The Employee Ownership Update
June 16, 2014
NCEO Releases Revised Key ESOP DataThe NCEO now estimates that there were 8,926 companies with ESOPs and similar plans in the United States at the end of 2011, including 6,941 companies with ESOPs and 1,985 with plans that, while not ESOPs, share a number of similar features. The numbers are based on a more rigorous method than the NCEO's prior estimates and rely on the Department of Labor's research files.
The new analysis shows the number of literal ESOPs declining from 8,874 in 2002 to 6,941 in 2011. The number of participants in literal ESOPs over that time, however, increased from 10.0 million in 2002 to 13.5 million in 2011.
Over the same time period, the number of ESOP-like plans increased from 1,614 to 1,985. While those figures in isolation imply an annual rate of increase in plan numbers, the actual trend was a decrease between 2002 and 2009, followed by a sharp increase in 2010. We define "ESOP-like" plans as profit sharing, stock bonus, and other defined contribution plans that are substantially (at least 20%) invested in employer stock and have at least five participants; most are profit sharing plans.
|Number of plans||Total number of participants||Total assets|
|Literal ESOPs||6,941||13.5 million||$942 billion|
|ESOP-like plans||1,985||1.2 million||53 billion|
|Total||8,926||14.7 million||995 billion|
Our forthcoming issue brief The Changing World of Employee Ownership includes a detailed report on the new estimates, including trends, company characteristics, and methodology. We also will be summarizing the report online in the near future. The NCEO will continue to release new data and results as they appear.
DOL and GreatBanc Settle Valuation LawsuitThe Department of Labor brought a 2012 suit against GreatBanc Trust Co., alleging that in 2006 it allowed the Sierra Aluminum ESOP to overpay for company shares. In the settlement, GreatBanc and its insurers will pay $5.3 million, including $4.8 million to the ESOP and $0.5 million in penalties.
The settlement also included standards that GreatBanc and the DOL negotiated, including how to select and monitor the appraisal firm, the scope of analysis required for the valuation, and documentation of the valuation. In reference to the agreement, James Staruck, the president of GreatBanc, said his company is "proud to be in the forefront of implementing what we consider to be an exceptional process." In a press release, the Assistant Secretary of Labor for the Employee Benefits Security Administration Phyllis Borzi said, "Others in the industry would do well to take notice of the protections put in place by this agreement."