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Corey Rosen
February 27, 2009
New Estimates of the Number of ESOPs and of Plan Assets and Participants
We have completely revised our estimating techniques for ESOPs and plans that function like ESOPs (stock bonus plans and profit sharing plans primarily invested in company stock) to create a more accurate and conservative estimate of the number of plans, how many participants they have, and the value of plan assets. Based on that, we estimate that for 2008, there were 11,400 plans. While we are reasonably confident about this number, we only feel confident about 2006 data for estimating the number of plan participants and asset value. For 2006, we estimate that there were 13.7 million participants with $923 billion in assets.There was a blip upwards in the number of plans in 2000-2002, and a sharp drop in terminations between 2001 and 2003. This appears to be because of the adoption and then termination of sham S corporation ESOPs that were shut down by Congress and the IRS. Similar growth and shrinkage patterns did not occur in asset value and participant numbers. The revised data show that the number of plans has started to grow again in recent years, plan participation has generally moved upward, and plan asset size has grown substantially (albeit the current market conditions will undoubtedly push that number down).
Details on the data and the revised estimating techniques are on our Statistical Profile page.
A complete review of the data on all forms of employee ownership plans, including their impact on corporate performance, is available in the newly revised 2009 edition of the NCEO issue brief The State of Employee Ownership.
NCEO/Beyster Institute Conference Case Study the Poster Company for New Stimulus Bill
Before President Obama signed the economic stimulus bill in Denver, he and Vice-President Biden toured Namaste Solar, an employee-owned company and upcoming case study at our annual conference in Portland, OR, on April 22-24. Namaste has been a rapidly growing solar firm, but the decline in new construction and other economic problems might have forced it lay off 20 people absent the bill. Now it will hire 20 more employees. The story was covered in the New York Times (February 17, 2009).Stimulus Bill Provisions May Help Some ESOP Companies
Many of the tax provisions in the economic stimulus bill may provide some benefits to ESOP companies. The key provisions include:- Enhanced depreciation: A 2008 law allowing 50% of qualifying property to be expensed in the first year of use is extended through 2009.
- Extension of enhanced small business expensing: Last year, Congress temporarily increased the amount that small businesses could write off for capital expenditures incurred in 2008 to $250,000 and increased the phase-out threshold for 2008 to $800,000. The new law extends these temporary increases for capital expenditures incurred in 2009.
- Expanded loss carryback of net operating losses for small businesses:
Net operating losses incurred in 2008 or, for some companies, 2009 can be carried back for five years instead of two for businesses with
gross receipts of $15 million or less. For a calendar-year taxpayer, only net operating losses for 2008 qualify. For fiscal year
taxpayers, it means the net operating loss for the tax year ending in 2008 (i.e., the tax year beginning in 2007). A company can elect to
use the tax year beginning in 2008, making the loss applicable for the tax year ending in 2009. Thus, fiscal year taxpayers could
conceivably apply these new rules for plans as early as February 1, 2007, or ending as late as November 30, 2009. - Cancellation off debt income recognition: Companies buying their own debt at a discount can recognize that income over 10 years for specified debt occurred between 2009 and 2010. This could be helpful to companies who are restructuring ESOP acquisition debt.
- S corporation holding period: The new law shortens the holding period of assets subject to the built-in gains tax from 10 years to 7 years for transactions in 2009 and 2010. ESOP companies that converted from C status to S status, but have a sale that occurs in these years, may be helped by this provision.
