When Bosses Shared the Profits

After the bruising crises we're now going through, it would be wonderful if we could somehow emerge a fairer nation. One possibility is to revive an old idea: sharing the profits.

The original idea for businesses to share profits with workers emerged from the tumultuous period when America shifted from farm to factory. In December 1916, the Bureau of Labor Statistics issued a report on profit-sharing, suggesting it as a way to reduce the "frequent and often violent disputes" between employers and workers, thereby "fostering the development of a larger spirit of harmony and cooperation, and resulting, incidentally, in greater efficiency and larger gains."

Read More
Studio Elias
International Landscape Architecture, Planning and Urban Design Firm Design Workshop Becomes Employee-Owned Company

Design Workshop, an international landscape architecture, planning and urban design firm, is pleased to announce today that it is now 100% Employee Stock Ownership Plan (ESOP) owned. Under this plan, ownership of the company is held in an ESOP Trust, is funded entirely by company contributions, and all employees participate. This is designed as a long-term retirement benefit, with the employees' accounts increasing as the value of the business increases.

Read More
Studio Elias
4 considerations when dealing with ESOP valuation issues during COVID-19

Back at the turn of the new year, few people imagined the havoc that the COVID-19 outbreak would cause during the first quarter of 2020. The broad financial outlook has worsened, and the valuations of many companies might be dramatically affected. Where ESOPs are concerned, this means that the 12/31/19 valuation—the value communicated in 12/31/19 participant statements and used to report the fair market value of employer securities on 2019 Form 5500—does not account for the public health crisis that has transpired since then. Here are four things to consider when confronting an issue such as this one.

Read More
Studio Elias
CARES Act Provisions of Related ESOP-Owned Companies

On March 27, 2020, President Trump signed into law a massive $2 trillion stimulus bill, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act or the Act), aimed at shoring up the U.S. economy in light of the disruption caused by the coronavirus pandemic. In addition to the widely discussed individual stimulus payments, the CARES Act contains extensive provisions expanding unemployment insurance, extending tax relief to individuals and employers, adopting healthcare measures, providing economic stabilization funds, and making other emergency appropriations. A number of the Act's provisions are of particular interest to companies owned by employee stock ownership plans (ESOPs).

Read More
Studio Elias
DOL Data Shows Strong Rates of Return for ESOPs

A common concern about ESOPs is their potentially higher level of risk for participants than a diversified 401(k) plan. As the argument runs, investments in a single company's stock carry more uncertainty than the same amount of investment in a diverse portfolio, and this risk is compounded when the company is also the investor's employer. Critics of ESOPs point to spectacular failures like Enron, where thousands of employees lost their retirement savings, ignoring that participants in 401(k) plans during steep market declines also often suffered dramatic losses.

Read More
Studio Elias
Fiduciary Duties: How ESOP Boards and Trustees Interact

ESOP company boards and ESOP trustees both have fiduciary obligations under ERISA to act in the best interests of employees as shareholders. It is very important that the board and trustee understand their own and each other's duties as well as how they need to work together on the following issues:

Read More
Studio Elias