations.  How did the 126 ESOP advocates vote on the debt ceiling increase that received so much attention in late July and early August?

Again, the 126 ESOP advocates split their votes almost the same as the rest of the Congress.  Most voted yes, as did the entire Congress.  Those voting no were primarily affiliated with their Tea Party backers if Republicans and if Democrats with their more liberal backers, such as those in the MoveOn organization.

Bottom line is that the development of ESOP friends in Congress has not been about which political party should reign; it has been about ESOP companies and advocates promoting the positive impact of employee ownership through ESOPs on employees, on the company, and on the local community.

ESOP advocates have done well, and when the tough fight over tax reform breaks out and it is debated whether to have tax preferences for ESOP creation and operation, this balance will be beneficial.   ESOP advocates should continue to work for ESOPs in their communities, and not put their ESOP beliefs under a basket if their elected official is not of “their” party.

Filed under: Employee Ownership Message, , , , , ,

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