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The Employee Ownership Update

Loren Rodgers

August 17, 2015

(Loren Rodgers)

Court Ruling Makes SBA Qualification More Difficult for ESOP Companies

The United States Court of Federal Claims supported an interpretation of stock ownership requirements by the Small Business Administration that resulted in an ESOP company losing its status as a service-disabled veteran-owned (SDVO) small business. The ruling could affect other SBA qualifications, such as women-owned businesses and participants in the 8(a) business development program.

In the case, the service-disabled veteran owned a majority of series A shares. The veteran, however, did not own any series B shares, which were held by an ESOP. The two series had equal voting rights, but different rights and requirements. The SBA argued, and the court agreed, that the two series were different classes of stock, which meant that the company failed the requirement for a service-disabled veteran to own a majority of all classes of stock.

The NCEO is working on a project to catalog existing preference programs, their requirements, and how they interact with employee ownership. Contact Tim Garbinsky (; 510-208-1310).

California Adopts Worker Cooperative Legislation

On August 12, Governer Jerry Brown signed into law the California Worker Cooperative Act, designed to facilitate the creation and financing of worker cooperatives. State Assembly member Rob Bonta, who introduced the bill, said, "Worker-owned businesses are central to a full economic recovery and to closing the income inequality gap." Before this bill, worker cooperatives in California did not have their own legal status and often filed as consumer cooperatives.

Improve Your Marketing and Community Outreach

On September 28 in Baltimore, the NCEO is launching a new type of meeting. In Reaching Out: Marketing and Community Impact at ESOP Companies, participants will learn from experts about how to use employee ownership as a marketing advantage and explore ways to collaborate with other ESOP-owned companies to trade ideas and possibly share resources. On community outreach, several companies that have well-developed charity programs will share how they structured their programs and help other companies decide how to set up their own programs. You will leave both with ideas designed to be adapted for your company and with a network of people to help you.

New Belgium Brewing's New CEO

After 25 years at the head of New Belgium Brewing, one of the most recognizable employee-owned companies in the country, Kim Jordan will be stepped down as CEO. The company's new leader will be long-time company insider and current COO Christine Perich.

The ESOP Transaction Survey Wraps Up Soon

Thank you to the many companies who have already filled out the first-ever ESOP transaction survey. Company responses help us answer questions no one has been able to answer before, such as:

The results are already intriguing, but to maximize the credibility of this research we want as many companies to participate as possible.

Complete the survey here. It should take no more than 15 minutes.

Your responses will be completely confidential, and the NCEO will release only aggregate results to avoid any exposure for individual companies or even small groups of companies.

The NCEO Is Looking for Photos!

From the web to slide shows to publications, mailers, and even our own walls, the NCEO has lots of ways to use compelling photographs and videos from employee-owned companies. If you have professional pictures and would like to have your company's name and image appear in NCEO materials, please contact Ramona Rodriguez-Brooks (; 510-208-1302).

GEO's Equity Compensation Meeting: September 14 to 16, Arizona

The Global Equity Organization will host its National Equity Compensation Forum on September 14 to 16 in Scottsdale, Arizona. Topics include the role of cash in equity compensation programs, global plan compliance, trends in equity compensation for private companies, working with data privacy requirements, and more.

Western Worker Cooperative Conference: September 20 to 22, California

The Western Worker Cooperative Conference will take place from September 20 to 22 in Berkeley, California, with sessions covering diverse topics, such as egalitarian corporate governance, cooperatives and grassroots ecology, a history of African-American cooperatives, and converting existing cooperatives to worker cooperatives.

Author biography and other columns in this series

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