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The Employee Ownership Update

Loren Rodgers

January 3, 2018

(Loren Rodgers)

Tax Reform and Employee Ownership

The NCEO has updated its special bulletin on tax reform to incorporate the impact of provisions that focus specifically on certain broad-based equity compensation programs in private companies. Some employees will receive more flexible tax treatment of their equity awards.

The NCEO will continue to publish about the the evolving understanding of the impact of tax reform on employee ownership. The original bulletin (from December 21) focused on the indirect impacts of tax reform on ESOPs by looking at the changing treatment of business interest expenses, pass-through income, and state and local taxes.

We welcome your questions and ideas about the impact of tax reform.

Employee Ownership in the Harvard Business Review

The January-February 2018 issue of the Harvard Business Review includes the article More Than a Paycheck (HBR allows the general public to view three articles per month), by Dennis Campbell, John Case, and Bill Fotsch. The article makes the case for employee ownership, concluding:
American business finds itself in an unusual position today. The decline in the good blue-collar jobs of an earlier era has contributed to stagnating wages among the bottom 80% of U.S. households, feeding growing levels of discontent. Governments have for the most part been unable or unwilling to address this situation. Many voters don't even believe that they should. But here is an arena where business can take the lead. Almost any company can set up some kind of system that encourages employee ownership, profit sharing, or both. Most can create a culture that helps employees learn the business and improve its results and that puts more money in their pockets right away. Executives who adopt such a system will find that they are pioneers in addressing one of America's most pressing problems—and, most likely, that their company performs better than it did before.

ESOP Company CEO Runs for Governor of Maine

Shawn Moody, who founded the 200-employee Moody's Collision Centers, now an employee ownership company, is running for governor of Maine. Moody's campaign website describes the relationship between employee ownership and his position on economic development:
Moody's employees are collectively coworker owners. Moody's employee ownership is a reflection of Shawn Moody's approach to problem solving, which is based on empowering people and challenging them to achieve success, which benefits everyone from the top-to-bottom of an organization.

DOL Investigates Hobbico for Delayed ESOP Distributions

The News-Gazette of Champaign, IL, reported on December 22, 2017, that the Department of Labor is investigating ESOP-owned Hobbico. The article states that Hobbico failed to make timely ESOP distributions to former employees.

Detroit Nonprofit Explores Employee Ownership

The ten-person nonprofit organization Data Driven Detroit is becoming an employee-owned company, according to an article in Crain's Business Detroit. It is converting to a Low-profit, Limited Liability Company (L3C), a status that allows it to become employee-owned and still receive funding from foundations. Executive Director Erica Raleigh expects employee ownership to reduce turnover, noting that when an employee is an owner, "You think about it as an owner and a steward of a community resource. You're not just an employee."

New Sample CEO Evaluation in the NCEO Document Library for Members

The NCEO has added a new sample CEO Evaluation Survey in its NCEO Document Library for members (member login required). The survey was developed by NCEO founder Corey Rosen using publicly available sample survey questions, questions suggested by employee owners, and suggestions from ESOP company board members. It was designed to be sent out to employees (all or a select group) to provide feedback to the board and the CEO. The document library contains 15 other useful forms, templates, and checklists for ESOP companies. If you are not a member, you can access the Document Library (and all the other benefits of membership) by joining for $90.

Author biography and other columns in this series

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