Employee Ownership Blog

Corey Rosen

Trump Selects Daniel Aronowitz to Head EBSA

President Donald Trump selected fiduciary insurance company executive Daniel Aronowitz to head the Employee Benefits Security Administration (EBSA). Aronowitz currently is the head of Encore Fiduciary (formerly Euclid Fiduciary). The company provides fiduciary insurance, fidelity bonds, cybersecurity insurance, and fiduciary insurance consulting. He is the author of the Fiduciary Liability Insurance Handbook. The book’s only mention of ESOPs is to say that this kind of fiduciary insurance is more costly than that needed for other retirement plans.

If approved by the Senate, Aronowitz would succeed Lisa M. Gomez and work under Lori Chavez-DeRemer, Trump’s pick for Secretary of Labor, who is also up for Senate approval. Chavez-DeRemer has been an ESOP advocate; Aronowitz does not appear to have taken any public position on ESOPs. 

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Corey Rosen

Wisconsin Bill Would Create Employee Ownership Incentives and Outreach Program

Senate Bill 21 (PDF), a bipartisan bill introduced in both the Wisconsin Senate and Assembly, would create a tax credit of up to 70% of the costs of converting to a worker cooperative and 50% of the cost of adopting an ESOP, with a credit cap of $100,000. Up to a total of $5 million in credits could be allocated each year, and any unused allocation could be carried forward.

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Loren Rodgers

Employee-Owned Companies and Foreign Aid

The extensive coverage of President Trump’s executive order to halt payments for foreign aid has missed one of the order’s unintended consequences: the impact it will have on the thousands of people who work at U.S.-based employee-owned companies that implement many USAID projects. Companies that have employee stock ownership plans (ESOPs) are heavily represented among the contractors affected by the executive order.

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Loren Rodgers

The Rescinded Spending Freeze, the Employee Buyout, and Employee Ownership

On January 29, the Trump administration appears to have rescinded its executive order freezing federal grant funding. A prior order freezing foreign aid is still in effect.  Press Secretary Karoline Leavitt suggested, however, that the freeze might continue in some form in a post on X: “This is NOT a rescission of the federal funding freeze. It is simply a rescission of the OMB memo. Why? To end any confusion created by the court's injunction. The President's EO's on federal funding remain in full force and effect, and will be rigorously implemented.” A separate executive action, still in effect, offers buyouts to over two million federal workers. 

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Loren Rodgers

DOL Releases Two Proposed Rules on the Valuation of ESOP Shares

January 23 update: The DOL removed the proposed rules from its website, so we have replaced the original links to them with links to the DOL PDFs hosted on our website.
 
January 20 update: The new Trump administration has put all pending regulations on hold, including the proposed rules on ESOP valuation discussed below. The second executive order signed by the President today states that all executive departments and agencies shall "immediately withdraw any rules that have been sent to the OFR [Office of the Federal Register] but not published in the Federal Register." The two proposed rules that affect ESOPs have both been released as public inspection documents but have not been published. The proposed rules could be withdrawn and rewritten, modified, or retained, but the executive order means that they may not advance "until a department or agency head appointed or designated by the President after noon on January 20, 2025, reviews and approves the rule." The executive order does offer an exception from the withdrawal, but only if the head of the Office and Management and Budget "deems [it] necessary to address emergency situations or other urgent circumstances." The NCEO will issue an analysis of the proposal in the coming days.
 

At 8:45 am Eastern time on January 16, the Federal Register released the public inspection versions of two proposed rules, both of which would affect the determination of the value of shares in ESOP transactions.  Both proposed rules are from the Employee Benefits Security Administration (EBSA) at the Department of Labor (DOL). (Original links below replaced with links to the DOL PDFs hosted on our site after the DOL took down the pages.)

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Scott Rodrick

OMB Completes Review of DOL ESOP Valuation Regulation

Valuation is a crucial topic for ESOPs because in closely held companies, the price paid for company stock in transactions must be based on an independent outside appraisal, and likewise ESOP-held stock must be appraised at least annually. Much ESOP litigation over the years has revolved around valuation.

The Department of Labor issued proposed ESOP valuation regulations in 1988 but never finalized them. ESOP professionals have urged the DOL to issue formal guidance instead of leaving it to the courts, and the SECURE 2.0 Act of 2022 (as part of the WORK Act) directed the DOL to develop formal guidance on valuation. In October 2024, the DOL sent a new proposed ESOP valuation regulation to the Office of Management and Budget (OMB) for inter-agency review of costs and benefits. The OMB has now completed its review of the regulation.

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