In the News: Employee Ownership Success Stories

Posted by Aaron Juckett, CPA, CPC, QPA, QKA on Sat, Aug 11, 2007
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Nypro (Clinton, MA); Atlantic Fasteners (West Springfield, MA); Litecontrol (Hanson, MA)

Ideally, employee stock plans can give workers more leverage provides an informative interview with a Massachusetts ESOP consultant. In my overview below I have provided links to more information about the employee ownership success stories mentioned in the interview:

  • "There are about 10,000 ESOPs in the country with 10.5 million participants, but growth has been slow. What are the trends behind these numbers?"

    In addition to the brief answer provided, you can find more information here.
  • "You helped the Dow Jones employees union evaluate the bid on the company by News Corp. owner Rupert Murdoch. Couldn't the employees have made their own bid for the company?"

    Basically, News Corp. paid a substantial premium that could not be matched. However, it was noted that, "we put the investment banking world on notice that unions themselves can be savvy participants in this process and can influence events."
  • "Traditionally ESOPs have been used more by small and midsize companies, right?"

    Yes

  • "Are employees interested in making these deals?"

    Generally the owners and not the employees initiate the deals. The answer cited South Mountain Co. and Equal Exchange as worker-owned companies, sometimes referred to as worker cooperatives.
  • "Having ESOPs didn't prevent the bankruptcies of Polaroid Corp. or United Airlines, though."

    "Polaroid used an ESOP as a takeover defense but then did not migrate fast enough into the digital arena." In addition to the answer given for United Airlines, the NCEO website has an entire page devoted to United Airlines.
  • "Where are some ESOP success stories?"

    The article cited the following ESOP success stories: Nypro, Atlantic Fasteners, and Litecontrol. "The success of ESOPs prove there are business owners who care about their legacy and rewarding the people who helped make them wealthy."
  • "What about the argument that ESOPs make employees too heavily invested in one company, compared with 401(k) savings plans that diversify their retirement holdings?"

    "Research shows ESOP employees are more likely to have these plans, too. Diversification always makes sense, but if the object is to build wealth, one has to begin by concentrating somewhere. To build wealth in the first place, employee ownership is a better bet than simply relying on a paycheck."

Topics: In the News, ESOP, employee stock ownership plan

Aaron Juckett, CPA, CPC, QPA, QKA
Written by Aaron Juckett, CPA, CPC, QPA, QKA

Aaron is President and Founder of ESOP Partners and provides implementation, administration, and consulting services to hundreds of companies. He is a member of The ESOP Association (TEA) and the National Center for Employee Ownership (NCEO).

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