The ESOP Association Blog

Covering ESOPs and employee ownership

Been There; Done That. Does It Have to Be?

The following article originally ran as the President’s Page column in the February 2015 issue of the ESOP Report, the newsletter of The ESOP Association.

Human nature is often an enemy of enthusiasm. By this statement I mean it is normal for a mature ESOP company to react with a ‘been there, done that,’ attitude when pondering how to keep the enthusiasm for employee ownership vibrant among the company employees.

In recent years, when I visit ESOP companies, I often find myself talking to company executives, ESOP committee members, or HR professionals of a company that has had an ESOP for 10, 15, 20, 25, or even more years.

Often, here is the story I hear:

“Well, when we finally put the ESOP in place, needless to say, we were somewhat focused on the details of being sure we met the law and regulations. We were somewhat surprised how creating the ESOP tapped our resources, both money and time wise.

We had our ESOP advisors, and felt that they could keep us posted on all we needed to know.

We told the employees we had an ESOP, but most just scratched their heads, wondering what kind of scheme had been cooked up, as no one was seeing any extra money in her or his pocket.

In sum, we were what one might say a “sleepy” ESOP, assuming that employees would be excited about being owners, and would want to do more and be better.

After some employees left vested, and others saw that the person did get real value, interest seemed to perk up, and we could sense the employees wanted to be more attuned to what this ESOP and their role in being a beneficial owner meant.

So in about year five or so, we began to have employees exposed to other men and women like them at Association Chapter meetings, the national Annual Conference, and the Foundation’s Employee Owner Retreat, for example.

Top level executives, and average pay employees saw the AACE entries, heard about winners of AACE, ESOP Company of the Year, Employee Owner of the Year, attended the Annual Awards Banquet. Some employees became the ‘champions’ for making sure others in the company knew we were special, and everyone would benefit the better if we maximized the human side of ESOPs as a company.

So we entered AACE. We put in applications for awards with our Chapter and thus nationally. We created an ESOP communications committee; we made sure average pay employees were at meetings, networking with others in ESOP companies, and going to break out sessions about ownership culture and the human side of ESOPs.

But after five years or more of going, going, entering, entering, it sort of became old hat all of this intangible ‘love’ of being ESOP.

We need a revival so to speak. We are a good company, don’t get me wrong; but we just wonder if all of this ‘going, participating, entering’ stuff is worth it as we have been down that road, and we do not regret it; but the enthusiasm is gone.”

Well, after hearing this story, I do not jump up and down preaching that persistence is the key to an ESOP company maximizing their ownership structure; persistence is in keeping the enthusiasm alive. But the truth is each company, for many different reasons — growth, or new employees, or new business initiatives — needs to be engaged with the ESOP community year in and year out.

Accepting that the ‘old’ stuff has no more intrinsic value can diminish the subjective impact that being employee-owned has on a better performing company, with a more dedicated, and a more experienced work force, that builds wealth for all.

So, exposing ESOP people to the various tactics used to build a good company, learning about new tactics not used before, is a major way to end ennui that can arise in a mature ESOP company.

Filed under: Employee Ownership Message, Member Services, Publication, , , ,

March 2015 ESOP Report

The March 2015 ESOP Report newsletter 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.

March2015ESOPReportCOVERsmall

Filed under: Member Services, Publication, ,

More Evidence of Foundation’s Impact on National Debate

The following article originally ran as the President’s Page column in the February 2015 issue of the ESOP Report, the newsletter of The ESOP Association.

More Evidence of Foundation’s Impact on National Debate

The first time I walked into a meeting of ESOP Association leaders, after spending many years around the legislative/political process in both the State of Texas and Washington, DC, I noted something differ­ent about the men’s thinking. [Sidebar: In those days, the leadership was all male.] They had two passions, not the typical one of most trade associations I had worked with prior to walking through that door to an ESOP Association governance meeting.

Yes, the men all expressed sincere, animated, inter­est in making sure that the laws that encouraged the creation and operation of ESOP companies remained in place or were improved. In other words, like most interest groups I had been around in my career up to that point, they were looking inward, at their own company, their own company’s bottom line, and at their own way of doing things in their company — the so called “style” or “culture” of the company they loved.

In hearing these expressions of self-interest, my thought was, “Yep, I have heard talk like this from many.”

But soon, I began to hear something different from these men; something one is more likely to hear at a cause oriented group — Common Cause, Right to Life, MoveOn, TEA Party, are examples, left and right — that the Association had to make employee ownership through the ESOP model national policy. Loved by the media; loved by the President; loved by the Congress; loved by academia; loved by think tanks, etc.

This cause orientation of the ESOP community has never gone away. As there are more ESOPs and more people experiencing the power of working and man­aging a well-run ESOP company, it grows bigger and more heartfelt.

This cause orientation led to the adoption of the Association’s Vision statement in 1993, and it has never really been changed. Our Vision is that the United States be a nation where a great majority of employees own stock in the companies where they work so that we have a catalyst for economic prosper­ity and employees can share in the wealth they help create.

Well the two orientations: work like heck to make sure ESOP tax benefits that enrich the ESOP company and the ESOP employees remain in place, and expand the benefits when possible, and spend resources and time to do outreach to the non-ESOP world, are not easily accommodated with the amount of money the Association collects each year. And believe me, if we said we were not going to pay attention to what the Congressional tax commit­tees were doing to tax laws impacting ESOPs because our modest resources and small number of staff were too busy putting on pro­grams convincing non-ESOP companies to be ESOPs, and paying big bucks to a national PR firm to infil­trate TV networks, major newspapers, etc. to only run positive ESOP stories, I suspect the ESOP world would dry up pretty quickly.

So, how to accomplish both passions? One, the nation is not going to love ESOPs if yours truly runs around the nation talking about how great ESOPs are; or writing pos­itive op-ed pieces for major newspapers; or having social media post­ings by thousands of ESOP fans to some elected official. No, when an ESOP advocate sings the praises of ESOPs to a non-believer, that non-believer’s response is “Duh, what does one expect from a self-serving ESOP fan; honest critique when there is ample evidence of ESOP companies, small, medium, and large, going bankrupt and employees getting zero for retirement?”

Key is knowing how big national policy develops in our nation. The typical pathway is academics, and men and women working in think tank who get interested in the issue. They do papers. The papers get published. They get jobs in think tanks and universities focusing on their published papers and research. They get tenure at their schools, or move from one school to another with more prestige.

If Democrats, when a Democrat becomes President, some are hired to work in the bowels of Treasury, Office of Management and Budget, or even on the direct White House staff, say the Council of Economic Advisors. Then their “team,” in my example, the Democrats lose, and the Republican team takes over and hires new people for jobs those Democrats had. Then in four, eight, twelve, sixteen years later, the Democrats win, and those young men and women who worked in these policy jobs years earlier, now come back at higher levels.

For example, many of the top advisors in the Obama Administration worked in the Clinton Administration at levels lower than what they have now.

For example, many of the top advisors to President George W. Bush’s Administration worked in his father’s, or the Reagan Administration in lower level jobs.

Where I am I headed with this commentary?

And what does the Employee Ownership Foundation have to do with it?

Well recently, the leftist think tank the Center for American Progress (CAP) had a summit, led by big name economic policy advisors. Summit leaders were a former Secretary of Treasury under President Clinton, and who was also a major advisor to President Obama in his first term; and a high official of the British government, Larry Summers and Ed Balls respectfully. The other fifteen summiteers developing recommendations to improve the economy mainly in the US were former Democratic governors, top news­paper commentators, economic advisors to President Clinton, and the list can go on.

What did the group recommend in their final report? Broad-based ownership, and mentioned ESOPs spe­cifically as a policy to increase broad-based ownership.

Big news because as a general rule, the so-called left has not touted employee ownership, except in rare instances by someone such as Senator Sanders of Vermont; but now it is front and center, among a liberal leaning think tank’s set of recommendations.

And by the way, the former head of the Office of Management and Budget under President Obama, Peter Orszag, published for Bloomberg an article on January 20 saying that President Obama should push to expand employee ownership, citing the book, The Citizen’s Share, by Rutgers Professors Blasi and Kruse, and Harvard professor Freeman.

What did the Employee Ownership Foundation have to do with these actions by big thought leaders endorsing more employee ownership? The Foundation did not have anything to do with the CAP summit; the Foundation had no role in any writing of The Citizen’s Share; no one in the Foundation ever said any­thing to Dr. Orszag.

But people at CAP in working slots that develop materials for men and women who made decisions at the summit have liaised with the Rutgers program which the Foundation supports, among others, with over $75,000 a year; The Citizen’s Share set forth findings, among many, that in some instances were developed with grants from the Foundation, such as grants to the National Center for Opinion Research’s quadrennial General Social Survey.

Public policy is not embedded in a nation by one magic moment. Reaching goal B is often not a straight line from A. Major changes in policy often take zig-zag routes over a long period.

But what was put forth by the CAP summit, and what Dr. Orszag said in that Bloomberg article had in a way, be it minor or major, outcomes for which the Foundation and its supporters can say, “Progress is being made in our journey to make our Vision real — and we, our Foundation, played a role.”


 

We have shared this video before but thought it was a fitting end to this column…

Filed under: Employee Ownership Foundation, Publication, , , ,

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, , ,

January 2015 ESOP Report

The January 2015 ESOP Report newsletter 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.

Jan2015ESOPReportCOVERsmall

Filed under: Member Services, Publication, , ,

December 2014 ESOP Report is Available

The December 2014 ESOP Report newsletter 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.

Dec2014ESOPReportCOVERsmall

Filed under: Publication, ,

Use Time Wisely: Think Elections

The following article originally ran as the Washington Report column in the October 2014 issue of the ESOP Report, the newsletter of The ESOP Association.

If you’re joining The ESOP Association at the 2014 Las Vegas Conference & Trade Show at Caesars Palace this November 13th and 14th, there will be an election wrap-up by ESOP Association President, J. Michal Keeling, at the Friday Lunch: November 14, 12:15 pm – 1:45 pm, Palace Ballroom.

Use Time Wisely: Think Elections

It is a waste of time to talk about what Congress may do in its lame duck session after the November Mid-term elections. Who knows, as crisis after crisis is exploding, and what next week will require is unknown, much less what will be the focus of Congress in November and December.

But, with members of Congress, the vast majority running for re-election, some in tough races, some not, moving around their districts and states, it is a perfect time to have your Congressperson, or her/his staff, or Senator, or his/her staff, come visit, or to interact at a local event, or to send a letter, or if you have contacts in her or his office, an email, asking that s/he co-sponsors H.R. 4837, the House pro-ESOP tax bill, or S. 742, the Senate pro-ESOP tax bill.

The track record is clear: Since 1990, on advice of the then leading champion for ESOPs on the House Ways and Means Committee, as the ESOP community came out of the 80s with a tax bill nearly every year, often reducing ESOP tax benefits, said to ESOP leaders: “You people need an offense; remember the best defense is an offense. I will introduce each Congress a pro-ESOP tax bill, bi-partisan, so we get members to say that they are “for” ESOPs, sending a message to those in the government and on Congressional professional staffs that are ESOP cynics, that if you want to hurt ESOPs, you will have a tough fight on your hands.”

So, each Congress, since 1990, the ESOP community has been able to go to members of Congress to get them to declare that s/he is for employee ownership through the ESOP model, and it is clear that when literally 100 and sometimes more, many on the tax committees of Congress, make it clear before the tax committees begin work on reducing tax benefits in order to lower tax rates, those with a knife out for ESOPs say, “Why take on a task and lose?”

A more colorful comment by a member of Congress some years ago who still serves on the House Ways and Means Committee when S ESOP advocates protested the proposal in 2001 to apply a corporate income tax on the ESOP’s share of its S sponsor’s taxable income, he said, “I learned a long time ago not to step on that ESOP snake!”

His remark was basically saying that the pain from other members not liking any negative action against ESOPs was not worth the amount of new tax revenue gained by squeezing ESOP companies and employees to pay more money.

“Stay with it” is the motto for now, and for the next two months, if your member of Congress is not a co-sponsor of H.R. 4837, or S. 742, ask; do not be bashful.

And the Election: For years the holy grail goal for ESOP advocates has been that some day, just some day, there would be ESOP voters, who would vote, or at least have a major reason for their vote, on how the candidates stood on ESOPs. The ESOP community is not there yet, but….

There is growing evidence from Association members that they do care how candidates stand on pro-ESOP policy — not big evidence but evidence. Take a look at the list of pro-ESOP men and women on the Association’s website: http://www.esopassociation.org/advocate/advocacy-kit/esop-advocates. First, see if your Congressperson or Senator is on the list. Then take note if s/he is in a tough re-election fight. Then think about how you will vote, in accord with your values, and your personal and company’s benefits from the ESOP, and put that into your calculation about how you will vote.

Your vote is your business; the Association respects how you vote, but thinking ESOP when you vote is not wrong; it is right.

Filed under: Government Affairs, , ,

October 2014 ESOP Report

The October 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.

Oct2014ESOPReportCOVERsmall

Filed under: Publication, , ,

Upcoming Congressional Elections: Important

The following article originally ran as the Washington Report column in the September 2014 issue of the ESOP Report, the newsletter of The ESOP Association.

There is no doubt, no question, that The ESOP Association, from day one of its existence, is all about ESOPs. And with regard to the Association’s focus on its advocacy mission, or its ‘lobbying’ mission if you like, it is all about ESOP laws and regulations.

No matter what you, or anyone may think of the women and men who are elected by voters to serve in the Congress, the bottom line is this — what these people do, or don’t do about ESOP laws and regulations can aid, can improve, or can be the demise of your ESOP, your company’s ESOP, or your clients’ ESOPs.

So while the ESOP community will be the only ones in America who will pay very, very close attention to what is done to impact your ESOP, or not, by the Congress in passing new laws, repealing old laws, and overseeing the implementation of the laws by the regulatory agencies, it is important to be aware of the ‘big’ picture as defined by who will be re-elected in the upcoming 2014 Congressional elections.

As said time and time again by the Association and its leadership, the Association does not presume to tell ESOP advocates and participants in ESOPs how to vote. How a person votes is the prerogative of the individual.

At the same time, the Association has a fiduciary obligation to inform its members who in Congress is ‘for’ ESOPs, and who is openly showing through their actions that s/he is for ESOPs. The Association does hope that each ESOP advocate and participant will weigh how he or she decides to vote based on whether the person seeking re-election has become an advocate for ESOPs by her or his public actions while serving in Congress.

[Good news, as of this day, there is no evidence that any member of Congress is ‘against’ ESOPs and positive ESOP law. This was not always the case as recently as 2010, and in the late 70s until the late 80s, there were probably 10 or so members of Congress in that era that felt current ESOP law was a waste of taxpayer money, or the laws governing ESOPs did not result in ‘real’ employee ownership, and thus needed to be drastically altered. If a member of the current Congress feels this way, s/he has not openly said so, or proposed legislation to do so.]

There are many members of Congress seeking re-election, and in all fairness, are not to be condemned just because they are not on the ESOP Advocates list posted at http://www.esopassociation.org/advocate/advocacy-kit/esop-advocates; it is just that we do not have any public evidence that they have any position with regard to ESOPs because they have not done anything publicly to indicate favoring current ESOP law, or expanding current ESOP law, or opposing an agency’s position that would be detrimental to ESOP creation and operation. Please note, to be an ESOP advocate, the member of Congress must have taken a pro-ESOP position that is public — such as being a co-sponsor of a pro-ESOP legislative proposal, offering a pro-ESOP amendment in a Committee, and making a statement that is part of the permanent Congressional Record that is pro-ESOP. It takes more than being nice to ESOP advocates when they visit a Congressional office.

If any member of The ESOP Association wants details about an ESOP Congressional Champion who is seeking re-election, do not hesitate to contact Association President Michael Keeling, michael AT esopassociation DOT org

For example, he would share what Senator seeking re-election he thinks would single handedly try to stop negative ESOP tax law proposals by filibustering on the Senate floor. He would share what member of the House is serving on the key committees that handle ESOP legislation and ESOP oversight duties. He would help you weigh what you might do, and what you might share with your fellow ESOP participants, in terms of the question, “Does this member of Congress deserve my/our vote because s/he can protect and enhance our ESOP?”

Sure the elections coming in November are ‘big picture’ stuff that the left-wing and right-wing TV cable shows like to bloviate about ad nauseam; but understanding the part of the big picture important to the ESOP community is as important to each ESOP advocate and her/his family.

Filed under: Government Affairs, , ,

February 2014 ESOP Report Newsletter

The February 2014 issue of the 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.

Feb2014ESOPReportCOVERsmall

Filed under: Member Services, Publication, TEA Members, , ,

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 123 other followers

Twitter

Flickr

2015 AACE Award Entries

More Photos
Follow

Get every new post delivered to your Inbox.

Join 123 other followers