The One-Stop ESOP Blog

Hiring a new leader to join your employee ownership culture? I was recently speaking with a human resources manager compiling a job specification for a senior manager succession plan she needed to fill due to a pending retirement. As we began discussing the transition, a thoughtful dialogue on what leadership looked like in an employee-owned culture soon became the focus. Here are some key attributes we came up with.

“Live your values. If you don’t know what they are, go find out.” -Art Barter

When an organization develops a culture based on a strongly held and widely shared set of beliefs that are supported by the business strategy, amazing things happen. Based on an extensive study, employee ownership increases sales 2.3 to 2.4% per year over what would have been expected without an ESOP (Employee Stock Option Plan), reports the National Center for Employee Ownership (NCEO).

Business succession planning will be critical for numerous businesses as approximately 10,000 Baby Boomers reach age 65 on a daily basis according to a Pew Research study. According to this study published in December of 2010, by 2030 all Baby Boomers will be at least age 65 and will represent approximately 18% of the nation’s total population. 

Many business owners may wonder, “What is an employee stock ownership plan (ESOP)?” This a common question from business owners seeking business succession plans as a method for liquidating their equity in the business while maintaining the culture and values of the company they built during their working years.

Part One of our Roles and Responsibilities of an ESOP Plan Trustee highlighted the requirements for an ESOP Plan Trustee according to Title 29 of U.S. Code Section 1104(a) and IRS Section 401(a)(28)(c).

In part one of our two-part series on the roles and responsibilities of an ESOP Plan Trustee, we will discuss the overall responsibilities of the Plan Trustee including engaging an independent ESOP appraiser.

Last month, Republican Senator Steve Daines from Montana cosponsored the bill in the Senate titled S. 1589 – Promotion and Expansion of Private Employee Ownership Act of 2017. The pending bill was initially sponsored in the Senate by Republican Pat Roberts from Kansas last year on July 19^th.

We have previously discussed how ESOP Companies are Better at Job Retention than their Non-ESOP Counterparts.

I am honored to be presenting on Struggling with How to Make an Impactful ESOP Committee on Thursday, March 8^th, at 1:05 pm in Appleton, WI as part of the ESOP Association Wisconsin Chapter 2018 Spring Conference & Roundtables  being held at Lawrence University.

What is the ESOP repurchase liability?

The ESOP repurchase obligation or liability is the company’s obligation to buy back shares from ESOP participants according to the company’s ESOP document and ESOP Distribution Policy. The ESOP repurchase obligation helps with planning for cash requirements and how to meet bank (or seller) requirements for leveraged ESOPs.