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The Employee Ownership Update

Loren Rodgers

August 15, 2016

(Loren Rodgers)

New Research: The 2016 Survey of Employee Stock Purchase Plans

The results of the newest survey on broad-based employee stock purchase plans (ESPPs) show some continuity with prior surveys, such as the continued prevalence of a 15% discount and a six-month offering period, as well as some insights, such as high levels of satisfaction and low levels of investment in education.

The results come from 239 companies, the greatest number of which are in technology. Just over half have annual revenues over $1 billion. Although rates varied by employment category, responding companies were relatively evenly divided between those where 40% or fewer of eligible employees participate and those where over 40% participate. Most respondents (72%) said they were very satisfied or somewhat satisfied with their plans.

The majority of respondents (54%) spend less than 0.5% of their total compensation budget on the ESPP. On the other end of the scale, 7% of respondents spend 3% or more of their compensation expense on the plan.

See the NCEO website for information about ordering the full results, and NCEO members can view the members' report (member number and password required).

The survey is a collaboration of the NCEO with the National Association of Stock Plan Professionals (NASPP) and the Certified Equity Professional Institute at Santa Clara University (CEPI). NASPP members, CEPs, and CEP candidates can obtain the members' report and learn more about the full report. NASPP members can click here for the members' report and information about ordering the full report. CEPs and CEP candidates should contact Dee Crosby ( and put "ESPP" in the subject line.

Addressing Rumors, New Belgium Brewing Intends to Remain Employee-Owned

In December 2015, Reuters reported that the prominent employee-owned company New Belgium Brewing was exploring a third-party sale. This month, New Belgium's co-founder and executive board chair Kim Jordan told employees at a company-wide retreat, "While the Board of Directors and ESOP trustee have a fiscal responsibility to keep an eye on capital markets, we have found that our current capital structure serves our purpose and vision best."

Company spokesman Bryan Simpson echoed Jordan, saying that "for all of the speculation that has been out there. . . we are super happy with our model and that is our plan going forward. There are no active discussions at this time, but we will always be watching the capital markets."

Major Private Companies Facilitating Trading of Equity Compensation Awards

The New York Times, in an August 11 article, described how companies such as Uber, Airbnb, Pinterest, and SpaceX are allowing employees to sell some of their equity stakes to third parties, whether directly or via markets such as NASDAQ Private Markets, in return for restrictions on when and to whom they can sell their remaining equity interests. Most entrepreneurial technology companies give stock options, restricted stock, or other equity awards to most employees, but they only provide for liquidity upon an IPO or sale of the company. Employees may want (or need) to exercise an award before a liquidity event, especially if they leave the company. Exercise usually requires either buying options with after-tax dollars or getting restricted stock that is taxable. Options may incur additional taxes on the spread. By allowing employees to sell some of the exercised shares, companies make it possible for them to pay their taxes and acquisition costs. The companies want the restrictions, however, to prevent shares from being held by third parties they do not want owning significant stakes.

ESOP-Owned Butler/Till Wins Contract as Women-Owned Subcontractor

Many businesses lose their special-status designation—such as minority-, women-, or veteran-owned businesses—when an ESOP becomes their majority owner, but different certifying agencies use different, and often complex, rules. Butler/Till is 100% owned by an ESOP, and earlier this month it announced it had been selected as the women-owned contractor for Empire State Development, New York's primary economic development agency. A majority of Butler/Till's shares are held in ESOP accounts belonging to women.

The NCEO is actively engaged in a project to assess the interaction of special-status companies and employee ownership. Please contact Tim Garbinsky ( for more information.

Butler/Till was also featured in a Forbes blog post by Mary Josephs titled "Stop Pampering Your Millennials: How Butler/Till Asks More, Not Less, of its Many Young Employees."

IRS Adopts Final Regulations to Simplify Tax Filings for Restricted Stock Recipients

On July 25, the IRS adopted final regulations (PDF) to reduce the document filing requirements for people making an 83(b) election on restricted stock grants (the regulations do not apply to restricted stock units). Commentary and background is available in a blog post on

Employee Ownership Preserves 100-Year Legacy

This year, the American Truck Historical Society awarded its first-ever 100-year award to Rieth-Riley Construction Company, which Albert Reith founded in 1916. Although no one from the family currently works at the company, its name and legacy are being preserved and built on by its employee-owners. According to an article in the Chicago Tribune, the company now has almost 400 employee-owners. One of them, contract administrator Jennifer Brozak, said that Rieth family members attended the company's century anniversary celebration. She said the family members "are so proud of their legacy."

Media Coverage

Darren Dahl, a blog-writer at Forbes who has been focusing on employee ownership, wrote about the comparison between worker cooperatives and ESOPs in his August 14 post.

The New Haven Register ran an August 7 story about local employee-owned Vespoli USA, which makes racing shells for crew teams. The reporter interviewed employees around the company, including the founder Mike Vespoli, who said "The challenge is for people being paid by the minute to act like an owner and we are beginning to see some very positive signs. They understand it is their company."

A blog post in the Minneapolis Star Tribune noted that "employee ownership is gaining popular and political support," citing polling data from Public Policy Polling (see more results in our new article Surveys Show Strong Preference for Employee-Owned Products and Services).

Coming Soon

The NCEO will begin accepting submission for speaking and sponsorship opportunities for all of our 2017 events on August 26.

Author biography and other columns in this series

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