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WASHINGTON, Aug. 11 /PRNewswire-USNewswire/ --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. Â 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. Â 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 2010 results have also shown a rise in the number of S corporation ESOP companies which was reported as 73% this year. This figure is in line with ESOP Association membership figures that show 66% of members as S corporations. Another interesting figure was the number of C corporations considering converting to an S. In previous years, the number answering yes to this question was 45%, in 2010 the number dropped 10% to 35.5%. The reason for establishing an ESOP has not changed over the last decade, with 50% of the respondents reporting that their ESOPs were created as part of an exit strategy, or a buyout from current owners. This figure is not surprising considering this has been the driving force behind the establishment of ESOPs for more than two decades now. In addition to an exit strategy, 23% reported that the ESOP was created to provide an additional employee benefit and another 21% stated the attraction of the employee ownership concept as the reason.

The figure for the amount of stock held by the ESOP has increased dramatically to 78% in 2010, up 10% over the 2005 survey data, and up 12% compared to the 2000 data. The number of currently leveraged ESOPs has decreased with 52% of companies reporting that they are not currently leveraged and have paid off ESOP debt. These results also reflect the age of the ESOP as most ESOP loans are a 7-12 year term. Approximately 90% of members reported having retirement savings plans in addition to the ESOP including the use of 401(k) plans, pension plans, stock purchase plans, and stock options.

In terms of motivation and productivity, 84% of respondents agree that the ESOP improved motivation and productivity. Â In addition, 78% of companies participating in the survey advertise the fact that they are employee owned through websites, in company literature, and in marketing campaigns.

"The data from the Association's company survey, which is done every five years, proves the case for more employee ownership," said J. Michael Keeling, president of The ESOP Association. "When coupled with 30 plus years of research, this survey shows employee owned companies are better performing, provide greater wealth creation for employee owners, stay in business longer, have greater profitability, offer better benefits, and have more employee involvement in decision making. Shared capitalism offers new prospects for U.S. businesses, and as a community, we need to be promoting these benefits more widely."

The above is a sampling of the data that was collected. Â In addition to providing members with a comprehensive summary of the results, a publication detailing all 45 questions and responses will be available for purchase by members and non-members in the fall of 2010. Â This year, 460 members participated in the ESOP Company Survey.

The ESOP Association is the national trade association for companies with employee stock ownership plans (ESOPs) and the leading voice in America for employee ownership. The core cause of The ESOP Association is the belief that employee ownership will improve American competitiveness, increase productivity through greater employee participation, and strengthen our free enterprise economy.

SOURCE The ESOP Association

WASHINGTON, March 24 /PRNewswire/ -- A Georgetown University/McDonough School of Business study released today found that, in the most recent economic recession, Subchapter S companies owned by their employees through employee stock ownership plans (ESOPs) demonstrated considerable resilience and performed better than other companies in providing for workers' retirement security, job creation, and revenue growth.

Economists Phillip Swagel and Robert Carroll reviewed the performance of a cross-section of S corporation ESOP companies in 2008, and found that the S corporation ESOP ("S-ESOP") structure, created by Congress to promote the retirement savings and other benefits of employee -ownership, has provided considerable benefits not only to workers but also to the national economy. "Our results indicate the resilience of S -ESOP firms during the first year of the recession. S-ESOPs hired and grew their businesses when other firms were shrinking."

In their study, Swagel and Carroll found that S-ESOPs give their workers a more secure retirement by providing substantial retirement savings for employee -owners, in this case at a time when most other companies did not. Surveyed S-ESOP companies increased contributions to retirement benefits for employees by 18.6%, while other U.S. companies increased their contributions to employee retirement accounts by only 2.8%, or one-sixth that amount.

The study's authors also reported that, while overall U.S. private employment in 2008 fell by 2.8%, employment in surveyed S–ESOP companies rose by nearly 2 percent. Comparisons between S-ESOPs and non-S-ESOPs in the manufacturing sector were even more favorable: surveyed S-ESOP manufacturers lost no ground where employment was concerned, while their non-S-ESOP counterparts shed about 6 percent of their jobs. Wages in all S-ESOP companies during the period grew by 5.9%, while overall U.S. earnings per worker grew only half that much.

"These results tell us what workers in S corporation ESOP companies already know," said Mark Lewis, president of Woodfold, Inc., in Forest Grove, Oregon. "When times are tough, employee -owners work smarter and harder because of their commitment and investment in the business and this makes us stronger."

Representative Ron Kind (D-Wis.), author of the S Corporation Promotion & Expansion Act (H.R. 3586), applauded the study's results. "With fewer than half of Americans claiming any form of employer - sponsored retirement savings plan, these S-ESOP companies are providing real retirement security for their workers," said Rep. Kind. Kind's bill, co-sponsored by a bipartisan group of a dozen other House Members, would enable the creation of more employee -ownership in U.S. companies.

About ESCA:
The Employee-Owned S Corporations of America ("ESCA") is the Washington, DC voice for employee-owned S corporations. ESCA's exclusive mission is to preserve and protect S corporation ESOPs and the benefits they provide to the employees who own them. These companies have an important story to tell policymakers about the tremendous success of the S-ESOP structure in generating retirement savings for working Americans and their families. ESCA provides the vehicle and the voice for these efforts. ESCA represents employee -owners in every state in the nation.

SOURCE ESCA

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In Survey, 88.5% of ESOP Association Members Report Better Performance Than Stock Market

WASHINGTON, Aug. 17 /PRNewswire-USNewswire/ -- Results from the Employee Ownership Foundation's 18th Annual ESOP Economic Performance Survey show that 88.5% of ESOP companies outperformed the stock market in 2008. The results indicate respondents' companies outperformed three major stock indices in 2008 including the Dow Jones Industrial Average, the NASDAQ Composite, and the S&P 500.

As has been the case in all 18 years the survey has been conducted, a very large majority, 88.2% of survey respondents reported that creating employee ownership through an ESOP (employee stock ownership plan) was a "good business decision that has helped the company." In addition, 65% indicated the ESOP positively affected the overall productivity of the employees. In terms of profitability, the number is down from 2008 with 50.4% of respondents stating profitability increased in 2008. In terms of revenue, 57.9% reported an increase over the prior year. A new question was added to the survey in 2009 asking ESOP companies to report whether profits/revenue were down in the final quarter compared to the first quarter of the year. Approximately 63% reported that profits/revenue were down significantly/moderately, with 12.2% reporting the last quarter remained the same as the first. In addition, 13.3% reported that revenue improved in the last quarter and 10.2% reported that profit improved in the same time frame.

"In a turbulent year, these results speak wonders for the power of employee ownership," said J. Michael Keeling, president of the Employee Ownership Foundation. "On the other hand, this survey and most news reports show that American companies are hurting, profits are down, and layoffs are taking place across the country. Objective academic research evidences that employee owned companies are higher performing, have high employee retention rates, and have employees that are more motivated and productive. Our national leaders need to promote policies to encourage more companies to become employee owned through an ESOP to create a more fair and equitable society."

In addition, the survey asked companies to indicate their performance in 2008 relative to 2007:

50.9% indicated a better performance; 39.7% indicated a worse performance; 9.4% indicated a nearly identical performance as the previous year

57.9% indicated revenue increased; 42.1% indicated revenue did not increase

50.4% indicated profitability did increase; 49.6% indicated that profitability did not increase

65% of survey respondents indicated the ESOP improved the overall productivity of the company's employees

51.3% of companies that responded indicated they have created an employee participation program since establishing the ESOP

The 2009 Economic Performance Survey was distributed to The ESOP Association's over 1,400 members in May 2009. The results are based on 429 responses, a 31% response rate.

For additional information about the survey, please visit the Employee Ownership Foundation's website at www.employeeownershipfoundation.org or The ESOP Association's website at www.esopassociation.org.

Dear ESOP Association Members,

We have just mailed the documents and application describing the Charles R Edmunson scholarships for 2009 to our corporate membership. Janet Edmunson, chair of the scholarship committee, is requesting your assistance in promoting the availability of the scholarships to your ESOP Association clients. While it takes a little work for the companies to complete the application forms, the benefit of winning a $1,250 scholarship could help keep ESOP excitement alive in their companies. And in these difficult economic times, scholarships could be the only way some of these companies can afford to send their enthusiastic employees to an ESOP conference or retreat. Thank you in advance for your help in making this scholarship program successful.

http://www.magnetmail.net/images/clients/ESOPA/attach/2009Edmunsonappl.doc

http://www.magnetmail.net/images/clients/ESOPA/attach/2009EdmunsonTerms.doc

http://www.magnetmail.net/images/clients/ESOPA/attach/2009Edmunsoncvrltr.doc

The Plan Governance™ module of our online tool, ESOPConnection™, will facilitate your ESOP’s compliance with applicable ERISA fiduciary and documentation requirements. Please let us help keep your plan governance “house” in order. Contact us at 434.979.5500 x66 or x64 to discuss.

The related topic of corporate governance deals with the duties and interactions of the company’s Board of Directors, officers, and shareholders. Your Board of Directors has responsibility under corporate law to the company’s shareholders (1) to monitor the officers the Board appoints to operate the company and (2) to document its review of these officers and the company's operations with Board meeting minutes, resolutions, and exhibits.

A similar governance process applies to your ESOP fiduciaries who have responsibility under ERISA to act solely in the interests of plan participants. Like the corporate governance process, the plan governance process must be performed on an ongoing basis with corresponding actions that are both well considered (i.e., prudent) and well documented.

The resulting historical record you create for your ESOP provides the basis for subsequently explaining your actions to your plan auditors, IRS or DOL examiners, and any participants raising claim issues under the plan. A detailed record also will limit questions from skeptical auditors/examiners and enhance credibility for your responses.

Plan governance and corporate governance overlap to some extent in an ESOP company because the ESOP is a special type of retirement plan: one where trust assets can consist solely of stock in your company. Since the trust has company stock, ERISA holds transactions between the employer and the trust to a high standard of scrutiny. Proper documentation is necessary to demonstrate that these transactions comply with all ERISA requirements. This documentation is necessary even if your ESOP is not a majority shareholder of the company.

It is not uncommon for ESOP company executives to wear several “hats.” A senior executive could be a company officer, a shareholder, a Board member, an ESOP participant, and also a member of the ESOP committee serving as plan administrator and/or trustee. The executive must be aware of which hat is being worn and to whom his or her duty of loyalty extends when making a decision that could impact the ESOP.

In light of these potential conflicts of interest, it follows that good plan governance requires good corporate governance. This means, for example, that a majority ESOP trustee should insist that the Board follow best practices by hiring qualified outside Board members and establishing the necessary Board committees to provide oversight (e.g., audit, compensation). The Board, in turn, should provide the ESOP trustee with the necessary information on company actions so the trustee can effectively protect participants’ interests.

ESOP plan governance is complex but you are not expected to be an ESOP expert. Nor does ERISA require that all your decisions be correct or perfect. However, ERISA does expect you to make well-reasoned determinations on the facts then available and to engage qualified experts, as needed, to help you make these decisions. To further support your decision-making process, your documentation should contain (or at a minimum at least refer to) (1) the specific recommendations made by your outside experts, and (2) your evaluation of these recommendations.

Over the last few years, the Department of Labor and certain employees of ESOP companies have been successful in bringing claims against board members, ESOP fiduciaries, and ESOP trustees where there has been a break down in corporate governance or ESOP Plan Governance™. Based on the current state of the law, the courts and government agencies view an ESOP company as a “quasi-public type of entity” since the employees own equity with the right to diversify their investment until they become eligible for a distribution under the ESOP. With this perspective, it is imperative that an ESOP company adopt reasonable corporate and plan governance policies that the company can actually follow.

In this webcast Michael Holzman of Morgan Lewis will discuss practical policies to be adopted by the Board of Directors and the Plan Committee to avoid any appearance of impropriety or conflicts of interest situations. Michael will also explore the function of the Board of Directors and the Plan Committee and how to effectively use committees and subcommittees to create a well balanced governance structure that keeps the appropriate checks and balances in place to ensure that the ESOP participants best interests are protected. This session will conclude with a demonstration of Blue Ridge ESOP Associates’ Plan Governance™ tool which allows one to document compliance with the fiduciary obligations of such committees, board of directors or trustees.

Come learn about the Best Practices of Corporate and Plan Governance™ and how to best develop, manage and document an arrangement that is right for your ESOP company.

Please join us to get your questions answered from these experienced ESOP experts.

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Initiative starting in 2006 requiring each individually designed qualified retirement plan to be filed with the IRS every five years for a new determination letter.

To review your needs, please contact:

Tom Roback
Director, Business Development
434-979-5500 x 66
troback@BlueRidgeESOP.com

or

Tracy Holzman
Business Development Associate
301-530-1305
tholzman@BlueRidgeESOP.com