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Covering ESOPs and employee ownership

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.

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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.

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

Thoughts on a New Book, The Citizen’s Share

Review of the new book, The Citizen’s Share: Putting Ownership Back Into Democracy

As reviewed by: Joseph Cabral, Immediate Past Chair of the Employee Ownership Foundation, Thousand Oaks, CA

Editor’s Note: Book reviews are not a regular feature of ESOP Association publications or social media.This article originally ran in the January 2014 issue of the ESOP Report, the newsletter of The ESOP Association. We are sharing the following information as a service to members of the ESOP community.

IMG_1201As Chair of The ESOP Association at the turn of the millennium, I called for The Great National Debate on Employee Ownership. The second year of my term, the debate talk disappeared as we defended employee ownership in the wake of Enron, Worldcom, and United Airlines. Although the problems with these companies were not the result of broad-based employee ownership, the inclusion of employee ownership made it difficult to overcome the argument that employee ownership was somehow involved in the failure.

The opportunity to advance employee ownership was given another chance when in 2002 President George W. Bush proclaimed his belief in an Ownership Society. The ESOP community was excited at the prospect of the President endorsing the idea of an Ownership Society and just as quickly disappointed when he restricted the definition to home ownership.

A new book, The Citizen’s Share, opens up yet another opportunity to debate the ownership issue. Authors, Professors Joseph R. Blasi, Richard B. Freeman, and Douglas L. Kruse, provide readers with the foundation to have the Great National Debate on Employee Ownership. The authors themselves seem to desire such a debate as they write, “Following American thinking about broad-based ownership and having a citizen’s share in society from the 18th to the current Century can, we believe, help us develop a road map to increase the citizen’s share of our economy. That is the purpose of this book.”

The authors take us on a journey through American history starting with the Founding Fathers, through the Industrial Revolution, to today’s information age. The authors provide documents, speeches, and quotes from our Founding Fathers warning readers of the consequences if wealth producing property is not distributed fairly. The country was founded by people escaping their homeland’s aristocracy that choked opportunity for upward mobility and the accumulation of wealth. Inherited wealth and power was the societal norm. What they sought was a land where freedom and liberty could be the principles for the founding of the country.

The authors follow the agricultural roots where most people could create wealth by farming their land and the beginnings of the industrial age, when cod fishermen participated in profit sharing associated with their catch, to the Louisiana Purchase, which added sufficient land for the new citizens to own, to companies that provided profit sharing and share ownership to employees in the industrial, and now, information age.

Today, we are concerned about the unsustainability of the current system. The public generally take exception to the current outcome but seem to have accepted, “the rich get richer and the poor get poorer,” as inherent to the capitalistic system.

The authors point us to a series of questions on the General Social Survey that are specific to broad-based ownership (the series of questions was supported by funding from the Employee Ownership Foundation) for a counterpoint to the conventional wisdom that shared ownership is insignificant in our society. The authors note the study discloses that “about 47% of private-sector full-time wage and salary workers have some form of shared ownership in small amounts, except for ESOPs, in the firms where they work.” Such ownership takes the form of profit sharing, gain sharing, as well as ESOPs. Thus, shared ownership is indeed a significant part of our society and there is a need to expand shares and expand the level of wealth they represent.

Our ESOP community knows the outcome of our capitalistic society does not have to result in greater concentration of wealth. In fact, ESOPs stand as testimony that broad-based ownership of wealth creates greater wealth in our nation and shares that wealth more fairly among those who helped create the wealth, making us all capitalists.

The authors cite a late 19th Century congregational pastor, William Gladden, who addressing rising tensions over wealth inequality and horrible working conditions suggested the solution was what he called cooperation, “by making the laborer his own capitalist.” Those of us in the ESOP community understand the impact of employee ownership through ESOPs and The Citizen’s Share provides us with the evidence, arguments, and historical material to rebut our naysayers. Now is the time to make our ESOP voices heard by not just our fellow ESOPers but by the public-at-large.

The Citizens Share is a must read for all in the employee ownership community and the rest of the American public. Read it and pass it on to all you know. If we all make sharing our ESOP story a priority, we can make a difference and make our nation a more just and economically fair society.

For information on where to purchase a copy of The Citizen’s Share, click here.

The Citizen’s Share: Putting Ownership Back Into Democracy, authored by Joseph R. Blasi, Richard B. Freeman, and Douglas L. Kruse, published by Yale University Press, ISBN: 978-0-300-19225-4.

Filed under: Employee Ownership Foundation, Member Services, , , ,

Why Submit for an AACE?

Today, we’re featuring a guest post by Rod Reinertson, Director of Automation at Van Meter Inc., Cedar Rapids, IA. He authored a recent column in the January 2014 ESOP Report, the newsletter of The ESOP Association, about the AACE Awards and why submitting an entry is an important step in creating your ownership culture.

This article originally appeared in the January 2014 issue of the ESOP Report, the newsletter of The ESOP Association. 

Don’t forget, the deadline for the 2014 AACE Awards is February 14th

Each year, The ESOP Association presents their Annual Awards for Communications Excellence (AACE) at the Annual Award’s Ceremony that kicks off the Association’s Annual Conference in Washington, DC. The winner of the Annual Employee Ownership Month Poster Contest is also unveiled at this great event.

We started our ESOP Communication Committee in 2003. From a committee perspective, we wanted to make sure we were educating and communicating the ESOP and employee ownership in everything we did. One of the first things we did to engage all the employee owners was to hold our own Employee Ownership Month Poster Contest and this is something that we have continued annually. We then select our company winner and submit it to The ESOP Association’s Poster Contest. Four years of winning posters are displayed at all 13 of our company’s locations. Several of us attended our first Annual Award’s Ceremony that next year and it was an eye opener for us. Even though we didn’t win the national poster contest that year, all the ideas we received by looking at all of the creativity put into the posters and AACE entries was invaluable. We talked with the winners and networked with the other entrants to brainstorm employee ownership communication ideas to bring back to our ESOP Communication Committee. At this point, we were too young in our journey to even think about submitting for an AACE, however, it was at that same time one of the AACE judges asked me, “Why didn’t you submit for an AACE in the category for ESOP Advertising/Ownership Marketing for the division of websites? Your company clearly presents employee ownership and integrates it well in your company website.” So that very next year, I made our first AACE submission only in this category and we won! All kudos to our marketing department!

Now what? It’s nice to win and celebrate an award but I had to remind myself that our main purpose of our ESOP Communication Committee was to educate and communicate the ESOP and employee ownership. We wanted to develop an employee ownership culture that would help us be a more successful company. Then a light bulb went off for me. The AACE has many categories. There are so many ways to communicate the ESOP and employee ownership to our employee owners. Do we have gaps in communications? I thought this may be a good way to evaluate our overall and total communications methods. So let’s look at the categories:

Category 1, Total Communications – In my mind, this is the top award for recognizing the company with the complete communications package to both its employee owners and the public. This would be inclusive of all the following categories we will discuss. All the categories have two divisions, Division A for 250 or fewer employees and Division B for companies with more than 250 employees (Except for category 5 which the divisions are defined differently which we will discuss later). Also, please note, categories 1, 2, and 4 have new entry procedures this year so please make sure to read the following document for details: http://www.esopassociation.org/docs/default-source/awards/2014-aace-awards-brochure.pdf

Category 2, Presentation Videos – This award is for the best use of video to promote the ESOP concept inside or outside your company. Beginning this year there is a five minute time limit requirement and entries must be uploaded to YouTube.

Category 3, Printed Materials – This award recognizes excellence in the use of original, printed informational materials which are used to promote the company’s ESOP to employee owners, customers and the community.

Category 4, Intranets – This award recognizes excellence in using the company intranet to communicate and educate about the ESOP and employee ownership.

Category 5, ESOP Advertising/Ownership Marketing – Division A: General – This award recognizes excellence in print advertising in newspapers and magazines, on company vehicles, banners, marketing brochures, etc. that are used to promote the company (and must reference the ESOP) to the outside world. Division B: Websites – This award recognizes excellence in the creative integration of the ESOP concept and ownership into your companies’ website.

Category 6, Special Events & Promotions – One Outstanding Event – This award recognizes excellence in the organization and creativity involved in one significant ownership event, such as a special celebration, ESOP community service day, parade float, etc.

Category 7, Special Events & Promotions – Series of Events – This award recognizes excellence in the organization and creativity involved in a series of ownership events. Employee Ownership Month events are often entered in this category.

So where are your gaps? We have now won three AACEs, one being a category 1, and we are still continually reevaluating all the different communication methods to educate our employee owners on ownership and our ESOP. So use this entire process to organize, review, and evaluate your methods. Your entry will give your company a chance to network with other companies, get new ideas, and improve your own program.

One of the other things we did on our ESOP communications committee was to elect a historian. Basically, the historian would organize everything you did throughout the year, create an archive that keeps you from scrambling at the end of the year getting your submission in, and from an AACE judge’s perspective, this is very important. Judges spend two full days looking through all the submissions so you want your entry organized and clearly labeled so they totally understand what your message is. A brief commentary page is recommended to be submitted with each category as a way to clearly and directly communicate your message to the judges.

Finally, the deadline this year for AACE submission is February 14th (Valentine’s Day) which is a few weeks sooner than it has been in past years. Good luck! See you at the Awards Ceremony on May 7th.

Rod Reinertson is the Director of Automation at Van Meter Inc. (VMI), Cedar Rapids, IA. Rod joined VMI in 1992 and is a charter member of their ESOP Committee that was formed in the summer of 2003. Rod has served as an AACE Awards judge. He currently serves as President of The ESOP Association’s Iowa/Nebraska Chapter and has been a member of The ESOP Association’s Ownership Culture Committee since 2006 and was recently selected as Chair. Rod has written many articles and speaks at conferences on different ESOP topics relating to communications and ownership culture. He was named the “Outstanding Chapter Officer” by The ESOP Association at their national conference in Washington, DC last May. Van Meter has won several of The ESOP Association’s Annual Award for Communications Excellence and won the AACE for Total Communications in 2012. Van Meter was presented the “Company of the Year” award by The ESOP Association’s Iowa/Nebraska Chapter in both 2008 and 2010 and was selected as the national “Company of the Year” amongst the other Chapter winners by the Association at the national conference in 2011.

 

Filed under: AACE - Annual Awards for Communications Excellence, Publication, , , ,

The January 2014 ESOP Report is Available

The January 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.

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Filed under: Publication, , ,

The December 2013 ESOP Report is available

The December 2013 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.

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Filed under: Publication, ,

The November 2013 ESOP Report is Available

The November 2013 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.
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Filed under: Employee Ownership Month (EOM), Member Services, Publication, TEA Members, , ,

Stay Focused

This article originally ran as the Washington Report column in the October 2013 issue of the ESOP Report, the newsletter of The ESOP Association. The ESOP Report newsletter is available to Association members on the website.

With the conclusion of Employee Ownership Month, we thought it was an important message to stay focused on your ESOP.

There is no question that the mess in D.C. with the Congress and the President not able to keep basic government functions operational causes most people to throw their hands up and say, “Don’t bother me about possible legislative action involving ESOP laws; Congress cannot even keep the government’s doors open. Fie on all.”

This reaction dominates citizen views, be they left, right, middle of the road, or all of the above.

This column has often said that the effective advocate has to understand the Big Picture to win a specific campaign for ESOPs. But, as Ralph Waldo Emerson said, a foolish consistency is the hobgoblin of small minds.

So, ESOP advocates will be taking a very risky posture to tune down outreach to their members of Congress on the grounds that Congress will do nothing to alter current tax laws to the detriment of employee owners.

Number one, the Congressional tax committees are not Congress. What they do in developing new tax laws is not 100%, or even 50%, determined by the Congressional and White House gridlock.

Number two, what the tax committees do is 90% of the final tax law changes that will be included in a reformed tax code when action by Congress is finally taken.

In other words, the tax committees may finalize their versions of a new tax bill in 2014, and Congress may not send a new tax reform proposal to the President until 2015/2016 or even beyond. But that 2015/2016 proposal will be very likely be nearly the same as what the tax committees agreed to in 2013/2014.

Number three, what is the negative outcome of ESOP advocates continuing to make the case that the Federal tax code should continue a modest national policy to continue the best jobs policy in the U.S. because ESOP companies in the vast majority of instances are more productive, more profitable providing locally-controlled, sustainable jobs with excellent retirement savings benefits? There is none.

Some ESOP advocates also explain their sitting on the sidelines because her or his member of Congress is not on the Congressional tax committees — the House Ways and Means Committee and the Senate Finance Committee. Constituent to member advocacy is the most effective advocacy work possible; the second most effective advocacy work is Congressional member to Congressional member. In other words, a Republican member of Congress not on Ways and Means advocating for ESOPs because her or his constituent has asked him or her to do so with a Republican on the tax committee, especially if from the same state or region, is very effective. In other words, a pro-ESOP statement from a Texas Republican not on Ways and Means to a Texas Republican on Ways and Means or a New England Democrat not on Ways and Means to a New England Democrat on Ways and Means is priceless.

In sum, do not let disgust with partisan shenanigans in D.C. back you off advocating for ESOPs with your Congress people.

Be safe; not sorry.

Filed under: Employee Ownership Message, Employee Ownership Month (EOM), Government Affairs, , , , , ,

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