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The Employee Ownership Update

Loren Rodgers

January 4, 2016

(Loren Rodgers)

Results of the ESOP Transaction Survey

The NCEO's first-ever ESOP transaction survey shows a number of trends in how companies structure, manage, and evaluate ESOP transactions. Data from the 240 companies that responded to the survey between February and September 2015 is the first attempt to gather the experiences of a large, diverse group of companies about the scope, management, and satisfaction with ESOP transactions.

One limitation of this study is that the transactions spanned substantial developments in the ESOP field, especially the fiduciary process agreement between GreatBanc and the Department of Labor. Appraisal standards, fiduciary scrutiny, and transaction structures are all different for the later transactions covered by this survey than for the earlier transactions. A second limitation is that the respondents represent a minority of all ESOP transactions, and there may be some bias in their behavior since many are likely members of the NCEO. Readers should exercise caution in drawing conclusions about ESOPs in general. Nothing in these results should be construed as a recommendation or a description of a best practice. Anyone considering an ESOP transaction should consult with qualified professionals who have expertise with ESOPs.

Some highlights of the findings include:

More results are available to NCEO members in the current issue of the NCEO newsletter, available now in the members area of the NCEO website.

Two Companies, Two Outcomes: The New York Times on Equity Compensation

In the last week of 2015, the New York Times ran two articles featuring the equity compensation plans at two very different companies. The first article noted that the company is aiming to take on Amazon, both by competing with it and by following a radically different employee relations strategy. While Amazon has a reputation for driving its employees hard,'s CEO Marc Loren says, "I'm constantly asking people at Jet if they are happy." Amazon once had a broad-based stock option plan, but it no longer does. provides options to all of its employees. Jet is also committed to measuring job satisfaction. Its first employee survey found that 87% of employees rated the company as a great place to work, an unusually high response for this kind of question (a recent Deloitte survey said half of employees would not even recommend their employer).

The second article told about the fate of employee stock holders at Good Company. Many employees there received stock grants of common shares. The company had planned an IPO, but ended up being bought by Blackberry for an amount that valued common shares at $0.44 per share, down from the prior year price of $4.32 per share. Although the specifics at Good Company are unclear, many experts recommend that private companies with equity compensation plans be designed to ensure that equity awards be liquid after exercise.

NCEO Board Elections Open Today

Members in good standing of the NCEO will receive their ballots for the 2016 elections for the NCEO's board of directors by email today. For memberships that cover more than one person, only the primary member will receive a ballot. If you are expecting a ballot and do not receive one, please check your spam filter and then contact Loren Rodgers ( Please note that this year's election is not contested. There are six candidates, six open positions, and each member may cast up to six votes.

Seattle Consumer Cooperative Converts to Partial Worker Ownership

According to the Puget Sound Business Journal, the Seattle-based grocery cooperative Central Co-op pioneered a new path to employee ownership when the store, formerly 100% member-owned, became a "solidarity co-op," in which members and employees each own 50% of the company.

Author biography and other columns in this series

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