Legislative Alert – S. 1232 Needs Co-Sponsors

This email went out to ESOP Association members this morning. We want to share the information with blog readers.

July 19, 2012

Dear ESOP Association Member:

No member of Congress has stood up for ESOPs in its struggles with the Department of Labor more than Senator Kelly Ayotte of New Hampshire.

Our information is that the Department of Labor is not responding to the ESOP community’s protests about its proposal to mandate appraisers of ESOP stock be ESOP fiduciaries.  In fact, it seems, by reports from certain Association members that the Department’s auditors are claiming appraisals using methodologies once “okay” are not right because they did not take into consideration the Great Recession of 2009 when doing appraisals before 2009!

In other words, the DOL audit position seems to be a tool to make a case that “many” ESOP appraisals are flim flam.

Senator Ayotte’s bill S. 1232 would stop the DOL proposal by making it clear, in law, that ESOP appraisers are not ERISA fiduciaries.

She understands, as the former Attorney General of the State of New Hampshire, that if DOL “wins”, ESOP companies will be harassed by lawsuits by those disagreeing with the value of ESOP shares, as she knows that there are attorneys looking to bring lawsuits against ESOP companies.

Senator Ayotte wants more U.S. Senators to join her efforts by co-sponsoring S. 1232.  So far six Senators have joined her to protect ESOPs: Senators Roy Blunt (R-MO), Scott Brown (R-MA), Susan Collins (R-ME), Mary Landrieu (D-LA), Mitch McConnell (R-KY), and Olympia Snowe (R-ME).

If you live in any state other than Maine, we respectfully request you contact your Senator with a letter respectfully requesting s/he join with Senator Ayotte as a co-sponsor of S. 1232.

Below is a suggested letter:

“Dear Senator ____________________________:

[I][We] are [Position] at [Name of Company].

[Name of Company] is owned [XX%] by an employee stock ownership plan, or ESOP.  So, employees at [Name of Company] are owners as well.

We are concerned that a Department of Labor proposal will harm [Name of Company] by mandating that the individual valuing our stock every year, or when our ESOP acquires shares from retiring, disabled, the survivors of a deceased employee, or someone who has left employment, be an ERISA fiduciary.

Sounds innocent, but the Internal Revenue Code mandates the appraiser be independent of all parties involved with an ESOP, whereas the law on ERISA fiduciaries mandates a fiduciary only act on behalf of ESOP participants.

On top to this potential legal conflict, if the appraiser of our stock is an ERISA fiduciary, then our costs will go up, depress the share value of employees’ stock, and expose [Name of Company] to class action lawsuits any time anyone disagrees with the share value.

Senator Ayotte’s bill just plainly states “ESOP appraisers are not ERISA fiduciaries.”

She knows the track record of ESOPs, the best retirement savings and jobs program in America – for example, the General Social Survey 2010 evidenced that during the Great Recession of 2009, employee stock owned companies laid off employees at a rate less than 3%, while conventionally owned companies laid off companies at a rate of 12% plus.  Data shows ESOP companies like [Name of Company] are more productive, more profitable, and more sustainable, providing jobs controlled in the USA.

Thus [I][we] respectfully ask that you consider joining Senator Ayotte and co-sponsor

S. 1232.



To learn your Senators’ address, go to www.senate.gov, click on box, upper right hand corner “Find your Senators,” and click your state.

If you have a relationship with any staff member of a Senator, email the above if you wish.  A letter is more likely to be reviewed.

Let me know if you have any questions.


J. Michael Keeling

President, CAE

The ESOP Association


This site uses Akismet to reduce spam. Learn how your comment data is processed.