The Ohio Employee Ownership Center

Tag Archives: Employee stock ownership plan

Newly Introduced Senate Bill Promotes Employee Ownership

A Bill has been introduced in the U.S. Senate that, among other things, will make it easier for companies to convert into S-Corp ESOPs. A press release from Employee Owned S Corporations of America provides some details. Some important quotes:

The bill eliminates barriers that businesses and their owners currently face in establishing a new S corporation ESOP or expanding the employee-ownership stake in an S corporation. Congress created the S corporation ESOP structure to encourage and expand retirement savings, giving more workers in private companies the chance to own their companies through an ESOP qualified retirement savings program. A similar bill, currently endorsed by 18 Republicans and 18 Democrats, was introduced earlier this year in the House of Representatives as H.R. 1244…

The S corporation ESOP structure accomplishes exactly what Congress intended it to do by creating retirement security for millions of American workers in all 50 states. A study from University of Pennsylvania shows that S ESOP employees have retirement account balances three to five times higher than the average 401 (k) or other defined contribution plans and that S ESOPs generate $14 billion in new savings each year for their workers beyond what they otherwise would have earned, offering greater job stability and job satisfaction. According to a Georgetown University report, S ESOPs have been better able to weather economic downturns, preserve jobs and, in the case of the recent recession, have grown wages in comparison to their non-S corporation ESOP counterparts.

An S-Corporation that is owned 100% by its employees through an ESOP is a 100% income tax free entity.

The bill was introduced by Republicans Pat Roberts and Olympia Snowe and Democrat Ben Cardin and mirrors House Bill 1244 that was introduced earlier this year. The House Bill has been endorsed by 18 Democrats and 18 Republicans.


A Cooperative Can Be An Innovative and Competitive Business Strategy for Today’s Economy

The AllBusiness website has an interesting article on the use of employee-owned cooperatives in small businesses. The article highlights a number of companies, including Cleveland’s own Evergreen family of cooperatives, who have used the cooperative model to empower and motivate their employees. A few have even used the model as a tool for ownership succession.

The article restates a familiar objection to cooperatives:

Co-ops have long been dismissed as touchy-feely experiments in business socialism, but with growing pressure on many traditional companies, the co-op model is getting increased attention — not just as a political statement of owner-worker solidarity, but as a fresh approach to business success.

For some people, cooperatives may indeed conjure up negative images of “socialism.” But for the many cooperative members around the country, the idea that they are engaging in some form of Utopian exercise would be some fresh news indeed (we cover this and other misconceptions about cooperatives in a previous post on our blog.)

It should be also noted that the author throws different types of cooperatives into the same jumbled bag. Employee cooperatives are part of a broad family of cooperative businesses, which include agricultural co-ops like Land of Lakes or Agland, which are owned by their farmer members (as mentioned in the article); credit cooperatives like credit unions, which are owned by their depositor members; mutual insurance companies like Nationwide and State Farm, which are owned by their policy holder members; and consumer co-ops like some natural food stores, which are owned by their customer members. For many of these other types of cooperatives, the employees may or may not also be owners of the business.

The OEOC has an extensive practice in setting up new employee-owned cooperatives, as well as significant experience with ownership transitions to employee-owned cooperatives. If you are interested in exploring this option in your company, drop us a line.

New Report Links Business Success to Employee Ownership and Involvement

A new report from the SJF Institute studies the effect of employee involvement and broad-based employee ownership to improved business performance and finds a strong correlation:

Two top employee engagement strategies detailed in Employees Matter are communicating the company’s core values clearly and consistently and sharing ownership broadly via stock options, restricted stock, ESOPs, or co-ops.

“When team members understand their company’s core values, they can be empowered to act quickly and make good decisions,” … “And when employees think and act like owners, they provide better customer service and find every possible way to build company value.”

The report, entitled Employees Matter: Maximizing Company Value Through Workforce Engagement, is available as a free download on the SJF Institute website.

Employee Ownership Drives NE Ohio’s Economy

The Cleveland Plain Dealer, as part of their special section in Sunday’s paper on small business in Ohio, highlights a number of ESOP companies and how they use employee ownership as a tool to “enhance attitudes and performance.” Some nice quotes…

“We’ve had a tremendous string of growth in the last 10 years,” said Daniel Sedor, president and chief executive officer. “Employees have seen their stock value triple.”

“I think as employee owners you take more pride in what you’re doing,” said Cherie Weaver, marketing coordinator for Prentke Romich. “That’s the way I feel about it and I’ve been here 28 years.”

“As an employee-owned company, Oswald Companies has a heightened sense of urgency when it comes to service and performance, as we have a vested interest in our clientele and the communities we serve,” said Marc S. Byrnes, the company’s chairman and chief executive officer.

The piece also features an interview with our very own Jay Simecek. Well worth a read!

Ohio’s Award-Winning Employee Owners

CTL Engineering is OH/KY Employee-Owned Company of the Year – CTL Engineering was named the 2011 Employee-Owned Company of the Year by the OH/KY Chapter of The ESOP Association. CTL is 85% employee-owned through an ESOP established in 1998. Combining strong management with employee ownership and involvement that includes strategic planning, the Columbus-headquartered, firm has 250 employees in nine offices in OH, IN, and WV. CTL provides engineering, testing, analysis and consulting services in environmental, geotechnical, roofing, forensic and civil engineering areas.

Perry Corporation’s ESOP Video Wins National Communication Award – Perry Corporation of Lima took The ESOP Association’s Annual Award for Communications Excellence (AACE) in the Audio Visual category.  TEA President, Michael Keeling, praised the video for its use of humor to communicate the link between ESOP participation and the long-term rewards of ownership and business success. Featuring a Gilligan’s Island theme with Perry’s ESOP committee members dressed as the show’s TV characters, the video was enjoyed by hundreds of attendees at the TEA 34th Annual Conference and AACE exhibit in Washington DC.

CTL’s Becky Carroll is OH/KY Employee Owner of the Year – Becky Carroll, Payroll Administrator of CTL Engineering, is the 2011 Employee Owner of the Year for the Ohio/Kentucky Chapter of The ESOP Association. With 11 years at the firm, she serves on CTL’s ESOP Education Committee, also known as the Fun Czars, whose three members lead and promote “celebration, teaching, learning, and ownership” company-wide. “As a member of the ESOP Education Committee, it is my duty to educate our employees on the importance of the ESOP.  I feel I make a difference when employees take ownership and pride in where they work,” she remarked.

PRC’s Team wins OH/KY Group Excellence Award – The ESOP Communication Committee of Prentke Romich Company was selected by the Ohio/Kentucky Chapter of The ESOP Association as the winner of the 2011 Group Excellence Award. This annual award acknowledges companies that have excelled in communicating the ESOP  and its meaning to the company’s employees. PRC is a worldwide leader in the development and manufacturing of augmentative communication devices and other assistive technology for people with speech and other disabilities. PRC is 100% employee-owned through their ESOP established in 2003. Headquartered in Wooster, the firm employs 165 people worldwide. The ten members of the ESOP Communication Committee represent each area of the company.  They develop company-wide education through the internet, annual participant meetings, small-group birthday lunches with their company president, matching of  new employees with senior employees, and learning games with cash prizes.

Andrew Kulesza is 2011 Outstanding TEA Board Member – Andrew Kulesza, CFO/Treasurer of RE Kramig & Co., headquartered in Loveland, was named the 2011 Outstanding Board of Governors Member by The ESOP Association for his volunteer service and strong support of the Association’s government affairs activities. “Andrew has worked enthusiastically to advance the cause of employee ownership, particularly with leading think tanks and federal officials,” said J. Michael Keeling, ESOP Association President.

Two New Employee Owner Retreats for Summer

The Employee Ownership Foundation is sponsoring two new employee owner retreats in August of this year, one in the Chicago area and one in Honolulu (yes, you read that right!). The retreats are staffed by the crack staff here at the OEOC (yes, I am one…!). The retreats are an excellent opportunity for the non-managerial employee-owners of your company to learn more about what being an employee owner means, effective communication, financial literacy, team problem-solving, and more.

More information on the retreats can be found on our website.

Be there or be square!

New Belgium Brewing Uses Employee Ownership and Participation to Grow

The Northern Colorado Business Report has an interesting interview with Kim Jordan, CEO of New Belgium Brewing. Jordan details how employee ownership and participation (she uses the term “High-Involvement Culture”) have allowed them to manage and sustain growth:

By 1995, as we got more customers and coworkers, we expanded our vision to take their needs into account. We combined open-book management, employee ownership (our coworkers own 41 percent  of the company), and a high-involvement culture. Our coworkers can see all financials, And our plans for branding, sales, capital expenditures, hiring, budgets, and strategies – and they participate in strategy development.  Once everyone knows where true north is, it frees people from uncertainty and allows them to do more creative work.  Powerful ideas come from all across the company: big ideas, little ideas, money-saving ideas, and culture-building ideas.  I think most people here would tell you that they feel their contribution matters.

Food (and drink!) for thought…

The 25th Employee Ownership Conference Is Just About Here…

I haven’t been posting a lot lately, as we have spent the last two weeks or more preparing for our 25th Annual Employee Ownership Conference on April 29th in Akron Ohio. As is the case every year, this year’s conference features a full schedule of sessions, speakers, and fun on everything employee ownership. The featured speakers are:

1) Jeff Evans, President and CEO of the Will-Burt Co., and

2) Michael Peck, U.S. Representative of the Mondragon Cooperatives of Spain

In addition to the focus on Employee Stock Ownership Plans (ESOPs), this year’s conference also features a bevy of information on cooperatives, employee-owned and otherwise. For more information, or to register (yes, there is still time!), you can check out the conference page on our website or drop me a line at ccooper1@kent.edu.

Owner Revolution Goes 100% Employee Owned

Plastics News reports that Owner Revolution, Inc.,  a group of four plastics companies in Iowa employing a total of 120, has recently completed it’s transition to being 100% employee-owned:

Employees have purchased the final 10 percent that had been owned by founder Chris Schafer. The company’s Employee Stock Ownership Plan started in 1999, according to Heather Link, human resources manager. This concludes an exit strategy by Schafer that ensured that the Iowa company would be employee-controlled, she said…

“There is no better way for a company to be successful than providing its employees with a stake in what they do each and every day. A culture of employee ownership provides our employee-owners with a culture of collaboration that drives innovation,” said President and CEO Don Hudak, in a news release.

Ohio’s Employee Owned Cooperative Model Gets National Attention


The NY Times You’re the Boss blog recently published a piece by Barbara Taylor on employee-owned cooperatives as a creative way for a business owner to exit their business. The piece provides a nice overview of what an employee owned cooperative is (and isn’t) and also highlights Select Machine, an employee-owned and cooperatively-run machine shop in Brimfield, Ohio. It’s definitely worth a read.

And, in the interest of full disclosure, The OEOC worked on the Select Machine deal, and our very own Bill McIntyre is quoted in the piece…