January 2015 Monthly Wrap-up

As it turns out, January was a busy month…

We noted some upcoming events for February

We reported that the Department of Labor will not mandate ESOP appraisers be ERISA fiduciaries

The ESOP Association filed an amicus in Supreme Court case Tibble V. Edison Int’l

ESOP Association members were named Great Places to Work!

The January 2015 ESOP Report was published

We shared a guest post from AACE Awards Volunteer Coordinator, Paul Horn – 2015 AACE Awards

We highlighted a new report from the Center for American Progress that discusses inclusive prosperity

2015 conference sponsorship were announced

We mentioned a few ways to keep up with Association updates

2015 AACE Awards category information was shared

The Two Day Professional ESOP Forum was announced

The ESOP Administration Handbook was highlighted

ESOP Experts 2015 – If you’re interested, more info here

2015 AACE Awards — we told you what you need to know to enter this year

Release: ESOP Companies Report Economic Growth in 2013

We normally don’t post more than once a day but we wanted to share this release sent out by the Employee Ownership Foundation today announcing the results of the 23rd Annual Economic Performance Survey.

FoundationFor Immediate Release: September 15, 2014

ESOP Companies Report Economic Growth in 2013

September 15, 2014 (Washington, DC) – Results from the Employee Ownership Foundation’s 23rd Annual Economic Performance Survey of ESOP (employee stock ownership plan) companies show that ESOPs continue to see increased economic growth. Additionally, ESOP companies continue to have increased share value, report high productivity among employee owners, and have overwhelming support for the ESOP among leaders of the companies, according to the results of this 2014 survey which was conducted among members of The ESOP Association in the summer of 2014.

Since the Employee Ownership Foundation’s annual economic survey began 23 years ago, a very high percentage, 93% of survey respondents, have consistently agreed that creating employee ownership through an ESOP was “a good business decision that has helped the company.” It should be noted that this figure has been over 85% for the last 14 years the survey has been conducted. In addition, 76% of respondents indicated the ESOP positively affected the overall productivity of the employee owners. In terms of revenue and profitability — 70% of respondents noted that revenue increased and 64% of respondents reported that profitability increased. In terms of stock value, the majority of respondents, 80%, stated the company’s stock value increased as determined by outside independent valuations; 18% of the respondents reported a decline in share value; 2% reported no change. The survey also asked respondents what year the ESOP was established. Among those responding to this survey, the average age of the ESOP was 16 years with the average year for establishment being 1998.

“As we’ve said before, research proves that ESOPs, and companies with other forms of broad-based employee ownership, provide more sustainable employment for U.S. workers,” said Employee Ownership Foundation President, J. Michael Keeling. “Our national leaders need to take note, step up, and encourage broad-based inclusive capitalism and increase employee ownership to ensure sustainable employment and more income for average pay employee owners. It’s the best jobs policy we have in this country.”

The survey asked companies to indicate their performance in 2013 relative to 2012:

  • 65% indicated a better performance; 21% indicated a worse performance; and 14% indicated a nearly identical performance to the previous year
  • 70% indicated revenue increased; 30% indicated revenue decreased
  • 64% indicated profitability increased; 36% indicated profitability decreased
  • 64% of companies have created an ESOP education program or ESOP advisory committee since establishing the ESOP

The 2014 Economic Performance Survey was distributed by the Employee Ownership Foundation to The ESOP Association’s 1,500+ members in June 2014. The results are based on 503 responses, a 34% response rate.


The Employee Ownership Foundation is The ESOP Association’s affiliated 501 (c)(3) organization dedicated to promoting employee ownership – www.employeeownershipfoundation.org.

The ESOP Association is the national trade association for companies with employee stock ownership plans (ESOPs) and the leading voice in America for employee ownership. The core cause of The ESOP Association is the belief that employee ownership will improve American competitiveness, increase productivity through greater employee participation, and strengthen our free enterprise economy. More information: website – www.esopassociation.org and blog – www.esopassociationblog.org.

News: Justice Department Asks Supreme Court to Reverse Circuit Courts’ Pro-ESOP Position

ESOP Association News

The ESOP Association sent out the following press release. We are sharing with readers here.

For Immediate Release: November 14, 2013

Justice Department Asks Supreme Court to Reverse Circuit Courts’ Pro-ESOP Position

November 14, 2013 (Washington, DC) – In a disappointing turn of events, the Obama Administration has once again taken a negative position in regard to employee stock ownership plans (ESOPs).

Early in 2013, the Supreme Court asked the Solicitor General to comment on technical questions regarding stock-drop cases and to assess whether these types of cases should be brought to the attention of the Court. In a rather strange move, the Solicitor General asked the Court to focus only on a matter concerning ESOP plan fiduciaries, and whether they are entitled to the presumption that they have acted in the best interests of plan participants by investing in company stock.

“Congress, and former Presidents, has consistently encouraged ESOPs for over 30 years,” said ESOP Association President, J. Michael Keeling. “The presumption that ESOP plan fiduciaries act prudently when company stock is the ESOP’s primary asset was decided by the Third Circuit in Moench V. Robertson,  a 1995 case that plaintiffs won, making it clear bad actors do not prevail but also acknowledging Congress has endorsed ESOPs and Presidents have signed pro-ESOP laws. This pro-ESOP Moench position has been upheld by a majority of Federal courts for years, and one can only presume from the Solicitor General’s question of Moench that the Justice Department is looking to harm ESOPs.”

There is concern that if the Supreme Court agrees with the Administration, there will be a rise in lawsuits challenging ESOP companies. Numerous anti-ESOP lawsuits would do harm to ESOP companies and their employee owners.

“Since 2010, the ESOP community has been fighting a proposed regulation from the Department of Labor regarding the definition of an ESOP fiduciary. The Solicitor General’s attack on ESOPs is one more dig from an Administration that has demonstrated negative views of employee ownership as evidenced by its budget proposal justifying the reversal of a pro-ESOP tax law because, according to the Administration, employees working for companies with more than 10 – 15 employees are incapable of understanding how their actions impact their company. It’s counter-intuitive to hear the Administration preach about creating jobs and then try to take away a proven policy that sustains jobs,” stated Mr. Keeling.

For those that are curious, the Justice Department Brief: Brief


The ESOP Association is the national trade association for companies with employee stock ownership plans (ESOPs) and the leading voice in America for employee ownership. The core cause of The ESOP Association is the belief that employee ownership will improve American competitiveness, increase productivity through greater employee participation, and strengthen our free enterprise economy. More information: website – www.esopassociation.org and blog – www.esopassociationblog.org.

Once Again: Save ESOPs

The following is a reprint of the Washington Report column which ran in the July 2013 ESOP Report, the newsletter of The ESOP Association.The ESOP Report is a members only publication. Additional information can be found here.

It sounds repetitious, but the Association has posted on its blog, on its Facebook page, on its LinkedIn group, in special email bulletins, and wherever it can be placed, that events are shaping up in our national government that present the greatest policy threat to positive policies for ESOPs since 1989. [Some ask, what was the threat in 1989? While ancient history so to speak, in 1989 the House Ways and Means Committee had before it a proposal made by the Chair at the time, the late Dan Rostenkowski of Illinois, to repeal all special tax benefits for ESOP creation and adoption created in the tax bills of 1984 and 1986. This threat was beaten back when the full Committee adopted an amendment by former Congressman Beryl Anthony of Arkansas, aided by former Congresswoman Nancy Johnson, and this is important to note, endorsed by the Treasury Department under President George G.W. Bush, that took down the effort to eliminate special ESOP tax benefits. Since 1989, there have been occasional “disputes” challenging the ESOP community over a proposed regulation, or even a proposal modifying one ESOP tax benefit — 1994, 1995, and 2001 — but never a challenge to the entire ESOP package.]

But experts in the human resources profession always remind us that just as “you get tired of saying something one more time, someone is listening for the first time.”

So, the House and Senate tax committees are deep in a process to reform the Federal income tax code. They are not just talking, nor are they waiting to have the leaders of the House and Senate promise them that any tax reform bill they develop will be considered on the floor of the House and/or Senate. The Chairs of the tax committee, Congressman Dave Camp of Michigan, House Ways and Means Committee, Senator Max Baucus, Senate Finance Committee Chair, both have a process for developing legislation sometime in the fourth quarter of this year.

While they are following processes that are not typical of how major tax bills were developed in the past, the goals are the same as evident in the past — eliminate special income exclusions, credits, deductions, and deferrals in the current tax laws, take the additional tax money raised to cut the tax rates on income, personal rates and corporate rates, and in doing so make the tax code more simple, in other words, easier to follow in calculating taxes owed. [Media likes to hoot and holler that the two parties will not come together under this approach because supposedly the Democrats want to use the extra revenue from eliminating special tax laws to collect more money to lower the Federal debt, whereas Republicans want to use all the new revenue to lower tax rates. Yes, these two different views of what to do with the extra revenue exist, but there is a great deal of common ground between the two parties in the tax reform debate.]

Even though The ESOP Association has become a “Johnny-one-note” in communications with members about being engaged to tell elected Federal officials about the power of employee ownership through the ESOP model — repeat over and over after telling the good story of the ESOP company that data proves overwhelmingly that in the vast majority of instances, ESOP companies are more productive, more profitable, providing sustainable jobs controlled locally in the U.S. than non-ESOP counterparts — and in doing so, hopefully have that member of Congress be willing to say, “OK, do not harm ESOPs with misguided steps to lower tax rates when the best jobs policy is having employees be owners in their companies where they work, and also make income better for the working men and women of America.”

Stay in touch with the Association’s website where you can find all the up-to-date background materials on how to save your ESOP; watch for blog postings, and if just now getting engaged, read the blog archives; watch for YouTube video updates.

Remember, if ESOPs are harmed in the process to developing new tax law, one can spot the blame by looking in the mirror — no exceptions.

The Association Submits Comments on Tax Reform

On March 21, 2013, The ESOP Association submitted comments to the House Ways and Means Committee on Tax Reform. The comments are available on The ESOP Association’s website.
In summary:

The House Ways and Means Committee has a long history of supporting laws that encourage the creation and operation of ESOPs because in the vast majority of instances, ESOP companies are more productive, more profitable, with sustainable jobs for their employees, that are locally controlled, while providing retirement benefits that are greater than most U.S. conventionally- owned companies.

ESOPs are at the same time, putting an average of $8 in revenues into the Federal Treasury for every $1 that is “foregone” by the Federal government because of the laws promoting employee stock ownership through the ESOP model.

As the process of Tax Reform progresses, the Association will update members on the blog and website. Check this page for the most recent government affairs information.

The ESOP Association Signs Letter Seeking Support for Senate Resolution on the Private Retirement Savings System

In October 2012, The ESOP Association, along with 22 other organizations concerned about the tax treatment of employer-provided retirement plans, signed a letter encouraging members of the Senate to co-sponsor a resolution showing support for the private retirement savings system. The letter states: “We are writing to ask you to co-sponsor a bi-partisan resolution that will be introduced by Senator Richard Blumenthal (D-CT) and Senator Johnny Isakson (R-GA) expressing the sense of the Congress that our current tax incentives for retirement savings provide important benefits to Americans to help plan for a financially secure retirement.”

If you would like a copy of the letter, please send an email to media@esopassociation.org with Senate Resolution Letter in the subject line.

Additionally, The ESOP Association will be joining a new retirement based group called the Coalition to Protect Retirement which is aimed at protecting retirement plans in the U.S. For more information on the Coalition to Protect Retirement, visit the website at How America Saves.

Fiduciary Responsibilities Webcast

At the end of March, the Department of Labor’s Employee Benefits Security Administration (EBSA) will sponsor a two part retirement plan webcast regarding fiduciary responsibilities: Getting It Right – Know Your Fiduciary Responsibilities.

It will take place March 27th and 28th, 2012, from 1:00 pm – 2:30 pm EDT.

Information about the webcast and registration information is available on the EBSA website.

According to the EBSA website, part 1 will focus on basic fiduciary responsibilities, prohibited transactions, and exemptions under ERISA. Part 2 will feature information on reporting and disclosure provisions and the Department’s voluntary correction program.