Rutgers ESOP Study: Employee Ownership Narrows Gender and Racial Wealth Gaps

May 17th, 2019 Did you know? #1 – Four in 10 adults, if faced with an unexpected expense of $400, would either not be able to cover it or would cover it by selling something or borrowing money? #2 – 28% of senior citizens in the United States retiring between 51 and 61 had zero or negative financial assets when they die and 36% had less than $50,000 in financial assets? #3 – American wealth inequality can be addressed efficiently through capital ownership and retirement savings. Employee Stock Ownership Plans (ESOPs), aggregate wealth at no cost to the employee. Workers should ask their next employer four words: Do You Offer Stock? In a new study of low- and moderate-income workers at employee-owned companies, researchers affirmed that employee stock ownership plans (ESOPs) enable families to significantly increase their assets, helping to shrink gender and racial wealth gaps. The three-year research project conducted by ... Read More..

The Hilb Group acquires ESOP-owned Walker Brothers Insurance Inc.

May 2nd, 2019 Springdale-based Walker Brothers Insurance Inc. has been acquired by The Hilb Group LLC (THG). Walker Brothers was previously owned by Mike Luttrell (President) and other employees of the company through an employee stock ownership plan (ESOP). THG is a middle market insurance agency headquartered in Richmond, Va., and is a portfolio company of Boston-based private equity firm, Abry Partners. The company now has 75 offices in 18 states.  Walker Brothers was founded in 1932 by Calvin and T.J. Walker. Luttrell said the business has 22 employees and more than 5,000 customers between its commercial business and personal accounts.   Read More at: Employee Stock Ownership Plans or “ESOPs” are a viable tool for shareholders and companies to create smooth succession plans while enhancing employee productivity. Menke & Associates, Inc. is the largest ESOP advisor in the country having created over 3,500 ESOPs in all 50 states, including Colorado, in our 45 ... Read More..

Van Horn Automotive Group recognized as the Wisconsin ESOP Company of the Year

Van Horn Automotive Group recognized as the Wisconsin ESOP Company of the Year April 25th, 2019 Wisconsin has approximately 185 ESOP owned businesses. Van Horn Automotive Group was recently recognized as the Wisconsin ESOP Company of the Year. The Van Horn has been a family owned business for over 50 years. Joe Van Horn moved from Chicago, IL to Plymouth, WI to open his first store; and since 1966, the Van Horn family has been selling cars to the public and supporting the local community. Rooted in midwestern values, the concept of family represents acceptance, trust and authenticity. The Employee Stock Ownership Plan (ESOP) is a unique benefit that invests in our associates and their future. It’s a differentiating reason to work for Van Horn, and is unmatched by any other dealer in Wisconsin. But the benefit of employee ownership does not end with the individual. It is naturally transferred to the customer in the form of a higher level of service, pride and genuine ... Read More..

Upcoming Webinar: How To Sell Your Business To An ESOP – For CFOs and Business Owners

Upcoming Webinar: How To Sell Your Business To An ESOP – For CFOs and Business Owners Monday, April 22, 2019: 8:00 AM PDT Course Description — This webinar will describe the tax and financial benefits benefits, structure, and process of selling a privately held business to an Employee Stock Ownership Plan (ESOP). Designed for CFOs and business owners, this informative course first describes the ABCs of ESOPs but will then cover: Special tax advantages that ESOPs have to offer; How ESOPs can be used to solve a number of different ownership succession problems; How companies are valued for ESOP purposes; The pros and cons of ESOPs versus other alternatives Who should attend? CFOs, Controllers, or Small Business Owners Cost: Free CPE Credits: 2.0 hours Course Level: Basic Instructional Method: Group Internet Based Prerequisites: None Advanced Preparation: None For more information and to register: ... Read More..

Richard L. Bowen + Associates Announces 100% ESOP

April 11th, 2019 Founded in 1959, Cleveland, Ohio based architecture and engineering firm Richard L. Bowen + Associates announced it will become 100% employee owned on April 1st through its Employee Stock ownership Plan (or “ESOP”) . Bowen’s ESOP was established in 2007, but in 2019 the ESOP will purchase the remaining 60% of the outstanding shares. ... Read More..

ESOP-Owned KI Industries, Inc. Ranked #2 on 2019 Best Places to Work

April 7th, 2019 Berkeley, Ill.-based KI Industries Inc., a supplier of decorative plastic and die-cast components, ranked No. 2 on the 2019 Best Places to Work list.  It also happens to have an Employee Stock Ownership Plan (or ‘ESOP”).   Getting employees more engaged after adopting an ESOP means different things for different companies.  For KI, it comes in the form of employee focus groups, employee commendations, contests, lunches and games. Read More at: Employee Stock Ownership Plans or “ESOPs” are a viable tool for shareholders and companies to create smooth succession plans while enhancing employee productivity. Menke & Associates, Inc. is the largest ESOP advisor in the country having created over 3,500 ESOPs in all 50 states, including Colorado, in our 45 year history ... Read More..

Visit us at the 2019 Employee Ownership Conference from April 8th-11th

Attending the 2019 Employee Ownership Conference?  If so, there are 3 easy ways to connect: #1: On Tuesday April 9th, hear Chuck Bachman speak about The 2018 Main Street Employee Ownership Act and its Impact on SBA Lending.  Chuck is our Senior Corporate Counsel.  As a CPA and attorney, he specializes in the design and installation of ESOPs. He has over 20 years of experience and has been involved in hundreds of ESOP transactions. Chuck is a member of the California Bar Association, AICPA, ESOP Association advisory committee, the NCEO, and the steering committee of the California/ Western States Chapter of the ESOP Association. #2: Stop by Booth #22 to say hi and talk ESOPs with us.  Learn how you can leverage our complete, full cycle ESOP expertise to your benefit while saving cost. #3: Contact Us to schedule an in-person meeting with one of our advisors at the conference. ... Read More..

Client Case Study: Menke ESOP is the First-Class Succession Solution for a Luxury Goods Supplier 

In 2018, Menke & Associates, Inc. assisted a unique, deeply relationship-driven service business with its successful transition to 100% employee ownership. The company’s two shareholders had built a $40 million-dollar entity with a worldwide, disparate supplier network, multiple Fortune 100 clients, and global operations in a heavily-regulated industry and were ready to continue their ownership and management succession plan through a sale to an Employee Stock Ownership Plan. We designed and orchestrated an ESOP transaction that transitioned the firm to 100% employee ownership. Our approach accomplished the client’s three key goals: #1 – ESOP implementation and transaction closing before the end of their 2018 fiscal year; #2 – Structure the financing to sustainably deleverage the ESOP acquisition debt while enabling tax deferral treatment for the selling shareholders; #3 – Attract and retain top talent in a fiercely competitive landscape through industry-leading benefits. Our integrated plan administration and benefits consulting practice designed ... Read More..

ESOP-Owned EVAPCO Celebrates 40 Years in Business

April 2nd, 2019 Evapco, an employee owned company (ESOP) and an international manufacturer of cooling and refrigeration products, celebrated 40 years in southwest Madera, California. Evapco Madera was the second manufacturing plant that Evapco created having being founded in Baltimore in 1976. Read More at: Employee Stock Ownership Plans or “ESOPs” are a viable tool for shareholders and companies to create smooth succession plans while enhancing employee productivity. Menke & Associates, Inc. is the largest ESOP advisor in the country having created over 3,500 ESOPs in all 50 states, including Colorado, in our 45 year history. ... Read More..

How Crafts Technology Fosters Innovation Among Its Employee Owners

March 29th, 2019 For Crafts Technology of Elk Grove Village, Illinois, building an innovative culture required asking for intellect, sharing ownership, and rewarding good ideas. The company, one of the oldest continually operating tool companies in the U.S., has expertise in cutting, tooling, and shaping ultra-hard materials. Their precision tools are used in the manufacture of everything from airplanes to diapers. The owners of Craft had a three-step process in mind to get their company to think differently. First, the company transitioned to an Employee Stock Ownership Plan (ESOP). In an ESOP, companies provide employees with stock ownership in the firm. The new culture of innovation is paying off at Crafts. In addition to two newly filed patents and one co-patent, the company has doubled its sales in the last five years while costs have not escalated at the same pace, thereby having a significant positive impact on net income.  Best ... Read More..

Chelsea Green Publishing goes 100% ESOP

March 28th, 2019 Vermont-based Chelsea Green Publishing is now fully employee-owned, marking the completion of an eight-year transition initiated by founders Margo and Ian Baldwin. Through an employee stock-ownership plan (ESOP), the company purchased ownership shares from the Baldwins on behalf of the 25 employees of the owners of the independent publishing house. Read More: ESOPs are a logical option for private company business owners who are looking to execute a succession plan, increase employee productivity, remain independent and enhance their employees’ retirement savings. Menke & Associates, Inc. is the largest ESOP advisor in the country having created over 3,500 ESOPs in all 50 states in our 45 year history. ... Read More..

Colorado: The New Delaware of ESOPs?

March 27th, 2019 Democratic Colorado Governor Jared Polis’ administration is putting together an Employee Ownership Center within the Colorado Office of Economic Development and International Trade The center will work with law firms and accountants to simplify the process and reduce costs associated with converting to an ESOP or Employee Stock Ownership model. Read more at: Menke & Associates, Inc. is the largest ESOP advisor in the country having created over 3,500 ESOPs in all 50 states, including Colorado, in our 45 year history. ... Read More..

Does your ESOP Plan document correctly provide for the ESOP distribution procedures actually used at your company?

By Victor Alam, Esq We recently came across a company whose ESOP distribution procedures prohibited participants from electing a stock distribution.  Those plan provisions were in the original plan document when the ESOP plan was first adopted years ago. When the company converted from an S corporation to a C corporation a few years later, the plan document was not updated to specifically contain the necessary language to permit the plan to prohibit a participant’s “right to demand” employer stock as a C corporation. As a plan sponsor, you should reaffirm the ESOP’s distribution procedures are in line with the plan document.  The best way to do that is to review the plan document with your ESOP plan counsel and the representatives of your company who oversee the plan’s distribution election forms that are sent to the participants on a regular basis.  The assumption that older plan provisions are still ... Read More..

High Performance Ownership: employee owned Architecture, Engineering & Construction firms command higher valuations

High Performance Ownership: employee owned Architecture, Engineering & Construction firms command higher valuations By Trevor Gilmore Zweig Group’s recently released 2019 Valuation Survey of AEC Firms highlights an important trend in employee ownership performance.  Zweig focused on nationwide AEC firms – i.e. architecture, engineering & construction firms, of all sizes.  From a valuation perspective, firms with employee stock ownership plans (ESOPs) performed better than non-ESOP firms in five of the six valuation ratios for the years 2016 through 2018.  Some key highlights: ESOP firms have a median value per employee of $89,000, compared with $69,136 for non-ESOP firms ( a 30% premium) ESOP firms command higher median EBITDA multiple – 6.67x versus 3.51x for a non-ESOP firm (a whopping 90% premium)  ESOP firms outshined their non-ESOP counterparts in these three valuation metrics: value/net revenue, equity value/profit and equity value/book value ratios.  The only metric where non-ESOP firms outperformed ESOP firms was the value/backlog metric –  which was .66 and .64, respectively.  The difference ... Read More..

“The World’s Greatest!…” TV show spotlights The Menke Group

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Could ESOPs spell the future of business ownership?

Growing numbers of U.S. companies are giving workers financial stakes via employee stock ownership plans Aritcle by Judy Stringer. Reposted from the original article at Crain’s Cleveland Business There are a few lingering questions when it comes to Great Lakes Brewing Co.’s newly announced employee stock ownership plan, or ESOP. How many shares employees will receive, for example, how much each one of those shares will be worth and if the stock will be subject to a vesting period. Or, even what percent of the company will be owned by the ESOP. “If you look at privately held businesses and who owns them, it’s a lot of 50 year olds and 60 year olds,” DeDominicis said. “They own these valuable businesses and they need a market for them somewhere. … But, the reality is many, maybe even most, privately owned businesses are not salable, and certainly not salable at a reasonable ... Read More..

Menke Client, Heath Ceramics, Made Its Employees Into Owners. Should You?

Reposted from the original article at Business of Home HEATH CERAMICS, MADE ITS EMPLOYEES INTO OWNERS. SHOULD YOU? JAN 9, 2019 FRED NICOLAUS In 2015, Robin Petravic and Catherine Bailey, co-owners of iconic California ceramics brand Heath, were looking ahead to the 15th anniversary of their tenure. Over the last decade, the couple had transformed the company from a struggling legacy brand into a thriving enterprise that recently celebrated its 70th anniversary. Moreover, they had done it with a tightly held set of values, keeping all design and production in-house, staying local, and favoring sustainability over growth. There was plenty to celebrate, but instead of breaking out the Champagne, the pair turned their attention to a subject many business owners choose to put off as long as possible: succession planning. “It’s still a ways off,” Petravic tells Business of Home, “but at some point there’s going to be succession at Heath. And unlike a lot of ... Read More..

Certified EO welcomes Menke & Associates as a Certified Employee-Owned founding member

Certified EO welcomes Menke & Associates as a Certified Employee-Owned founding member SAN FRANCISCO – June 1, 2017 – PRLog — Menke & Associates, Inc., the nation’s largest and oldest employee stock ownership plan (ESOP) advisory firm, announced today that they are becoming a Founding Member of Certified Employee-Owned® (Certified EO), a new certification program for employee-owned companies. “Menke & Associates is majority owned by its employees. We are proud to partner with Certified EO, an organization whose mission to expand the awareness and adaptation of employee ownership is the same as ours. We envision Certified EO will become the premier employee ownership certification body, connecting employees, consumers, and companies looking to do business with other employee owned companies” says John Menke, Founder and President of Menke & Associates, Inc. Besides being an attractive exit strategy for shareholders, ESOP’s can offer substantial wealth to employees. According to recent research conducted by the Oakland, CA based think tank National Center for Employee Ownership, ... Read More..

The Brix Group, a leader in commercial vehicle onboard communication systems, becomes 100% employee owned

The Brix Group, a leader in onboard entertainment and communication systems for the commercial vehicle industry, has become 100% employee owned. With the help of The Menke Group, The Brix Group has extended ownership to their employees by way of an Employee Stock Ownership Plan. In addition to helping create financial security for employees, the plan is designed to encourage and reward increased employee productivity and efficiency. According to The Menke Group, a 5 or 10 percent increase in individual employee productivity can result in increasing company profitability by 50 percent or more. The ESOP creates a direct link between employee productivity and employee benefits, and nurtures a collaborative culture where the employee-owners and the bottom line can thrive. “As part of our overall succession strategy, we sold The Brix Group to our employees, rather than to a third party, as a way to ensure our employees are rewarded for ... Read More..

SolarCraft becomes 100% employee owned

SolarCraft, a well established Novato solar panel design and installation firm, has become 100% employee owned. With the help of The Menke Group, the principal owners of SolarCraft have extended ownership to their employees by way of an Employee Stock Ownership Plan. In addition to helping create financial security for employees, the plan is designed to encourage and reward increased employee productivity and efficiency. According to The Menke Group, a 5 or 10 percent increase in individual employee productivity can result in increasing company profitability by 50 percent or more. The ESOP creates a direct link between employee productivity and employee benefits, and nurtures a collaborative culture where the employee-owners and the bottom line can thrive. Previous owners, Bill Stewart and Dennis Nuttman, plan to remain active in their current roles as President and Director, respectively, for the foreseeable future as the company transitions to a new management team made ... Read More..

New Study Shows Jobs Grew 60% in S-ESOPs While Others Remained Flat

A study released today by Alex Brill, former advisor to the Simpson-Bowles bipartisan deficit reduction commission and a fellow at the American Enterprise Institute, finds that private employee stock ownership plans (ESOPs) organized as S corporations increased employment over the last decade more quickly than the overall private sector. Among surveyed “S-ESOP” companies, the Brill study reported, jobs grew by 60 percent over the past decade, while jobs in the private economy as a whole remained relatively flat. “The unique strengths of employee ownership drove company gains and jobs in the past decade, while helping insulate S-ESOP businesses from the adverse effects of the recent recession,” Brill wrote in the new report. ESOPs are tax-exempt retirement plans that consist of company stock held on behalf of the company’s employees. They are company-funded retirement plans that do not require any contribution from workers. Congress first changed U.S. tax rules to allow ... Read More..

Howard's Appliance Celebrates Being 100% Employee Owned

The Los Angeles Times featured an article about Howard’s Appliance & Flat Screen Superstores, which has been 100% employee-owned since 2000. The company, which started as a radio repair shop in San Gabriel, sold nearly half of the company over to the employees when the government approved employee stock ownership plans in 1976. Employees acquired 100% of the company in 2000. Howard Roach still retains his place as chairman of the board. Under the ESOP structure, profit shares accumulate in employee’s retirement accounts The more profitable the company, the more employees receive when they retire. The ESOP has resulted in far lower employee turnover than the in the rest of the industry. Howard’s, turnover rate is around 15% whereas other retailers typically experience 75% or more.  Customers like dealing with faces they are familiar with from year after year and from generation to generation so having employees who have been there for ... Read More..

Mills James Produces Animated Film About ESOPs

Mills James, a comprehensive creative media production company based out of Columbus, Ohio has made an animated film explaining how their Employee Stock Ownership Plan (and how ESOPs in general) work. Mills James employs about 150 employees and specializes in the following areas: Teleproduction, Broadcast Production, Business Video, Meetings & Events, Web Interactive and Original TV Productions. To read more about Mills James and their ESOP, you can visit their website here. ... Read More..

Great Falls Business Owners Explain "ESOPs"

Local business owners say they’re spreading the wealth in Great Falls by offering long term employees stock ownership plans or ESOP’s. It’s a structure that is set up and its federally recognized, so the employees are then part of a trust that then owns either a 100% of the company or some portion of the company,” said Sletten President Erik Sletten. Today at Sletten Construction company, ESOP’s were the main topic of conversation — that and pie. Beyond just being a gluttonous getaway from work, the event used pie as a delicious symbol for an ESOP or an employee benefit plan that turns the employees of a company — into owners. You can read the rest of the article at ... Read More..

Read about the Cal-Tex Protective Coatings ESOP

Read the original posting at the Cal-Tex Website Cal-Tex is 97% employee-owned through an Employee Stock Ownership Plan (ESOP).As the 2011 Grand Prize Winner of theNational Center for Employee Ownership’s Innovations in Ownership Award and the 2011 ESOP Association’s Best Communications Award (Small Company), Cal-Tex is committed to providing a company structure that will benefit the employee and the customer. If you are considering becoming a Cal-Tex employee or customer, consider the benefits of being a part of a company that is 97% employee-owned and 100% dedicated. What is an ESOP?  An ESOP is an employee benefit plan in which the company offers its employees stock, and thereby, they become partial owners of the company itself. Although some ESOPs require their employees to purchase the company’s stock, Cal-Tex provides its employee owners with their shares without charge. Our ESOP benefits the company, its employee owners and its customers. Benefits of an ESOP to ... Read More..

ACG Kentucky panel talks about benefits of ESOPs

Click here to read the original article at For business owners who want to cash out but still oversee the direction of the company and take care of their workers, an employee stock ownership plan might be the best bet. That was the message from panelists Tuesday morning at the monthly meeting of ACG Kentucky, the local affiliate of the Association for Corporate Growth. Many entrepreneurs get caught up in the tax benefits of ESOPs, but sellers have to consider their goals, said Alan Taylor, a partner in Louisville accounting and consulting firm BKD LLP. “If you just want to cash out and go to the beach, there would be other transactions that would be better,” he said. ESOPs serve as retirement plans for employees. An ESOP, controlled by a trustee, buys all the shares of a company. Then, company profits are placed into accounts for employees, with payouts based on ... Read More..

National Van Lines Becomes ESOP-Owned

National Van Lines Inc. said it has changed the company’s structure, selling itself to an employee stock ownership plan entity. The third-generation, family-run business said it has been working on transitioning to an ESOP-owned S Corp. structure since July 2010 effort to “find an ownership and liquidity succession plan that did not disrupt the culture or the people.” The ESOP structure gives National Van Lines with tax savings, improved employee benefits and financial flexibility, the Broadview-based company said in a press release. Founded in 1901 by F.J. McKee, National Van Lines began in the Chicago area as a one horse and wagon moving service and expanded to a nationwide fleet of trucks. McKee’s granddaughter, Maureen Beal, is the company’s chief executive and one of its primary shareholders. Below is a ESOP training video they created for their employees: ESOP Training Presentation Video from National Van Lines, Inc. on Vimeo. ... Read More..

ESOP Companies Report Positive 2010 Even Amid Slow Economic Recovery

WASHINGTON, Sept. 14, 2011 /PRNewswire-USNewswire/ — Results from the Employee Ownership Foundation’s 20th Annual Economic Performance Survey of ESOP (employee stock ownership plan) companies that are members of The ESOP Association show that ESOPs, while not immune to economic developments beyond their control, have seen an upturn over the past year. The survey shows ESOP companies, by significant percentages, continue to have increased share value, better productivity, and overwhelming support among leaders of the companies. Since the survey’s beginnings 20 years ago, and the case in all the years the survey has been conducted, even in 2009, a very large majority, 92.2% of survey respondents, reported that creating employee ownership through an ESOP was “a good business decision that has helped the company.” In addition, 72.9% of respondents indicated the ESOP positively affected the overall productivity of the employees. In terms of profitability and revenue, both were up from previous ... Read More..

The Joys Of An ESOP

NOVEMBER 1, 2004 The following article was originally published in Bloomberg Businessweek and written by Amey Stone Employee ownership can be a powerful tool Last November the 100 employees of Superior Plumbing & Heating, a mechanical contractor in Anchorage, Alaska, gathered on the snow-covered ground to celebrate their new status as full owners of the $20 million company. Cutting the ribbon and symbolically reopening the company was Jan Van Den Top, the 60-year-old president, who had sold his shares to the company’s employee stock ownership plan (ESOP). Van Den Top started the ESOP in 1995, contributing 42% of his shares as retirement perks for employees. In 2003 he learned of changes in the tax code that give generous breaks to S corporations that are fully employee-owned. He sold the rest of his shares to the ESOP, then switched Superior from a C corp to an S corp. The tax advantages ... Read More..

The Will-Burt Company Celebrates its 25th Anniversary as an Employee Owned Company

For additional information, contact: Angie Lamielle, Senior Marketing Associate 330-684-4002 For Immediate Release: Monday, June 06, 2011 The Will-Burt Company is celebrating its 25th year as an Employee Owned Company. Will-Burt employees have been participating in the Employee Stock Ownership Program (ESOP) since its inception on December 31, 1985. Will-Burt will be holding a celebration for its employees and retirees on June 16, 2011 with a special recognition for over 60 employees who have participated in the ESOP for all 25 years. A short history of the Will-Burt Company since becoming an ESOP… 1990’s – The Night Scan line of emergency light towers begins to set the standard in vehicle-mounted emergency lighting. Contract manufacturing work for Caterpillar and Volvo begins to steadily increase in addition to contracts with Gerlach and Phoenix Mold & Die. Will-Burt receives the ISO 9001 designation for quality in 1994. A 140,000 square foot expansion ... Read More..

WinSystems, an Employee-Owned Corporation on Youtube

Here is a video posted by one of The Menke Group’s Clients: WinSystems, an embedded PC designer and manufacturer, provides a high level of quality and customer service through an Employee Stock Ownership Plan (ESOP). This leads to employees holding a direct stake in maintaining a high level of customer service. Here is the full press-release: WinSystems Adopts Employee Stock Ownership Plan September 19, 2007, Embedded Systems Conference, Boston, MA Jerry Winfield, President of WinSystems, today announced that the company has instituted an Employee Stock Ownership Plan (ESOP) and now joins a growing list of successful companies whose employees are stockholders. This corporate structure offers stability and longevity for the WinSystems Corporation insuring long-term availability of products for our customers. This is very important for industrial OEMs using embedded PC technology for their ongoing and future applications. “Acquisitions happen during a market consolidation or when an owner seeks an exit ... Read More..

ESOP plans let founders cash out and employees cash in

By Nancy Mann Jackson, contributing writer June 17, 2010: 4:45 AM ET ( — On his 81st birthday, entrepreneur Bob Moore signed the papers to hand nearly a third of his company over to his 200 employees. But it’s a gift Moore and his three partners hope will pay off for them as well: By launching an employee stock ownership plan, they’re creating an exit strategy for themselves from the business they’ve spent the past three decades building. We’re growing old,” says Moore, who launched Bob’s Red Mill Natural Foods in 1978 in Milwaukie, Oregon. “We started wondering, ‘What are we going to do with this company?’ We could position it to sell it, but we just felt that the people in this company deserve to have it. They have made it what it is.” An ESOP allows a company to gradually buy out its existing owners. Typically, the company ... Read More..

ESOP: A New Tax Savings Tool for Owners of S Corporations

“A new dawn greets ESOP companies!” “The Holy Grail of business opportunities beckons: ESOP companies can now operate tax free!” Not since 1984, when the §1042 tax-free rollover was enacted, has the ESOP community bubbled with such enthusiasm. Under the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001, (“EGTRRA”), the ESOP’s share of S corporation earnings will not be subject to federal corporate taxation or to taxation as “unrelated business income tax,” unless the ESOP runs afoul of certain “anti-abuse” provisions. Thus, in the case of an S corporation that is 100% owned by its ESOP, the company’s earnings will be entirely tax exempt. Even the least ebullient of practitioners note that fiduciaries of existing ESOPs now confront a new obligation: to assess whether electing S status would benefit the company and the trust beneficiaries. A Bit of History Until the Small Business Job Protection Act ... Read More..

ESOPs as Retirement Benefits: An Analysis of DOL Data

Fall 2010 Written by Loren Rogers In a project funded by the Employee Ownership Foundation, the NCEO did an extensive analysis of ESOP companies using data from the US Department of Labor. Unlike prior research, the study carefully compiled data from multiple plans within a single company and used multiple years of data for each plan. It concluded that ESOP companies are more likely to offer a second defined contribution (DC) plan than non-ESOP companies are to offer any DC plan at all. ESOP companies also contribute substantially more to their ESOPs than companies with non-ESOP DC plans contribute to their DC plans. The average ESOP participant has 20% more DC assets than the average participant in a non-ESOP DC plan, and those assets are much more likely to come from the company. Considering only DC assets originally contributed by the company, ESOP participants have approximately 2.2 times as much ... Read More..

The ESOP Association and the Employee Ownership Foundation Release Results of the 2010 ESOP Company Survey

August 11, 2010 The ESOP Association and the Employee Ownership Foundation released today the results of a survey conducted among the Association’s 1,400 corporate members in the first quarter of 2010 which confirms positive benchmarks for ESOP (employee stock ownership plan) companies. The company survey is conducted every five years and was last completed in 2005. Prior to 2005, the survey was completed in 2000. The eye-opening statistics of the 2010 survey are the increase in age of the ESOP and account balances. In 2010, the average age of the ESOP was reported to be 15 years as opposed to prior years where the ESOPs reporting where much younger. In addition, the average account balance has risen dramatically to $195,222.65; a much higher figure which correlates with the age of ESOPs participating in this year’s survey. The eye-opening statistics of the 2010 survey are the increase in age of the ... Read More..

Ross Group Inc. Rewards Employees With Stock Ownership Plan

Ross Group Inc of Dayton, Ohio announced that the company has formed an Employee Stock Ownership Plan (ESOP) and has joined the growing list of companies whose employees are stockholders. “When the transaction is completed,” said Mr. Mark Ross, President and CEO, “the employees of Ross Group Inc will own just under 25 percent of the Company.” Mr. Ross said, “We had an immediate need for one of our shareholders to exit, but beyond that, the ownership team wanted to find a long term solution that would provide an exit strategy alternative for the remaining owners as we neared retirement age. It seemed only right to us that the company should be sold to the employees. Without the loyalty, dedication, and hard work of this fine group of individuals, we certainly would not have grown as much as we have.” “The Plan has two objectives,” Mr. Ross indicated. “First, to ... Read More..

Clif Bar Announces ESOP Program

Wednesday, June 30, 2010 Clif Bar & Company announced the selling of family owned common stock to its employees through an employee stock ownership plan (ESOP). Employees through the ESOP own 20% of the company, while husband and wife owners Gary Erickson and Kit Crawford retain the remaining 80%. No change in management structure will take place, with Erickson and Crawford remaining majority owners and co-CEOs of the company. “All along we wanted to create a company where we would want to work,” said Crawford. “Employee ownership is one more way we could run a different kind of business: one that inspires a team of people to make the kind of delicious, nutritious food we’d like to eat, and that strives for a healthier, more sustainable world.” “By retaining private, employee ownership we will continue to have the freedom and flexibility to build a sustainable business with long-term focus for ... Read More..

PRESS RELEASE – Technomics, Inc. Benefits Employees with Stock Ownership Plan

FOR IMMEDIATE RELEASE Technomics, Inc. Benefits Employees with Stock Ownership Plan Arlington, VA – January 26, 2010 Rick Collins, President and CEO of Technomics, proudly informed employees on January 26, 2010 that the Company formed an Employee Stock Ownership Plan (ESOP) and, in doing so, has joined the growing list of companies whose employees are stakeholders. “The Plan has several objectives,” Mr. Collins indicated. “First, to provide ownership of the company to those that build the company; second, to provide a significant retirement benefit and a reason to want to make the company more successful; third, to provide a tool to motivate, retain and attract employees; and finally, to create a market for stock held by original owners without a sale to outside interests. The plan should result in increased employee incentives and provide them with long-term retirement benefits. We also hope the ESOP will encourage employees to create opportunities ... Read More..

RESILIENCE AND RETIREMENT SECURITY: Performance of S-ESOP Firms in the Recession

Written by Phillip Swagel and Robert Carroll Executive Summary A study of a cross-section of Subchapter S firms with an Employee Stock Ownership Plan shows that S-ESOP companies performed better in 2008 compared to non-S-ESOP firms along a number of dimensions, including job creation, revenue growth, and providing for workers’ retirement security. The S-ESOPs paid their workers higher wages on average than other firms in the same industries, contributed more to their workers’ retirement security, and—crucially in a year of recession—hired workers when the overall U.S. economy was pitched downward and non-S-ESOP employers were cutting jobs. S-ESOPs help prepare ESOP participants – the workers – for a more economically secure retirement. Employee-owners accumulate shares of company stock as part of their compensation in addition to their wages and other benefits such as health insurance. This is a meaningful contrast between S-ESOPs and other firms: nearly 60 percent of working Americans do not have any ... Read More..

ESOP: Employee Ownership of Companies on the Rise

The ESOP – Employee Stock Ownership Plan – is, slowly, on the rise. These worker-owned businesses are more productive and could benefit the American economy. Shoppers eye goods at the bakery of King Arthur Flour Co. in Norwich, Vt. The employee-owned firm was able to expand from its niche to deliver a broad product line. Norwich, Vt. A decade ago, John Schock of Pasadena, Md., reached his mid-50s and a crossroads. He could fund his retirement by selling off his financial-services firm to another company. But he wanted to assure the future of FMS, the firm he’d founded in 1974. “If there isn’t a solid succession plan for key management and staff, then a company can fail after the founder leaves,” Mr. Schock says. So he took the unconventional route: He sold FMS to his workers, all 35 of them, by creating a tax-advantaged Employee Stock Ownership Plan. They got ... Read More..

ESOPs on the Rise Among Small Businesses

Small companies are rushing to reward workers with employee stock ownership plans as low valuations make awarding shares more attractive By Karen E. Klein Bob Moore gathered three employee shifts together last month for pizza parties to celebrate his 81st birthday. But Moore, the founder and president of Bob’s Red Mill Natural Foods in Portland, Ore., also had a surprise announcement: He was giving his 200 employees the company he founded in 1978. “I thought some of them were going to kiss me,” Moore recalls. “It went over very, very, very well.” Moore and his partners researched their retirement options for more than a decade before settling last year on an Employee Stock Ownership Plan (ESOP). An ESOP is a tax-advantaged, qualified employee retirement plan similar to a stock bonus plan except that it can borrow money. ESOPs are typically created to buy out all or part of an owner’s interest in an ... Read More..

New Study Documents ESOP Account Balances

The NCEO has just completed an analysis of Form 5500 retirement plan filings filed by ESOP companies. The Form 5500 data are prone to considerable reporting and transcription error and should be used with caution, but many of the results described below are in accord with prior research, with our experience, and with best estimates from practitioners in the field. Among the companies studied, the average value of plan assets per participant is approximately $46,000. This compares to the average of $47,680 reported for the state of Washington in 1995 (See Wealth and Income Consequences of Employee Ownership by Peter Kardas, Adria Scharf, and Jim Keough, (Oakland, CA: National Center for Employee Ownership, 1998) and to an average 401(k) account balance of $58,000 in 2005 computed by the Employee Benefit Research Institute and Investment Company Institute. However, typically only one-third or less of 401(k) plan balances are attributable to company ... Read More..